Take Down These Interest Rates And Oil Prices Too!

President Donald Trump invoked his inner President Ronald Reagan today in a virtual speech at the World Economic Forum in Davos, Switzerland. But his asks amounted to a taller order than just "tear down this wall." During his address, Trump demanded lower interest rates (not just in the US, but globally), called on OPEC to lower oil prices, and urged that the Russia-Ukraine war must end as soon as possible. He also warned that foreign companies either produce in America or pay tariffs.

During Trump 1.0, the President also demanded that the Fed lower interest rates. Perhaps it gives dovish Fed Governor Christopher Waller a bump in his shadow campaign for Fed Chair, 2026. The stock market took the comments in stride, as the S&P 500 reached a new record high of 6,118. But the biggest impact of Trump 2.0 so far has been in the oil market. A barrel of WTI crude is down from $80 on January 15 to $75 today, erasing its gains from the Biden administration's last-minute added sanctions on Russia (chart). We think there's room for crude prices to fall further.