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White House blames China

May 1, 2020

May 1, 2020

Dollar needs a new scapegoatDmitri Demidenko

**Victory at presidential election might slip away unless the guilty

are found**

Enough hate, let’s start violence! Donald Trump threatens China with new measures in response to coronavirus. The US president isn’t pleased either with the US death toll or with the US economy’s recession. He blames China, and the US administration has started thinking about punishing the guilty. Rumour has it that Washington might refuse to pay $1 trillion of American debt owned by Beijing.  White House economic adviser Larry Kudlow says it’s just a rumour.  Investors’ full trust in US treasuries is a sacred cow. But is there smoke without fire?

Being a president is cool, but there’s a small problem - people. People demand bread and circus but get whisky and TV, because of COVID-19.  All was good for Trump until February: the economy had been growing, China had put up a white flag and signed an agreement beneficial to the USA, trust in Trump had been increasing and stock indexes had been updating historical maximums. One could think the winner of the 2020 presidential election was determined. Then something went wrong. The invisible hand of the market was the first to give the finger. [S&P 500][1] was falling so fast that seemed to hit rock bottom every time.  Well, apparently rock bottom has a basement.

![LiteForex: White House blames China][2]

What’s more, the USA faced the deepest recession since Great Depression of 1930 and tens of thousands of people were killed by coronavirus. Donald Trump understood the victory was slipping away and had to ask:

- Doctor, please check if it’s a tic or just a pulse.

![LiteForex: White House blames China][3]

Unsurprisingly, the US president started looking for the guilty. He was doing that when all was fine, so why shouldn’t he do the same when a recession is ruling? Jerome Powell can’t be a scapegoat any more. What a pity. The Fed not only dropped the rate almost to zero, but also increased its balance sheet by $2.3 trillion since the beginning of March by buying unlimited amounts of treasuries and MBS. So, no blame lies with the Fed. China is another thing. According to Trump, China was fulfilling the obligations under the trade agreement, but the agreement isn’t as important as coronavirus now.

![LiteForex: White House blames China][4]

We have a reason for praising Trump:  while others are moaning and groaning , he decided to punish those who made the world groan. Besides, the idea of lifting quarantine doesn’t seem to be that bad. There’s a risk of catching another wave of coronavirus, but a horrible end is better than endless horror. And people’s opinion is subject to changes. Even Hemingway once wrote that every day is a new day and it is better to be lucky, but then shot himself all the same.

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Price chart of SPX in real time mode

![Dollar needs a new scapegoat][7]

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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