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Perverse US Economic management.

It is perverse that the US has so little confidence in the shared values, judgement, and motivation of its leadership that it should insist on splitting economic management between the White House and the FED. In the hypocritical name of independence their “working together” is interpreted as a form of deviant chicanery where it would seem eminently sensible for both parties to work hand in glove.

As it is, the President has turned the process into part of his drum beat for reelection and is in a win/win position with his unthinking 39% rump of supporters. He can win credit for demanding lower interest rates without the risk the policy may be misguided. He has turned the FED into his own political punch bag.

But stand back and look again – this is an abrogation of authority, it is fiddling, fudging and flailing – because it is covering up the economic management of the nation, it is adding to the uncertainties of policy, and so the hesitancy of business to invest.

The US needs to know what its economic policy is, to publish it clearly, and then to manage it openly. Waiting for the next FED conference, tracking the President’s midnight tweets is no way to manage the world’s leading society. Covering up policy shifts will only further weaken confidence in what is already a rotton system.

As it is, I am indebted to J.T.Crowe of Money and Markets for pointing out that the FED has silently reversed its tightened monetary policy over the last 2 weeks and reinitiated Quantative Easing with $14bn as the first salvo of QE4.

Berated by the President, the FED has already suggested a reduction in interest rates. Together with QE4 they will have silently reversed the national economic strategy – and not one politician has noticed!

Invest sparingly. US centric stocks, gold and strong high dividends are the name of the game. Sell China, sell Europe, and sell the UK.

Hav a good day. James

James is advisor to the  Merrill Lynch Wealth Management King Group.