Published: Wed, December 26, 2018
Markets | By Erika Turner

Trump Voices Confidence in Mnuchin, Fed Amid Tailspin in Markets

Trump Voices Confidence in Mnuchin, Fed Amid Tailspin in Markets

US markets have had a awful month, an extra bad past week, and a nasty yesterday when the Dow Jones Industrial Average fell more than 650 points.

In the cash market, the benchmark S&P 500 Index settled at 2351.10, down 65.52 or -2.47%. Traders have also fretted over the U.S. 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.

Key drivers included upset at the Federal Reserve's latest interest rate hike, the shock resignation of Defense Secretary Jim Mattis, the ongoing US-China trade war and a US government shutdown triggered Friday at midnight following unsuccessful budget negotiations between President Donald Trump and congressional Democrats.

Since hitting its peak on September 20, the S&P has declined 19.8 percent. By June, the president was tweeting: "Stock Market up nearly 40% since the Election".

Speaking to reporters in the Oval Office after a Christmas video conference with USA troops deployed overseas, Trump also said US companies were "the greatest in the world" and presented a "tremendous" buying opportunity.

"The only problem our economy has is the Fed", the president wrote, suggesting the Fed's role is to prop up the markets to support his policy agenda.

Trump's Monday morning tweet heightened fears about the economy being destabilized by a president who wants control over the Fed.

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Le also called on Washington to "immediately correct its wrong actions", saying: "China will respond further depending on USA actions".

On Sunday, the Treasury Department tweeted that Mnuchin "conducted a series of calls today with the CEOs of the nation's six largest banks" - Bank of America, Citigroup, Goldman Sachs, JPMorgan, Morgan Stanley and Wells Fargo.

Stocks fell again at the open on Monday amid concern about slowing economic growth, the government shutdown and reports that Trump had discussed firing Federal Reserve Chairman Jerome Powell.

"They're raising interest rates too fast", the president said following a teleconference with US troops.

The President has gone after Mr Powell several times now, saying he's "not thrilled" with his own appointee and the Fed should do more to help him boost the economy.

Stephen Innes, head of APAC trading at OANDA said that investors "have no confidence in the administration". It was the Nasdaq Composite's worst week since 2008 as well, as it dipped into bear-market territory.

The Trump-Powell conflict, a steady outflow of USA cabinet members and a partial shutdown of the federal American government have also proved unnerving.

Mick Mulvaney, his new acting White House chief of staff, painted a similar picture during an appearance on Fox News on Sunday. "I think the increasing of interest rates and the shrinking of the Fed portfolio is an absolute awful thing to do at this time especially in light of my major trade negotiations which are ongoing, but I never suggested firing Chairman Jay Powell, nor do I believe I have the right to do so, "' Powell tweeted. "There's a chance this could go into the next Congress". That was its worst Christmas Eve performance since 1918. This is the 63rd straight year that NORAD has publicly tracked Santa's sleigh on its global rounds.

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