US markets: Mnuchin to convene crisis team amid White House chaos | Business | The Guardian

US markets: Mnuchin to convene crisis team amid White House chaos | Business | The Guardian

 to bank CEOs and calls together working group created after 1987 market crash

Treasury secretary talks to bank CEOs and calls together working group created after 1987 market crash

The US Treasury secretary has sought to calm market jitters about White House dysfunction and the government’s partial shutdown, calling the heads of the nation’s six largest banks and gathering the “plunge protection team” that formed after the crash of 1987.

Steven Mnuchin called the bank CEOs on Sunday in an apparent attempt to reassure financial markets. In the unusual move, Mnuchin disclosed that he had spoken to the heads of Bank of America, Citi, Goldman Sachs, JP Morgan Chase, Morgan Stanley and Wells Fargo.

He said the CEOs all assured him they had ample money to finance their normal operations, even though there haven’t been any serious liquidity concerns rattling the market.

On Monday, Mnuchin will convene the president’s working group on financial markets, a group that includes Jerome Powell, the chairman of the Federal Reserve, and the head of the Securities and Exchange Commission. The group, created following the stock market crash of October 1987, is known more commonly as the “plunge protection team” and met in 2009 in the latter stages of the financial crisis.

With investors worried about a litany of factors, including a partial federal government shutdown, the US-China trade dispute, interest rate rises and Donald Trump’s dispute with the Fed’s chairman, Jerome Powell, US stocks have plunged in December. The S&P 500 has suffered its largest monthly loss so far since the financial crisis a decade ago and is on pace for the largest loss in any December since the Great Depression.

Asian stocks were subdued on Monday as investors fretted about US political instability at a time when the global economy was showing signs of faltering. Moves were limited by a holiday in Japan while many bourses are set to close early for Christmas. MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.5% to its lowest in seven weeks. Yet Chinese blue chips managed to edge up 0.2%, while E-Mini futures for the S&P 500 recouped early losses to rise 0.4%.

Oliver Pursche, a board member at Bruderman Asset Management, said: “More than anything else right now Washington and politics are absolutely driving investor sentiment and market direction and that can turn on dime.”

The US economy has been growing steadily since 2009, something most experts believe will continue, but there are signs things are slowing down in Europe and China.

Over the weekend, a flurry of reports claimed Trump had discussed the possibility of firing Powell. Such an unprecedented move would trigger further instability in the markets. US officials scrambled to deny Trump had suggested ousting Powell, who was appointed by the president barely a year ago.

Mnuchin, tweeted that he had spoken to the president, who insisted he “never suggested firing” Powell, and did not believe he had the right to do this.

However, Trump also declared – via Mnuchin – that he “totally disagrees” with the Fed’s “absolutely terrible” policy of raising interest rates and unwinding its bond-buying stimulus programme, piling further pressure on the US’s independent central bank.

Most economists and investors assert that any attempt by Trump to fire Powell would have significant repercussions in financial markets, which have long operated on the principle that the US central bank’s independence is integral to its mission and to market stability.

Rick Meckler, partner at Cherry Lane Investments, said Mnuchin’s acknowledgement that the White House does not have the ability to remove Powell was more reassuring for investors than trying to say it did not want to remove the Fed chair. “The administration hasn’t been all that stable when it comes to changing their mind,” he said. “Politically, these are very strange times.”

AP and Reuters contributed to this report




our goal

In these critical times …

… The Guardian’s US editor John Mulholland urges you to show your support for independent journalism with a year-end gift to The Guardian. We are asking our US readers to help us raise $1 million dollars by the new year to report on the most important stories in 2019.

A note from John:

In normal times we might not be making this appeal. But these are not normal times. Many of the values and beliefs we hold dear at The Guardian are under threat both here in the US and around the world. Facts, science, humanity, diversity and equality are being challenged daily. As is truth. Which is why we need your help.

Powerful public figures choose lies over truths, prefer supposition over science; and select hate over humanity. The US administration is foremost among them; whether in denying climate science or hating on immigrants; giving succor to racists or targeting journalists and the media. Many of these untruths and attacks find fertile ground on social media where tech platforms seem unable to cauterise lies. As a result, fake is in danger of overriding fact.

Almost 100 years ago, in 1921, the editor of The Guardian argued that the principal role of a newspaper was accurate reporting, insisting that “facts are sacred.” We still hold that to be true. The need for a robust, independent press has never been greater, but the challenge is more intense than ever as digital disruption threatens traditional media’s business model. We pride ourselves on not having a paywall because we believe truth should not come at a price for anyone. Our journalism remains open and accessible to everyone and with your help we can keep it that way.

We want to say a huge thank you to everyone who has supported The Guardian so far. We hope to pass our goal by early January 2019. Every contribution, big or small, will help us reach it. Please make a year-end gift today to show your ongoing support for our independent journalism. Thank you.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.