By CCN Markets: Dow Jones Industrial Average (DJIA) futures slumped in early trading Thursday and Trump is livid. The president…
By CCN Markets: Dow Jones Industrial Average (DJIA) futures slumped in early trading Thursday and Trump is livid.
The president took his anger out on Twitter, screaming in all caps:
“WHERE IS THE FEDERAL RESERVE?”
Trump is desperate for the Federal Reserve and Chairman Jerome Powell to get more aggressive on monetary easing, a move he believes will stimulate the stock market and make America more competitive in the global arena.
But a statement released by the Fed yesterday appeared to dampen hopes of continued, aggressive interest rate cuts. Traders are now worried the Fed is acting too slow in the face of flashing recession warnings.
Dow Jones Industrial Average (DJIA) futures pointed to a weak open on Thursday. Despite a strong rally yesterday and a spirited overnight push, US stock futures fell into negative territory as of 5.45 am ET. Dow futures traded 26 points lower at 26,200.
The president’s tirade stems from the fact that much of the world is now adopting zero or negative interest rates. For example, rates on Germany’s 30-year bond just turned negative. Trump wants the Fed to step in and lower US rates to keep the US competitive.
Earlier in the day, he compared Fed chairman Jay Powell as a “golfer who can’t putt, has no touch.” Trump has repeatedly called for a one percent cut in interest rates and a return to quantitative easing. He urged the Fed to drop interest rates below competing countries.
The action or inaction at the Federal Reserve is the primary market driver. Yesterday’s statement pushed the bond market back into panic mode with the dreaded yield curve inversion returning. The 10-year bond yield dipped back below the 2-year as traders pile into perceived safe havens.
All eyes are now on Jerome Powell’s speech on Friday. His remarks at Jackson Hole will give traders an insight into whether the Federal Reserve intends to bend to Trump’s will or maintain its slow and steady approach.