Stock Market Continues to Plunge Despite Steve Mnuchin’s Reassurances
The Dow Jones Industrial Index fell more than 400 points on Monday morning, continuing a downward trend, despite efforts by Treasury Secretary Steve Mnuchin to calm investors’ nerves. In an unusual move, Mnuchin made a series of phone calls on Sunday to six banks to make sure they had enough liquidity to continue to function.
“We continue to see strong economic growth in the U.S. economy with robust activity from consumers and business,” Mnuchin said in his statement, adding, “With the government shutdown, Treasury will have critical employees to maintain its core operations at Fiscal Services, IRS, and other critical functions within the department.”
But experts believe Mnuchin’s strategy has backfired. “This is the type of announcement that raises the question of whether Treasury sees problems that the rest of the market is missing,” Cowen & Co. analyst Jaret Seiberg wrote in a note to clients obtained by CNN. “Not only did he consult with the biggest banks, but he is talking to all of the financial regulators on Christmas Eve. We do not see this type of announcement as constructive.”
President Donald Trump, true to form, is not blaming himself and the government shutdown for the stock market’s plummet, despite never failing to take enormous amounts of credit when the market is doing well. Instead, he’s blaming the Federal Reserve and reportedly called for its chairman to be fired earlier this week, although incoming White House Chief of Staff Mick Mulvaney said Sunday that Trump now realizes he cannot fire him.
The only problem our economy has is the Fed. 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!
— Donald J. Trump (@realDonaldTrump) December 24, 2018
But Trump’s motivation for targeting Fed Chairman Jerome Powell is likely more personal than he is letting on. Trump took out $340 million in variable rate loans between 2012 and 2015, and by raising interest rates, Powell may have cost the president as much as $5.1 million per year in debt repayments, according to analysis by Bloomberg News.