Via WaPo: The Dow Jones industrial average followed its worst week in a decade with a 650- point drop Monday, and President Trump once again took to Twitter to interject himself into financial markets.
As blue chips sank even deeper into the red after weeks of chaos, Trump tried to assign sole blame for the sell-off to the Federal Reserve, likening the central bank to a golfer who “can’t putt.”
“The only problem our economy has is the Fed,” the president said in a tweet. “They don’t have a feel for the Market, they don’t understand necessary Trade Wars or Strong Dollars or even Democrat Shutdowns over Borders. The Fed is like a powerful golfer who can’t score because he has no touch — he can’t putt!
It is more likely that Trump doesn’t understand the effects of trade wars, unnecessary government shutdowns, rebukes from Mattis, and general chaos at the White House (to name a few factors).
Further, it is worth noting that we are just about exactly a year into the new tax law, which is the signature piece of legislation for this administration. It has not produced the promised results.
Note: the DJIA was at 24, 824,01 at the start of 2018 and closed today at 21, 792.20. A rally to make up that difference, especially given current conditions (government shutdown, warring with the Fed) is unlikely, shall we say, to end the year.
The three major indexes are down for the fourth consecutive session, and the tech-heavy Nasdaq Composite that was key to the current bull market resides in bear territory. A bear market is 20 percent off recent highs. The Nasdaq was down 1.9 percent in late trading.
The S&P was in a bear market, down 20 percent, and the S&P 500 closed at 2,351. All 11 sectors of the S&P were down.
Trump inherited a healthy economy with trends lines all in the right direction. Some of those trends remain in place, but his chaotic governing style and his insistence on damaging the global economic order via confrontations with allies and starting trade wars is starting to take it toll.
He does not know what he is doing, and he will, like here, lash out to blame others should things get worse (which is likely).
The Secretary of the Treasury, Steve Mnuchin, is helping out as follows:
Mnuchin shook financial analysts, bankers and economists on Sunday by issuing an unusual statement declaring that the nation’s six largest banks had ample credit to extend to American businesses and households.
Mnuchin made the statement on Twitter after calling the leaders of the six banks, seeking to address an issue that had attracted little concern ahead of the treasury secretary’s tweet.
“He raised the specter of concern in one of the most solid areas of the U.S. financial system, the solvency of the banks,” said Washington, D.C., investor Michael Farr. “The banks are as solvent as they have ever been. He went to the heart of the economy’s strength and created doubt.”
Mnuchin followed that up Monday by scheduling a conference call of the “Plunge Protection Team,” which was a committee created following the 1987 stock market crash to help stem steep drops in the market.
By the way, I understand that the market doesn’t like the interest rate moves by the Fed, but starting a war with the Fed, and challenging its independence, is not the way to calm things down.
