US stock market slump, Trump blames someone else

The US stock market is having a bad week, slumping to lows for the year and said to be ‘on the cusp of a bear market’. President Donald Trump praised himself when the market rose to record highs, but as has become typical of him, he blames someone else when it dives.

Trading has a few hours to go before closing for Christmas but it is not looking good for the last five days:

The US markets closed at 1 pm on Christmas Eve. Dow Jones  closed on 21,792 , down 653.17 (2.91%) for the day.

Nor for the year:

New York Times: Stock Market Rout Has Trump Fixated on Fed Chair Powell

President Trump has unabashedly hitched his political fortunes to a rising stock market. Now, with stock prices in retreat, he has become increasingly fixated on the idea that one man is to blame for the recent rout: Jerome H. Powell, chairman of the Federal Reserve.

After the Fed raised its benchmark interest rate on Wednesday, the fifth consecutive quarterly increase, Mr. Trump fretted to aides that Mr. Powell would “turn me into Hoover,” a reference to the man who was president in the early years of the Great Depression.

Mr. Trump has said choosing Mr. Powell for the Fed job last year was the worst mistake of his presidency, and he has asked aides whether he has the power to fire him.

But the volatile stock market, which just posted its worst week since 2008, is falling in part because of Mr. Trump’s own policies, including an escalating trade war with China, a shutdown of the federal government and the fading effects of the $1.5 trillion tax cut Mr. Trump ushered in at the end of 2017. While the Fed’s rate increases have upset investors — who seem to have a darker view of economic growth than the central bank does — some analysts said Mr. Trump’s musings about the Fed would only exacerbate anxieties.

Mr. Trump’s economic advisers scrambled over the weekend to reassure markets that Mr. Trump was not, in fact, planning to fire Mr. Powell. Treasury Secretary Steven Mnuchin tweeted what he said was a quote from Mr. Trump accepting that he did not even have the power to do so.

While Mr. Trump has turned on his chairman, the Fed’s trajectory should not have been a surprise.

When Mr. Trump chose Mr. Powell as Fed chairman in the fall of 2017, he said, “Based on his record, I am confident that Jay has the wisdom and leadership to guide our economy through any challenges that our great economy may face.”

Mr. Trump also chose three of the other four members of the Fed’s board, all of whom joined Mr. Powell in voting for all four 2018 rate increases.

In conversations with friends and advisers, Mr. Trump has acknowledged responsibility for the selection of Mr. Powell. He told Stephen Moore, an economist at the Heritage Foundation, that it was “one of the worst choices I’ve ever made,” according to Mr. Moore.

Sarah Binder, a professor of political science at George Washington University, said presidents had often tried to shape Fed policy, but the current episode stood apart because Mr. Trump appeared to be acting against his own interest in a stable economy.

“I think what is the unusual part here is that it seems the president has created the crisis,” she said. “His intervention certainly seems to be making things worse for him and worse for the Fed and worse for the economy. It’s just very shortsighted, and we’re not used to that.”

@HoarseWhisperer

The punchline of Trump’s meltdown over the markets and Fed:

– Every sane human knew we were in for a bumpy landing after the long recovery under Obama

– Trump did everything possible to make that worse

– That was a recipe for disaster

Trump is now blaming everyone else for his ignorant, moronic decision to steer the Trumptanic economy right into the iceberg A competent president would have focused on things that fuel growth like:

1) Expansion of trade – rather than the opposite: trade wars

2) Pro-working class tax relief to fuel consumer spending

3) Expansion of “green” incentives to grow renewables and further reduce reliance on oil, gas and coal

4) Small business incentives to spur the true engine of the labor force

5) Reductions of loopholes and credits which shield large corporations from taxation and incent moving business abroad

6) Efforts at controlling health care costs since every consumer dollar spent toward HC isn’t spent elsewhere in the economy

7) Managing down runaway enthusiasm about the economy and growth since it leads to consumers spending their way into deeper debt which then produces a nasty backlash when the bills come due.

Every step of the way, Trump has done the diametric opposite of what he should have.

He steered the economy out of smooth waters toward calamity – and along the way, he robbed the ship of fuel to enrich the already rich.

Now, the battleship can’t be turned fast enough to help and he has no effing clue what he did wrong let alone how to fix it.

Meanwhile, over on Main Street, USA, average Americans who bought his bullshit deficit-spent thinking they’d get a present on Tax Day.

A cooling economy. Consumer wages going sideways. Bills going up. No money in the treasury to help.

This is going to be a sh**-show.

Trump inherited an eight-year expansion. A healthy economy with some navigable challenges.

He burned the whole damn thing down by being an incompetent, narcissistic moron… …and steered the entire economy straight toward full-blown recession.

This is going to be ugly.

Stock markets can be fickle things, but after a good run for years it was on the cards that there would be a correction, or worse, It looks like heading for worse right now, regardless of who is to blame – but the big buck stops at the President’s desk.

