Trump resumes attack on Fed as markets sink

Trump resumes attack on Fed as markets sink

No Fed chairman has ever been removed by a president. So probably the most obvious and important is that the president gets to decide who sits on the Fed's board.

Mnuchin also convened a call on Monday with the President's Working Group on financial markets, which includes the chairman of the Federal Reserve and top market and business regulators.

At some point the Democrats not wanting to make a deal will cost our Country more money than the Border Wall we are all talking about. The Nasdaq Composite is now 22 percent below its record reached in August and is in a bear market. The benchmark index is now down 19.8 percent from its peak on September 20, close to the 20 percent drop that would officially mean the end of the longest bull market for stocks in modern history - a run of almost 10 years.

After another brutal day on Monday, the Dow is 18.8%, or 5,036 points, off its peak reached on September 20.

Of all its traumas, the closest the S&P 500 has ever been to a 20 percent, close-to-close bear market plunge was from April 29 to October 3 in 2011, when headlines about Europe's sovereign credit crisis pushed the benchmark within points of a formal bear market. All 11 sectors of the S&P were down and are negative for 2018. Oil fell more than 6% on Monday to below $43 a barrel.

Stocks are on pace for their worst December since the Great Depression.

"There's carry-over selling from weakness last week combined with lighter-than-average volume, that allows for opportunistic traders to push share prices lower without much opposition", said Sam Stovall of CFRA Research.

A Treasury spokesman said Mnuchin initiated the individual calls with the six bankers because he felt that having conversations with major market participants, as well as holding the Working Group call, was prudent given considerable market volatility. Financing for about a quarter of federal government programmes expired at midnight on Friday, and the shutdown could continue to Jan 3.

USA financial regulators told the Treasury Department on Monday they were not seeing anything out of the ordinary in financial markets during the recent sell-off, according to a source familiar with the matter. The regulators briefed Mnuchin on their plans for monitoring markets during the government shutdown, and the state of markets, said the person.

Trump, who has repeatedly taken credit for the market when it rises, is blaming the Federal Reserve for the increasingly dark picture.

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Yet Trump continued railing against the Fed in a tweet Monday, tying the central bank to a slew of other economic and political issues roiling his administration.

On Monday, Trump tweeted, "The only problem our economy has is the Fed".

Two weeks ago, Trump told reporters that Powell was "being too aggressive, far too aggressive, actually far too aggressive". "Not even a little bit". A senior Treasury official acknowledged that the reports about Trump's discussion of firing Powell was part of the catalyst for Mnuchin's call but not the sole reason.

"I'm just saying the economy, the basic economy, has reawakened and it's going to stay there - I mean I'm reading some of the weirdest stuff, how a recession is around the corner, nonsense", stated Larry Kudlow, National Economic Council Director.

And Japan's markets were closed.

Trump has ignored the president's traditional respect for the Fed's independence. "History is littered with economies that have been brought down by strong-man, populists muscling their central banks". Mnuchin said the executives added "that they have not experienced any clearance or margin issues and that the markets continue to function properly".

The call followed a series of moves by Mnuchin over the weekend aimed at assuring markets.

While both earnings and the economy are forecast to slow next year, neither is anywhere near a full blown decline.

"It used to be during time of crises, investors asked, 'What will the government do for us.' Now they are questioning, 'What else will they do to us, '" said Stovall.

Read the full Post report here.

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