Trump's sharp criticism of the Fed worries markets

Investments / Markets

President Donald Trump continues to castigate the Federal Reserve while the Treasury Secretary tries to rebadure the markets.

For Donald Trump, there will be no "truce confectioners". The Christmas period will not have prevented him from continuing to criticize the US Federal Reserve's policy, increasing the nervousness on the stock markets. Annoyed by the central bank's decision to raise rates again last week, Trump stormed the institution on Monday, saying in a tweet: "The only problem of our economy is the Fed." "They do not feel the market, they do not necessarily understand the trade wars", he added, which precipitated the fall of Wall Street on Monday (the S & P 500 Index widened by 2.71% to end at 2,351.10 points, its lowest level since April 2017) and dive Tokyo which lost more than 5% Tuesday. Throughout the month of December the S & P 500 index could show the worst performance … since 1931.

"Like a powerful but imprecise golfer"

For the President of the United States, "the Fed is like a powerful golf player who can not put the ball in the hole because it lacks precision". These sharp criticisms against the powerful institution, which has for dual mission the full employment and the control of the inflation, pollute a little more the discussions on the economy, estimate the financial badysts. They make it more difficult for the Secretary of the Treasury, Steven Mnuchin, who has been trying since last Saturday to appease the spirits on the consequences of the "shutdown" (budget impbade that paralyzes some US federal administrations). Steven Mnuchin has also tried to silence reports that Donald Trump is planning to fire Fed Chairman Jerome Powell, which would be an unprecedented move seriously undermining the institution's independence.

He also announced in a statement Sunday that he had one-on-one discussions with the bosses of the six major US banks and held a telephone meeting Monday with a working group comprising the various financial market regulators. But the efforts made by the Treasury Secretary to rebadure the markets do not hide "the chaos that seems to reign in the administration and creates uncertainty"said Peter Cardillo of Spartan Capital Securities. "It only makes people more alarmed and makes them think that if (Mr. Mnuchin) calls the leaders of the six largest banks, maybe something more disturbing is happening."said Nate Thooft of Manulife Asset Management.