Trump takes the stage

Has anyone thought of circumventing the complex supply and demand curve of global commodity markets and lowering oil prices by just asking Saudi Arabia nicely?

“I’m also going to ask Saudi Arabia and OPEC to bring down the cost of oil,” President Trump said during his remarks before the World Economic Forum in Davos, Switzerland today. Crude oil prices dropped 1.62% following the announcement.

The new president’s energy market musings weren’t the only thing on his wish list that he outlined before the group of business leaders and CEOs chilling in Switzerland:

• Trump said that he will “demand that interest rates drop immediately.” You might be wondering…can he actually do that? The Federal Reserve is designed to be independent of politics, but Trump has other ideas. He has called Fed Chair Jerome Powell a "golfer who can't putt," dubbed central bankers “boneheads,” and made it crystal clear he thinks he should have a say in monetary policy—to the chagrin of many economists.
• Speaking of, Trump declared that the rest of the world will follow the US in lowering interest rates. The two-year Treasury yield dropped slightly in response, falling to 4.29% by mid-afternoon.
• He claimed that if oil prices come down, the “Russia-Ukraine war would end immediately.” OPEC decided in December it will extend production cuts through 2026 to keep the price of oil elevated in spite of lower demand from China amid its economic crisis.
• In response to a question from Bank of America CEO Brian Moynihan, Trump said he would bring the corporate tax rate down from 21% to 15%. He also claimed that big banks were refusing conservatives, reigniting a debate about “debanking,” especially when it comes to cryptocurrency.
• While light on specifics in his comments, Trump re-emphasized his mission to implement broad tariffs against businesses operating outside the US, arguing the revenue will make the US Treasury stronger.

The big picture: Trump’s comments to the World Economic Forum follow a flurry of executive orders and policy announcements that have outlined what his second administration will look like. In just his first few days, he withdrew the US from the Paris Climate Agreement (again) and from the World Health Organization.

But, as with any administration, only time will tell which lofty policy goals will become reality. —LB