Trump blasts Fed again as 'only problem' in U.S. economy
President Donald Trump blasted the Federal Reserve on Monday, describing it as the "only problem" for the U.S. economy, as top officials discussed a rout in stock markets caused in part by the president`s feud with the central bank.
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.
U.S. stocks have dropped sharply in recent weeks on concerns over weaker economic growth, with the S&P 500 index on pace for its biggest percentage decline in December since the Great Depression.
In a tweet that did nothing to ease market concerns about the Fed`s cherished independence, Trump laid the blame for economic headwinds firmly at the feet of the central bank.
"The only problem our economy has is the Fed. They don`t have a feel for the market," Trump said on Twitter. "The Fed is like a powerful golfer who can`t score because he has no touch - he can`t putt!"
Trump has frequently criticized the Fed`s raising of interest rates this year.
The Trump administration arranged a phone call on Monday with top U.S. regulators to discuss financial markets, the Treasury Department said. Treasury Secretary Steven Mnuchin was to host the call with the president`s Working Group on Financial Markets, known colloquially as the "Plunge Protection team."
Bloomberg News said regulators told Mnuchin on the call that nothing is out of the ordinary in the markets. Mnuchin also made calls to top U.S. bankers on Sunday and got reassurances that banks were still able to make loans, the Treasury said.
If Mnuchin’s efforts to poll the top banks on their financial health and convene a call of a group of officials who typically meet to address a crisis was meant to soothe markets, that was not evident early on Monday. Wall Street initially traded sharply lower in a shortened session ahead of Tuesday`s Christmas holiday.
All the 11 major S&P 500 sectors were lower, and all the 30 components of the Dow Industrials were in the red.
However, trading volumes were muted, with markets closing at 1 p.m. ET (1800 GMT) ahead of the Christmas holiday and by midmorning the major averages were well off their lows. FIRING POWELL? Wall Street is closely following reports that Trump has privately discussed the possibility of firing Powell. Mnuchin said on Saturday that Trump told him he had "never suggested firing" Powell.
Markets are also concerned about a partial government shutdown that began on Saturday following an impasse in Congress over Trump`s demand for more funds for a wall on the border with Mexico. Defense Secretary Jim Mattis` resignation on Thursday after Trump`s surprise decision to pull U.S. troops out of Syria also unsettled investors.
A statement by Mnuchin on Sunday about his conversation with the banks and plans to convene the so-called Plunge Protection team “was not especially comforting, however, given that investors had not generally been questioning market functioning in recent days, despite large declines,” Nick Bennenbroek, currency strategist at Wells Fargo in New York, wrote in a note to clients.
The Working Group dates to March 1988 when Washington was still trying to figure out what was behind the "Black Monday" stock market crash of October 1987.
The team was also convened during the 2007-09 financial crisis.
Powell is a member of the Working Group, as are the heads of the Securities and Exchange Commission and the Commodity Futures Trading Commission. Mnuchin has also invited representatives from the Comptroller of the Currency and the Federal Deposit Insurance Corporation to participate in the call.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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