The US stock market may drag the world down with it. We can hope that heading into the holiday period it may not be so bad here in New Zealand,

 

US stocks slide again after partial recovery

US stocks are on the way down again after a partial recovery mid-week. By mid Friday they are down over a percent on the Dow Jones index, after a large slump on Thursday of 4.15% on the Dow Jones, 3.8% on S&P and 4.2% on the Nasdaq.

This follows a drop last Friday, a record slump on Monday followed by a partial recovery on Tuesday and Wednesday.

The US market looks headed for it’s worst week in nine years, when the worst financial crisis since the Great Depression hit.

The Dow Jones index over the last three months:

This brings stocks down to the level they were at three months ago, but a drop of 10% is classed as a ‘correction’, and the persistence of this drop and it’s suddenness will be causing some concerns.

Reuters: Wall Street slips into correction territory

U.S. stock indexes slipped into correction territory again with a drop of more than more than 1 percent on Friday, as soaring volatility continued to spook investors.

The three indexes are now more than 10 percent below their record highs hit on Jan. 26.

New Zealand’s NZX 50 was down 1% yesterday so hasn’t been dragged as low, yet. And now the NZX is closed for the weekend it may give some more respite here.

 

 

 

 

US stock market slump

After soaring to record highs last week the US stock market took a dive today (Monday in the US).It recovered a little but ended the day heading downwards again.

It is still well up on where it was a year ago, but current momentum is drastically downwards.

One day movement:

One month movement:

One year movement:

Five year movement:

It’s impossible to know if this is just a sharp correction, or a sign of imminent financial collapse. There have been recent claims that world finances were precarious, and the US economy was on a knife edge, with lessons of the 2008 Global Financial Crisis not heeded.

Is it a good time to move Kiwisaver savings to a more conservative fund?

 

Year starts with share market falls

2016 has started badly on international share markets, reportedly led by China after their manufacturing sector contracted again in December.

  • China – down 7%
  • FTSE 100 – down 2.39%
  • Germany’s Dax – down 4.28%
  • Dow Jones – down 2.42% (at 12:33 pm)
  • S&P 500 – down 2.36%
  • Nasdaq – down 2.81%
  • MSCI All-Country World Index fell 2.4 percent by 12:34 p.m. in New York, topping its slide of 1.5 percent to start 2001.

New Zealand’s NZX market opens today at 10 am.

Bloomberg: Global Stocks Tumble Following Shanghai’s 7% Crash

  • Dow Average heads for worst start in at least eight decades
  • Brent rallies on Iran tension, yen rallies on haven demand

The Dow Jones Industrial Average sank more than 420 points as a selloff in Chinese equities spread around the world, fanned by concerns that economic growth is decelerating from Asia to North America.

The U.S. blue-chip index tumbled toward its worst start to a year since at least 1932, while banks and technology shares led the Standard & Poor’s 500 Index lower. A measure of global equities tumbled headed for its worst inaugural session in at least three decades. Emerging markets slid the most since August as slowing manufacturing triggered a selloff that halted Shanghai trading.

Radio NZ: International share markets tumble

Wall Street has continued the rout on global share markets, with the Dow Jones, S&P 500 and Nasdaq indexes all opening more than 2 percent down.

It followed sharp falls in China, where trading on the main stock markets was halted early after indexes tumbled 7 percent.

A survey indicating China’s manufacturing sector contracted again last month was blamed for the falls. Other Asian markets also fell.

Meanwhile, news that Saudi Arabia had broken off diplomatic ties with Iran sent oil and gold prices higher.

Earlier on Monday, trading on China’s Shanghai and Shenzhen stock exchanges was halted for the first time under new “circuit breaker” rules, which are designed to curb market volatility.

The share price falls came after more signs of trouble in the world’s second-largest economy.

Some analysts also attributed the decline in share prices to the imminent end of a six-month lockup period on share sales by major institutional investors, a policy implemented to shore up indexes. Big shareholders may start dumping shares once the ban is lifted on Friday.

Huang Cengdong, an analyst for Sinolink Securities in Shanghai, said: “The market will not improve because there will be heavy selling in the near future.”

An ominous start to the financial markets in 2016.

UPDATE: By the close of the US trading day (Monday) the damage had reduced:

  • Dow Jones down 1.58%
  • S&P 500 down 1.53%
  • Nasdaq down 2.08%

Early in the first trading day for the year on the NZX 50 – down 1.19%

UPDATE: at close of trading the NZX 50 ended up down 0.73%

Better Tuesday

Writing columns during significant share market upheaval has it’s risks, Tracey Watkins at Stuff yesterday (posted at 13:16):

Is New Zealand immune from the Chinese contagion?

OPINION: Here we go again.

As world share markets slide into a fresh crisis, John Key was quick to reassure on Tuesday that New Zealand has plenty of tools in the tool kit to head off a recession.

Interest rate cuts, bringing forward infrastructure spending, even tax cuts are weapons at the disposal of the Government and Reserve Bank to stimulate the economy. But with memories still raw from the Global Financial Crisis, the biggest threat facing the economy may be one the Government finds harder to head off – a loss of confidence.

