Episode summary
Dylan Jovine | Trump Targets the Fed: DOJ Investigation Sends Gold to Record Highs
Summary
Dylan Jovine argues that the reported DOJ criminal investigation into Fed Chair Jerome Powell is a political move meant to pressure the Federal Reserve, not a credible corruption case. He says markets immediately interpreted it that way: gold jumped 3% and hit a new record of 4600, while long-term rates began to creep higher. In his view, a president who pushes the Fed toward growth, deficit spending, and debt is setting up a more inflationary backdrop.
He frames the issue as a fight over Federal Reserve independence, saying history shows that political control of monetary policy tends to end badly. He points to Nixon and Arthur Burns as the classic example of a Fed chair buckling under pressure, and argues that using courts and investigations against political opponents is not new, citing lawfare as an old tactic dating back to the Romans.
Jovine still sees opportunity in the turbulence. He says the coming days will bring more discussion of defense spending and Trump’s push to cap credit card rates at 10%, and he suggests credit card stocks could become attractive if conditions worsen enough.
Key takeaways
- Jovine says the DOJ investigation into Jerome Powell is widely seen as political pressure, not a credible corruption case.
- He says gold spiked 3% and reached a new record of 4600 right after the news, signaling inflation fears.
- He argues that a president controlling the Fed would likely push policies that are inflationary and lift rates.
- Jovine says history, from Nixon and Arthur Burns to modern lawfare, shows political pressure on the Fed usually ends badly.
- He plans to look for opportunities in defense spending and possibly credit card stocks if conditions deteriorate further.
Notable quotes
“Trump's DOJ had opened a criminal investigation into Fed Chair Jerome Powell, ostensibly because of the Federal Reserve building out a new headquarters”
“Nobody believes that to be credible. Frankly, the thinking is that Trump is again trying to use the lawfare to pressure the Federal Reserve chair to leave”
“gold spikes up 3%. Just smashes to a new record of 4600”
“I'm one of those people that believes the only thing worse than an independent Fed is a Fed that's beholden to political pressure”
“If things get bad enough, I'll be recommending credit card stocks. I promise you that”
How the episode opens
Good morning. This is Dylan Jven with Behind the Markets. Happy Tuesday.
Today is Tuesday, January 13th. And what I said yesterday, we would have an eventful year. I was not exaggerating.
When I recorded yesterday's video, this story broke the night before that Trump's DOJ had opened a criminal investigation into Fed Chair Jerome Powell, ostensibly because of the Federal Reserve building out a new headquarters. and they're going to say that they're attacking him. They're opening up an investigation to see if there was any corruption.
Nobody believes that to be credible. Frankly, the thinking is that Trump is again trying to use the lawfare to pressure the Federal Reserve chair to leave and his term expires in May. I don't really see the upside here.
And look, you know, in the history of governments, remember we used to have very high interest rates in this country. And when we created an independent Federal Reserve, basically they began to manage the economy. So long-term rates went down.
So when you have a president that controls the Federal Reserve, they can push the Fed to do things that the president finds important. This president prizes economic growth and deficit spending, debt, and economic growth. Now, immediately after Trump announces that he's opening a criminal investigation or after the DOJ announces that, gold spikes up 3%.
Just smashes to a new record of 4600. Again, it's telling you that when the president wants to run policy, monetary policy, it's inflationary. Angel rates will just, as they did yesterday, will start to creep up.
This is not generally a good thing in the history of countries. So we have a president who prioritizes deficit spending, debt, and economic growth, tax relief. So the next president, you know, if the president actually succeeds in minimizing or reducing the Fed's independence, the next president might prioritize bulk stuff, right?
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- trump doj investigation
- fed independence
- gold price rally
- inflation and interest rates
- market positioning
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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