“Stocks fell sharply on Thursday as continuing fears over U.S.-China trade relations and concern over a possible global economic slowdown kept investors on edge,” CNBC reports.
NPR: “This week, the interest rate on some short-term U.S. Treasury securities rose above that of longer-term instruments. Known as an inversion of the yield curve, this unusual phenomenon is something that hasn’t occurred since 2007. Economists say it often signals a slowing of growth and perhaps even a recession.”
Washington Post: “The whiplash nature of Trump’s economic policies and pronouncements bore tangible consequences on Tuesday, when U.S. stock markets cratered amid investor skepticism of Trump’s China talks. The Dow Jones industrial average dropped 799 points, or 3.1 percent, while the Standard & Poor’s 500-stock index fell 3.2 percent and the Nasdaq dropped 3.8 percent.”
“Global markets demand consistency and reliability, but Trump delivers neither. Instead, he makes knee-jerk announcements that surprise investors, lawmakers and even some of his own aides and advisers, who sometimes find themselves reversing course depending on the president’s whims.”
“President Trump placed responsibility for recent stock market declines and this week’s General Motors plant closures and layoffs on the Federal Reserve during an interview Tuesday, shirking any personal blame for cracks in the economy and declaring that he is ‘not even a little bit happy’ with his hand-selected central bank chairman,” the Washington Post reports.
“Trump complained at length about Federal Reserve Chairman Jay Powell, whom he nominated earlier this year. When asked about declines on Wall Street and GM’s announcement that it was laying off 15 percent of its workforce, Trump responded by criticizing higher interest rates and other Fed policies, though he insisted that he is not worried about a recession.”
Said Trump: “I’m doing deals, and I’m not being accommodated by the Fed. They’re making a mistake because I have a gut, and my gut tells me more sometimes than anybody else’s brain can ever tell me.”
“There’s still a week to go before the midterm elections, but Wall Street has already voted — with its campaign contributions,” CBS News reports.
“The securities and finance industry has backed Democratic congressional candidates 63% to 37%… Democratic candidates and political action committees have received $56.8 million, compared to Republicans’ $33.4 million.”
The Goldman Sachs Bull/Bear Index, which was designed to provide a “reasonable signal for future bear-market risk,” has risen to the highest in almost 50 years, Bloomberg reports.
Barclays disagrees that the stock market would plummet if President Trump were impeached, Bloomberg reports.
Writes William Hobbs, head of investment strategy: “We doubt that capital markets would collapse if President Trump’s administration was endangered, either electorally or indeed legally. The forward momentum of the world economy, and therefore its capital markets, has little to do with the actions of the White House, past, present or future, in our opinion.”
“The top government official overseeing the $1.5 trillion student loan market resigned Monday, citing what he says is the White House’s open hostility toward protecting nation’s millions of student loan borrowers,” the AP reports.
“Seth Frotman is the latest high-level departure from the Consumer Financial Protection Bureau since Mick Mulvaney took over in late November. Under Mulvaney, the bureau has scaled back its enforcement work and has proposed revising or rescinding all of the rules and regulations it put into place under the Obama administration.”
President Trump took another swipe at the Federal Reserve in an interview with Reuters, expressing concern that the central bank is raising interest rates after years of holding borrowing costs near zero.
Said Trump: “I’m not thrilled with his raising of interest rates, no. I’m not thrilled. I should be given some help by the Fed.”
President Trump “said he expected Jerome Powell to be a cheap-money Fed chairman and lamented to wealthy Republican donors at a Hamptons fundraiser that his nominee instead raised interest rates,” Bloomberg reports.
“The Federal Reserve has raised rates five times since Trump took office, including twice this year under Powell. The president nominates the Fed’s chairman and other governors in Washington, but the agency is independent and historically frustrated presidents by raising interest rates without regard for politics.”
Rep. Chris Collins (R-NY) has been arrested on insider trading charges lodged by the Justice Department, CNBC reports.
“The Russian government has sold off the vast majority of its holdings of U.S. Treasury securities for reasons that remain mysterious, in a dramatic move that experts are calling unprecedented,” the Daily Mail reports.
“A U.S. Treasury report released on July 18 shows that Russian holdings of Treasury securities declined by 84% between March and May, down to just $14.9 billion from March holdings of $96.1 billion.”
In a stinging and historically rare criticism, President Trump expressed frustration with the Federal Reserve in an interview with CNBC and said the central bank could disrupt the economic recovery.
“Presidents rarely intercede when it comes to the Fed, which sets the benchmark interest rate that flows through to many types of consumer debt. Fed officials, including Chairman Jerome Powell, have raised interest rates twice this year and have pointed to two more before the end of 2018.”
Commerce Secretary Wilbur Ross told CNBC that there’s no level on the downside in the stock market that would alter the way President Trump approaches trade.
Said Ross: “There’s no bright line level of the stock market that’s going to change policy. The president is trying to fix long-term problems that should have been fixed a long time ago.”
“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.”
Rep. Darrell Issa (R-CA) is among the candidates who have been discussed as President Trump gets closer to naming someone to run the Consumer Financial Protection Bureau, Bloomberg reports.
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.”
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.”
“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.”
Taegan Goddard is the founder of Political Wire, one of the earliest and most influential political web sites. He also runs Political Job Hunt, Electoral Vote Map and the Political Dictionary.
Goddard spent more than a decade as managing director and chief operating officer of a prominent investment firm in New York City. Previously, he was a policy adviser to a U.S. Senator and Governor.
Goddard is also co-author of You Won - Now What? (Scribner, 1998), a political management book hailed by prominent journalists and politicians from both parties. In addition, Goddard's essays on politics and public policy have appeared in dozens of newspapers across the country.
Goddard earned degrees from Vassar College and Harvard University. He lives in New York with his wife and three sons.
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