What Trump truly hates is not Musk, but Powell. In his worldview, he has already made overtures in January and February 2025, softening his stance, but Powell just won't budge and refuses to lower interest rates, which makes Trump very uncomfortable. Everything he wants to do must be based on the premise of low interest rates.

First is the stock market. Trump has repeatedly stated that his presidency would bring a bull market. But the reality is that the stock market has become more volatile, especially after the tariffs were implemented, leading to severe market fluctuations and shaking confidence. This uncertainty is directly reflected in the polls, which is a drag on both him and the Republican Party's electoral prospects. This is a negative factor for the midterm elections in 2026 and the presidential election in 2028. To stabilize the stock market, the first step is to lower interest rates to alleviate the constraints of high rates on liquidity.

Secondly, in terms of finance, the grandiose plans Trump initiated not only raised the debt ceiling but also increased fiscal spending, promoting the return of manufacturing, infrastructure projects, and industry subsidies. However, issuing debt while bearing a 4.5% interest rate is unsustainable for the Treasury, which can barely handle the interest payments. Lowering interest rates is a prerequisite for making this logic work; without rate cuts, not only will the plans fail to materialize, but the debt will also continue to grow.

Next, regarding exchange rates, Trump is engaged in a global tariff war, with Japan, South Korea, China, and Mexico taking turns in the fray. Exporters are already under significant pressure, and if the dollar remains strong, it would be a double blow to domestic manufacturing. Therefore, for Trump, the depreciation of the dollar is very necessary, but it cannot be due to a recession; it can only be alleviated through interest rate cuts. Additionally, a decrease in the DXY can release more liquidity, stimulate risk markets, and increase investors' risk appetite.

Then politically, Trump needs a compliant Federal Reserve, not an independent one; he needs Powell to be obedient. Only with the Fed's cooperation can Trump better leverage tariffs and other political agendas. As for inflation, I believe Trump will realize there might be issues, but it is certainly not his primary concern right now. Just six months into his term, there have been issues arising almost every month because of him.

Finally, and most importantly, we all know that historically in the U.S., when interest rates are high, there is a 70% to 80% probability of an economic recession. How could Trump not know this? Quickly lowering interest rates to eliminate the probability of an economic recession caused by high rates is something Trump urgently needs to accomplish. If an economic recession does occur during Trump's term, his approval ratings will drop even lower, providing a target for the Democrats to attack.

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