Well, that didn’t take long. The ink was barely dry on the paper before Trump comes out and does exactly what I said he would do. Namely, start bashing the US Federal Reserve.

You can see the latest bombshell from the Potus here – https://www.cnbc.com/2018/07/19/trump-lays-into-the-fed-says-hes-not-thrilled-about-interest-rate-.html

Why any of us should be surprised is beyond me. Trump only cares about himself and staying in power, come what may. Those strategists and analysts who’ve been warning about an overly excessive hawkish US Fed were always barking up the wrong tree in my view.

Trump doesn’t care about institutional niceties. Michael Gove might like to think he’s the Leninist revolutionary, determined the knock down the ancient regime but the real deal is Donald. Here is a man determined to strip away the institutional certainties of the old order and rebuild it into a smaller state USA. That’s what he said he would and that’s what he’s doing. His voter base doesn’t give a damn about the constitutional niceties of the US Fed’s independence. They care about jobs, incomes and making America great again. If that means knocking the Hawks off their perch because they are too aggressively increasing interest rates – so be it.

My guess is that the US Fed will now face a maximum interest rate of around 2.5 to 3%. Anything above this level and the US economic boom will stall.

Next up will be a determined assault to weaken the value of the US dollar. The current levels are way too high for Potus and he really can’t afford the dollar to strengthen from here on in. He needs the Chinese and the Europeans to weaken their currencies – and fast.

And of course, when Trump meant that he was going to start a trade war – he meant it. This is a proper all out, heads down confrontation designed to make the Chinese blink first.

So, be warned. Much more political turbulence to come. Along the way Trump may also make the US next to ungovernable, shoving it ever deeper into long-term strategic paralysis…but hey, that’s not his problem. Someone else can sort out his mess.