Daily Trends Now
Daily Trends Now

Trump again hits Fed on rate rises

Trump again hits Fed on rate rises

Last week, Trump was reportedly considering firing Fed Chairman Jerome Powell after the central bank hiked rates for the fourth time this year.

Here are some of the key factors that have brought the S&P 500 to the brink of a "bear market", a drop of 20 percent from its peak.

US President Donald Trump is weighing dismissing Treasury Secretary Steven Mnuchin after the Dow Jones Industrial Average fall, Bloomberg News has cited a source familiar with the situation. Other concerns roil the market The partial shutdown of the United States government is also worrying investors.

Troise said the Treasury call begs the question of whether Mnuchin has "no idea what he's doing" or if "there actually is a liquidity crisis".

Some analysts were also unnerved the reports over a possible Powell firing.

"The market is concerned about what is happening in D.C.", he said.

Now, the day after Mnuchin sent out the "all is well, nothing to see here" statement, CNBC reported that despite Mnuchin's headline being "the banks all confirmed ample liquidity is available for lending to consumer and business markets", the call was actually not about liquidity.

Accustomed to boasting about the strong stock market performance this year, the President has in recent days complained to aides that Powell's rate hikes will "turn me into Hoover", the president who oversaw the start of the Great Depression.

Investors have also closely followed rumours Trump had privately discussed whether he could fire Powell, after appointing him last February.

Other U.S. indexes fell too.

While Trump regularly took credit for the stock market's rise, he has consistently pointed elsewhere to explain its decline.

Coming on top of the impasse over the funding of the USA government via the Trump-induced shutdown, and the worries about the longevity of the Fed chairman, Jay Powell, Mnuchin's comments and discussion with major market regulators on Monday (who told him nothing out of the ordinary was happening in the markets) sent exactly the wrong message and investors sold off in heavy pre-Christmas trading.

The United States treasury secretary has on Monday, called the chief executive officers (CEOs) of six biggest banks of the U.S. and organized plans to summon a "plunge protection team", amid the USA government partial shutdown.

Mnuchin also tweeted that he had checked with the heads of the six largest USA banks to ensure they had enough liquidity to operate in a stock market that has tumbled sharply since October.

Bank stocks were among then biggest decliners Monday.

Monday morning's drop in US financial markets began after Trump tweeted about the Fed.

"There's simply no buyers out there", said Manulife AM senior portfolio manager Nate Thooft. Holding what seemed like an emergency discussion with financial regulators on a day when markets closed early for the Christmas holiday may have only added to investor anxiety.

Speaking of 2008, the United States Treasury Secretary, Steve Mnuchin, released an absolutely freakish statement about banking liquidity on Christmas Eve (a bank is liquid when it can easily convert assets to cash) that should send chills up the spines of those familiar with the Great Recession.


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