Trump Urges Exit From Market Boosted by ‘Artificially Low’ Rates

  • He tells individual investors to get out of stocks like he did
  • Says his tax, inversions plan will boost GDP more than 4%

Republican presidential nominee Donald Trump speaks on Aug. 1, 2016, in Mechanicsburg, Pennsylvania.

Photographer: DOMINICK REUTER/AFP/Getty Images

Donald Trump on Tuesday said interest rates set by the Federal Reserve are inflating the stock market and recommended 401(k)-holders to get out of equities, just like he did.

“I did invest and I got out, and it was actually very good timing,” the Republican presidential nominee said in a phone interview with Fox Business. “But I’ve never been a big investor in the stock market.”

“Interest rates are artificially low,” Trump said. “The only reason the stock market is where it is is because you get free money.”

Trump said the market would “go great” if he were elected.

Growing Tension

His comments come amid growing tension between him and Republicans concerned that his inflammatory rhetoric -- most recently about the parents of a slain American soldier -- are hurting the party’s chances against Democrats led by Hillary Clinton in the November elections.

The Fed has kept the benchmark federal funds rate at 0.25 percent to 0.5 percent since a quarter-point increase in December that ended seven years of near-zero rates. Central bankers are taking stock of the economy’s progress in the wake of the U.K.’s vote in June to leave the European Union, as well as the large swing from May’s soft labor report to June’s rebound.

While Chair Janet Yellen has repeatedly said the Fed intends to raise interest rates gradually, market volatility and the unexpected dip in job gains have delayed such plans.

Republican and Democratic administrations alike typically don’t comment on the Fed’s monetary policy, out of respect for the central bank’s independence. 

Stocks tracked by the S&P 500 Index have tripled since global markets bottomed following the financial crisis. The second-longest bull market in U.S. history has pushed the benchmark index’s price-earnings ratio above 20 for the first time in almost seven years.

Trump didn’t specify the timing of his sales. A comparison of disclosure forms Trump filed in 2015 and 2016 -- conducted as part of the Bloomberg Billionaires Index estimate of his net worth -- shows he sold corporate bonds and shares of U.S. firms including Apple Inc. and Bristol-Myers Squibb Co.

Unemployment, Taxes

Trump reiterated his view that the unemployment rate is even higher than officially reported, saying that it’s closer to 20 percent than to 5 percent.

He said his plans to boost infrastructure spending and cut taxes to 15 percent or less will boost hiring and lift economic growth to more than 4 percent. He also noted that U.S. companies have stockpiled more than $2 trillion offshore to avoid paying U.S. income taxes that are due when the money returns to the U.S.

Trump proposes a 10 percent tax rate on such foreign earnings -- down from the top corporate tax rate of 35 percent under current law. That special rate would incentivize companies to return that money to the U.S. and keep them from transferring their tax addresses offshore through corporate inversions, he said.

“A lot of companies are leaving in order to get their money, they’re leaving because taxes are too high,” Trump said. “Just bringing that money in will be tremendous, tremendous.”

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