Apart from China confidence appears to have recovered by the end of the day with tghe NZX recovering slightly and the Australian stock markey bouncing back by 2%.

Also at Stuff (posted at 18:20):

NZX bounces back after ‘Black Monday’ hangover

“Black Monday” is being followed by “Better Tuesday”.

The Kiwi share market shook off a hangover from “Black Monday” to closer higher on Tuesday amid signs of hope for global markets overnight.

The NZX 50 fell more than 2 per cent within seconds of trading opening on Tuesday.

But stocks staged a recovery which strengthened after the Australian share market showed resilience.

And The Dow Jones looks like in recovery mode too (about an hour until close on the US Tuesday):

DowJones150825-3days

And the five year trend shows more of a correction than a crash.

DowJones150825-5yr

For now at least.

Stock market plunge

World stock markets are all significantly down in Monday trading. New Zealand can do little but try and keep the fundamentals here sound. There’s nothing we can do about the world markets. The Shanghai market was down 8.4% yesterday.

NZ Herald: Wall St tumbles as China syndrome rocks world markets

The Dow was down 282 points, or 1.7 percent, to 16,176 points as of 1:54 p.m. Eastern time. The S&P 500 dropped 39 points, or 2 percent, to 1,931. The Nasdaq composite fell 72 points, or 1.5 percent, to 4,663 points. The three indexes are down for the year.

The New Zealand sharemarket was a sea of red ink yesterday as stocks were sold down in response to weakness in the global markets and investors worldwide became increasingly nervous about China’s economic prospects.

By the close of trading, the S&P NZX 50 was down 143 points, or 2.49 per cent, to 5616, with $2.25 billion shaved off the market’s total value. It was the worst day on local markets in four years.

Australia’s All Ordinaries Index fared even worse, slumping 3.66 per cent. In China, the Shanghai Composite Index was down 8.4 per cent at 3211 late yesterday.

A big blip or a slide?

From New York Times: Why Global Financial Markets Are So Turbulent

Last week, global financial markets were churning, but it really only mattered if you were an oil trader, Chinese bureaucrat or hedge fund manager.

Now it’s starting to get scary for everyone.

An 8.5 percent drop in the Shanghai Composite index in Monday’s trading session spread to financial markets across the world. In the United States, the broad Standard & Poor’s 500 index was down 2.5 percent in Monday morning trading, after steeper declines in Asian and European stock markets, falling prices for oil and other commodities, and a rush of money into the safety of United States Treasury bonds.

It started in China:

The immediate trigger to the outburst of global volatility was China, where the sharp drop in stocks Monday continued a rout that has been underway — with periodic pauses thanks to government interventions — all summer.

The Chinese economy is slowing, and the 38 percent drop in the Shanghai Composite Index since June 12 is indeed a huge number. There is no question that this giant economy is struggling with a transition from the investment-and-export-led boom of the last generation toward something more sustainable.

But a few facts make China’s problems less satisfying as an explanation for the turmoil across world markets. The Chinese stock market has risen sharply over the past year as millions of middle-class Chinese citizens took to making investments. Even after its steep drop this summer, the Shanghai index is down less than 1 percent for the year and still up 43 percent from one year ago.

Other markets followed:

Some of the key evidence for the “this is about more than China” story come from other emerging markets, stretching from Malaysia to Mexico, that are also taking it on the chin. Their currencies and stock and bond prices have fallen sharply over the last week. Some of that most likely reflects exposure to the Chinese economy. But some of it reflects something bigger.

In effect, the Fed’s easy money policies led global investors to search for higher-yielding securities, which they found in many faster-growing emerging markets. Money gushed into these countries in search of better returns from 2010 until 2013, driving up prices of assets.

But as the end of the era of cheap dollars has approached, that hot money has pulled out — and created volatile spikes in interest rates and damage to those emerging economies.

And oil.

The price of a barrel of oil fell from around $60 in late June to under $40 on Monday. Over time, that will be good news for American and European energy consumers, but there are complex feedback loops that probably make the commodity sell-off both a cause and a result of the broader emerging markets panic.

Waiting for the Fed.

In the background of all of this is a crucial decision looming for the United States Federal Reserve. Fed officials have expressed confidence that the domestic economy is on track and that the time is right to raise interest rates after nearly seven years of keeping them near zero. It could make that move at its policy meeting Sept. 16 and 17.

Fed officials have indicated a determination to base interest rates on what is most appropriate given the state of the American economy and not to overreact to fluctuations in markets. The latest volatility will test that resolve.

Of course, it is the Fed’s job to set policy based on where the economy is going, not where it has been. If markets keep falling, that could endanger American growth prospects. On the other hand, the Fed’s job isn’t to try to protect investors from the risks of a downturn.

Where too from here?

The Dow Jones is currently down 4.19% (US Monday).

UPDATE: After a down and up day the Dow Jones closed significant;y higher tha it’s opening lows but still finished down 3.58%