Trump says Federal Reserve ‘has gone crazy’ after big stock drop

Ivan Schwartz
October 11, 2018

They include the U.S. trade war with China and its potential impact on global growth, while rising bond yields have diverted attention from equities - stocks - which have been offering the most attractive returns for years because central bank stimulus had flooded markets with cheap money.

Numerous biggest USA names fell hard in Wednesday's session, with Apple, Boeing and Facebook all slumping more than 4% and Amazon, Nike and Microsoft shedding more than 5%.

"I believe this selling is an overdone panic", Feinseth said.

USA presidents have rarely criticized the Fed in recent decades because its independence has been seen as important for economic stability.

The Dow Jones industrial average dropped 2.2 percent, or more than 550 points.

After a long stretch of relative calm, the stock market has suffered sharp losses over the last week as bond yields surged. "It's all about investors rethinking their exposure to stocks". The IMF projections don't take into account Trump's threat to expand the tariffs to effectively all of the more than $500 billion in goods the USA bought from China past year.

Money Map Press chief strategist Keith Fitz-Gerald, Fox Business correspondent Kristina Partsinevelos and Capital Wave forecast editor Shah Gilani discuss President Trump's criticism of the Federal Reserve.

Trump's comments echo his previous criticisms of recent months, which broke more than two decades of White House tradition of avoiding comments on monetary policy out of respect for the independence of the USA central bank.

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Higher interest rates tend to moderate economic growth and makes borrowing more expensive for the USA government as well as businesses and consumers.

Trump said Tuesday that the economy is enjoying "record-setting" numbers and "I don't want to slow it down even a little bit, especially when we don't have the problem of inflation".

On Friday, federal data showed that the USA jobless rate fell to 3.7 percent in September, it's lowest point since 1969.

White House Press Secretary Sarah Sanders said in a statement following the close of markets that the USA economy is "incredibly strong" despite the selloff, which analysts attributed in part to trade tensions with China.

"The fundamentals of the United States economy continue to be extremely strong, I think that's why the stock market has performed as well as it has".

Stocks have been under pressure since the yield on 10-year US Treasury bonds jumped above 3% last week, a sudden move that raised fears of an overheating economy, speeding inflation and more aggressive Federal Reserve interest rate increases.

Trump was briefed on the market turmoil earlier in the day, a White House official said.

During an event earlier Wednesday amid the sell-off, Trump and his top economic adviser, Larry Kudlow, said they believed the US economy was strong. "It is doing well", Trump said.

Other reports by GizPress

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