Federal Reserve Chairman Jerome Powell just handed President Trump and the American people an early Christmas gift, softening his tone on further interest rate hikes in an economic speech Wednesday. The Dow Jones Industrial Average rallied 617 points in response. This message is markedly different from the one Powell gave only a month ago, when all indications were for multiple rate increases in 2019.

For months, the president has been publicly calling for the Fed to stop raising rates, and his instincts are already proving to be correct. The inflation data do not support rate increases. Interest-rate-sensitive sectors such as housing and automobiles have slowed, and GDP growth is slowing as well. The continuation of hawkish Fed policy runs a real risk of hurting the U.S. economy.

However, there is more going on here than meets the eye. Trump is playing chess when others are playing checkers. We need to look beyond the public comments from the president regarding the Fed. Trump needs the Fed to support his pressure on China by not killing the strong economic growth in the U.S, especially with the G-20 meeting this weekend between Trump and the Chinese general secretary. Powell’s newfound dovish outlook just gave Trump added leverage going into that meeting.

But the Fed is only one economic lever. In January, Trump could enact additional tariffs against China, and he wants an insurance policy on his trade battle. He also wants lower oil prices. He has been “jawboning” – his own word for lower prices — now for months and has publicly pressured the Saudis not to cut production. He exempted other countries from the sanctions against Iran in an effort to avoid a spike in prices.

Trump’s push to lower prices is one example of the unorthodox steps he has been willing to take to gain the upper hand in trade negotiations. I have spoken to several U.S. oil executives regarding the recent drop in oil prices. They profess to have no idea why Trump has been pushing for cheaper oil prices, and quite frankly, they are irate. One of his top supporters has not been able to get a return call from the administration. If anyone thinks Trump is in the pocket of Big Oil, his current tactics do not support that theory.

Meanwhile, the president’s adversaries in the media – who would normally cheer lower oil prices as a victory for the middle class – have taken to sniping about his effort. As a sign of frustration with this hard-to-peg chief executive, The Washington Post began its analysis of this fascinating story this way: “Lower oil prices are good for America, but they aren’t always good for the Trump-supporting parts of America.” The New York Times and CNN took similar tacks.

In truth, Trump’s moves have been working. Oil has dropped from $75 to just over $50 per barrel in less than two months. Lower interest rates and $50 oil prices give our economy all we need to offset any tariffs should we have a protracted trade war with China. Contrary to CNN’s assertion that the administration is pursuing a “Saudi first” policy, President Trump is putting America first once again – while showing that he’s one step ahead of his critics, and even some of his friends.

Hal Lambert is the founder of Point Bridge Capital, which launched the first-ever Republican stock index: MAGA. He is a frequent guest on Fox News, CNBC, and Fox Business. Learn more at Point Bridge Capital and follow Hal on Twitter at @MAGAINDEX

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