Let’s play a game called “Spotting the Intruder”, the FED independence vs Trump manipulation techniques.

Starting from the beginning, we had the Fed cutting rates in August 2024 for the first time while the market was printing a small local bottom and with cheaper money available for the first time, liquidity started flowing into the market pushing it further up.
Then in December 2024 the Fed decided to pause the rate cuts keeping them neutral, and shortly after market formed what you could call a distribution phase or a local top.
Seeing that the Fed didn’t want to continue cutting rates, Trump manufactured the tariffs event hoping the Fed would cut rates out of fear of inflation risk, which could eventually lead to a recession. However the Fed independence did not fold, and the market recovered in a V shape especially after multiple FOMC conferences repeating “We need more data to see what inflation wants to do” even though we already knew inflation wasn’t likely to persist.
And guess what happened after the market recovered from the pause?, the Fed started cutting rates again favoring the market and pushing it higher.
Recently we got another pause in interest rates keeping them neutral for the past two meetings, and the market is now doing exactly the same thing as before, marking another local top.
And now the game starts.
Trump has started the war right after a few rate pauses trying to manipulate the markets again, thinking it will force the Fed to cut rates by bringing OIL problems.
Now there are a few ways to catch the intruder in this story:
1. Oil scenario
-If oil spikes above $100 and stays there for a few weeks then we risk inflation, and that inflation will bring a recession, which would force the Fed to aggressively cut rates.
-Oil stays under 100 with no risk of inflation and the Fed spotting this will keep rates neutral rather than folding against Trump manipulation techniques.
2. Trump folds
-Trump backs down because he can’t afford a recession before the FIFA games and the midterms and the Fed continues keeping interest rates neutral, as the market absorbs everything above the level from the initial pause in December.
-Shortly after the new Fed chairman comes into office will begins cutting rates “naturally” exactly as Jerome did pushing the market further — 7,400 to 8,200 this year with no recession and no major inflation risk.
So the question is:
Who is the intruder?
The Fed, for refusing to fold again and cut rates early when there’s no real risk of inflation and recession?
Or Trump for eventually folding because he can’t afford a recession?