The attack of Donald Trump on Mario Draghi leaves a deep impression

Stand: 08h09 | Reading time: 4 minutes

reOnald Trump has already won many titles. The most powerful man in the world is not content to be the president of the largest economic nation on the planet and the supreme commander of US forces. Instead, the former real estate mogul has long been a prominent banker and trade warrior.

Since Tuesday, he has also pbaded under ECB observers. In other words, the species specialized in the critical follow-up of the European Central Bank (ECB) and in the examination of all the declarations of the executive floors of the ECB's skyscraper on its impact on the financial markets.

On four occasions, Trump spoke on his favorite Twitter media to express his dissatisfaction at the recent statements by ECB President Mario Draghi. At a conference of the central bank in Sintra, Portugal, he made it clear that interest rates should be reduced in the euro area, lowering the dollar to the euro and boosting European stock markets.

"Mario Draghi has just announced that there may be more stimulation, which would cause the euro to fall immediately against the dollar, which is why it is much easier for Europe to compete with the United States." said Trump. "They have gone away with this scam for years, as have China and others."

Just an hour later, he added, "European markets have increased as a result of Draghi's remarks, which are unfair to the United States." And when that was clearly not enough, he sent a third and a fourth message. For example, the US president complained that the ECB was considering interest rate cuts as a means of choice to boost the European economy. And finally declared in an exasperated tone: "The German stock index has risen after the comments of Mario Draghi, very unfair to the United States!"

A clue to Trump's worldview

The comments on the short message service are very instructive in many ways. On the one hand, again, the worldview to which the President of the United States is attached is becoming clearer. After that, the world is a zero-sum game in which one player can win only to the detriment of another. So, adding European equities is, according to Trump's worldview, automatically a disadvantage for US stocks.

At the same time, markets can go up in unison. And a comparison of stock market performance on both sides of the Atlantic shows that there is nothing wrong with the US view. While the German Dax stock index has gained 19% since the inauguration of Trump, the Dow Jones US barometer has risen by 57%, which is close to the record high.

On the other hand, the tirade on Twitter also reveals a lot about Trump's mentality regarding the commercial conflict that he initiated. In these disputes, the US president obviously considers that not only tariffs, but also currencies and interest rates, are instruments of power.

A reduction in interest rates in Europe can only be perceived as an affront to the United States. What Trump mistakenly believes is that Europe will only have loose financial conditions, as the global trade dispute only worsens the economic outlook.

"Anything" 2.0

However, not only was Trump surprised by Draghi's comments. Several euro-keepers would be irritated by Reuters news about the large-scale ads published by Draghi. These had not been discussed. However, given the difficult political situation, there is no reason to expect strong opposition to Draghi's plans at the next ECB meeting in July.

"All that makes you think of some sort of speech" No matter what "2.0," says Peter Schaffrik, an economist at RBC Capital, recalling Draghi's strong commitment to the euro debt crisis in Europe. The President of the ECB then promised that the ECB will do all that will be needed to save the euro ("anything"). And, as now, this large-scale commitment had not been agreed in advance with the other advisers.

With his anger at Draghi's new promise, Trump proves once again that he has a fair idea of ​​the important issues. Even before many professional observers at the ECB, the US president realized very soon after Draghi's speech that this time it was not just an ordinary conference speech, but commitments with which Draghi leaned once more out the window. at.

This certainly has an impact on the euro. Measured by fundamentals, the common currency against the dollar is heavily undervalued. According to the model of purchasing power of the OECD, the common currency should cost one-fifth more, that is to say more than 1.30 dollar. Even the Big Mac index of the British economic magazine "Economist" sees the fair value of the euro. The badyzes also support a comparison of the power of buying currencies.