Financial Markets

Mulvaney Picks Deputy to Run Consumer Bureau

“Mick Mulvaney, the White House budget director and acting head of the Consumer Financial Protection Bureau, has picked a deputy at the budget office, Kathy Kraninger, to succeed him at the consumer watchdog agency,” the New York Times reports.

“The choice of Ms. Kraninger, who oversees the preparation of the budgets for cabinet departments, generated immediate opposition, with critics pointing to her inexperience in consumer and financial services issues and her association with Mr. Mulvaney. She was selected over the objection of some White House officials, who argued that her nomination could founder.”

Trump Sent Market Early Signal on Jobs Report

President Trump “broke with decades of protocol and commented publicly about the highly anticipated jobs report data 69 minutes before they were released by the Bureau of Labor Statistics,” the Washington Post reports.

Treasury yields moved sharply higher within seconds of a Twitter post from President Trump that said he was “looking forward to seeing the employment numbers at 8:30 this morning.”

“The jobs data come out once a month, and often can lead to massive buying or selling trends on Wall Street depending on how the information is received. It is extremely closely held and kept under tight control until it is released at 8:30 a.m. on the first Friday of each month. The Chairman of the Council of Economic Advisers is traditionally given the report the day before it is released, and it can often be shared with the president after that time. But the president – and other administration officials – never tip their hand about what the numbers reveal.”

Mulvaney Loves Running Agency He Detests

Bloomberg: “Along with reshuffling its initials, he’s reviewing its enforcement, supervisory, and rule-making functions. He’s frozen data collection in the name of security, dropped enforcement cases, and directed staff to slash next year’s budget. He also wants to curb the agency’s independence by giving Congress—rather than the Federal Reserve—control of its spending, and replace the powerful director position he fills with a five-person commission.”

Congress Passes Rollback of Banking Rules

“The House voted to exempt small and regional banks from some of the most stringent rules put in place after the financial crisis, while also loosening some of the rules aimed at keeping the biggest banks from failing,” the Washington Post reports.

“The measure does not repeal the 2010 Dodd-Frank law, as some in the GOP had hoped, but it does represent the most significant scaling back of the rules to date.”

New York Times: “While the legislation offers little for the very largest banks, the Trump administration has already been working through the regulatory system to make things easier for them.”

Trump Rattles the Stock Market

Bloomberg: “The turmoil has damaged Trump’s ranking when it comes to equity returns. The Dow Jones Industrial Average’s 32 percent rally during his first year gave him the third-best start by a president going back more than 100 years. But tack on the turmoil since January and he drops to the middle of the pack, behind former Presidents Barack Obama, Bill Clinton and George H.W. Bush.”

Mulvaney Hikes Pay of Top Aides at Consumer Bureau

“Mick Mulvaney, President Donald Trump’s appointee to oversee the Consumer Financial Protection Bureau, has given big pay raises to the deputies he has hired to help him run the bureau,” the AP reports.

“Mulvaney has hired at least eight political appointees since he took over the bureau in late November. Four of them are making $259,500 a year and one is making $239,595. That is more than the salaries of members of Congress, cabinet secretaries, and nearly all federal judges apart from those who sit on the Supreme Court.”

The Trump Slump

New York Times: “Even after a fast start to 2018, stock markets finished the first quarter down for the year — the first quarterly decline since 2015. It suggested that a period of calm and steadily rising markets had given way to a turbulent new era with a bearish bent.”

Financial Times: “Traders said anxieties were being exacerbated by Donald Trump’s tweets and trade policies.”

The Dow is up 19% since Trump took office. By comparison, it was up 32% for Barack Obama during the same time period.

Democrats Will Help GOP Roll Back Financial Regulations

“The Senate is preparing to scale back the sweeping banking regulations passed after the 2008 financial crisis, with more than a dozen Democrats ready to give Republicans the votes they need to weaken one of President Obama’s largest legislative achievements,” the Washington Post reports.

“Eight years after nearly every Senate Democrat backed a sweeping set of new rules for financial firms large and small, the party is now split, with moderates, several of them facing tough midterm election contests, working with the opposing party.”

SEC Dropped Inquiry After Firm Aided Kushner Company

“The Securities and Exchange Commission late last year dropped its inquiry into a financial company that a month earlier had given White House adviser Jared Kushner’s family real estate firm a $180 million loan,” the AP reports.

“While there’s no evidence that Kushner or any other Trump administration official had a role in the agency’s decision to drop the inquiry into Apollo Global Management, the timing has once again raised potential conflict-of-interest questions about Kushner’s family business and his role as an adviser to his father-in-law, President Trump.”

Stock Market Plunges Again

The Dow Jones Industrial Average plunged more than 1,000 points during trading Thursday, the latest major swing in a volatile week for the market.

New York Times: “One likely catalyst for Thursday’s fall were comments from the Bank of England that it might raise interest rates sooner and higher than expected as it looks to fend off possible inflation. That was the latest signal that an epic run of easy money, which buoyed markets worldwide, is coming to an end.”

Trump’s Fed Nomination In Trouble

Sen. Rand Paul (R-KY) “said he will vote against Marvin Goodfriend’s bid to become a member of the Federal Reserve board, a move that could sink the nomination on the Senate floor,” Politico reports.

“Goodfriend, nominated by President Trump, was approved by the Senate Banking Committee in a 13-12 party-line vote, indicating that he is unlikely to receive any Democratic support. With Sen. John McCain (R-AZ) out for health reasons, any Republican ‘no’ vote could defeat his nomination.”

Trump’s Stock Market Miscalculation

“President Trump is learning a basic and painful lesson of Wall Street: Stocks also go down,” Politico reports.

“A global market sell-off accelerated Monday with the Dow Jones Industrial Average plunging nearly 1,600 points at one point in roller-coaster afternoon trading. After a volatile session, the Dow ended down 1,175 points, or 4.6%, at 24,346. It was the largest ever single-day point drop for the Dow and it rattled both Wall Street and Washington, abruptly ending a remarkable period of placid markets where it often seemed the only direction was up.”

Financial Times: “A rout swept through European and Asian stock markets in the wake of the biggest sell-off on Wall Street in six years as a sudden burst of turmoil shattered the long period of calm.”