Investment guru and market strategist Byron Wien predicts that the thriving economy will avoid recession and stocks will continue to soar to record highs without the Federal Reserve doing anything.
“If you look at the market over the past week, stocks don’t need any help. They are roaring ahead, without the Fed doing anything,” Wien told CNBC.
The economy will continue on cruise-control because “the consumer is spending; unemployment is low; wages are rising,” the vice chairman of private wealth solutions at Blackstone said.
Wien conceded that some of the recent stock gains could probably be attributed to expectations of a Fed rate cut at its next policy meeting in September, CNBC.com explained.
“But I think the stock market is fine. The situation right now is very favorable” for the stock market and for economy, Wien said. However he did admit a sudden change can’t be ruled out.
“It may change. It could change abruptly,” but stressed that “right we’re in pretty good shape.”
Wien's perspective is the polar opposite of President Donald Trump's stance on the central bank.
For his part, Trump on Wednesday continued to pressure the Federal Reserve and the central bank’s chairman to lower interest rates, saying the central bank hiked rates "too fast" and has let the nation down as a result.
“The Federal Reserve has let us down,” Trump told reporters outside the White House, adding that the nation’s central bank should “get smart and reduce interest rates like many other places around the world that we have to compete with.”
The comments by Trump, who has repeatedly criticized the Fed’s policies, come as he seeks to downplay worries that a trade war between the United States and China could weigh on the U.S. economy and trigger a possible recession before the November 2020 presidential election.
Trump said the U.S. economy “is the strongest in the world, by far nothing even close and a lot of good things are happening. We had some very good retail numbers this morning.”
Wall Street’s main indexes rose about 1% on Wednesday, as upbeat earnings from retailers Lowe’s and Target reinforced confidence in consumer demand, while investors awaited the release of the Fed minutes for further clues on the path of interest rate cuts.
Big-box retailer Target Corp (TGT.N) surged 19.5%, set for its biggest one-day percentage jump, after it raised its annual earnings forecast. Home improvement chain Lowe’s Cos Inc (LOW.N) climbed 9.8% as it joined bigger rival Home Depot Inc (HD.N) in beating profit estimates, Reuters explained.
The reports come on the heels of solid earnings from Walmart Inc (WMT.N) and strong retail sales data last week that allayed fears of a U.S. recession.
Trump denied he is demanding that Fed Chief Jerome Powell cut rates once again.
“I don't demand it, but if he used his head, he would lower them,” Trump said.
Trump said “in Germany, they have a zero interest rate, and we do compete with Germany,” although Trump said the U.S. is “much stronger” than Germany.
“If you look at what's happening around the world, Jay Powell and the Federal Reserve have totally missed the call. I was right. And just about everybody admits that I was right. He did quantitative tightening. He shouldn't have done that. He raised interest rates too fast, too furious and we have a normalized rate.”
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