ibusinesslines.com
ibusinesslines.com October 21, 2018


Trump calls USA stock sell-off 'a correction'

11 October 2018, 12:31 | Kelvin Horton

Trump calls USA stock sell-off 'a correction'

President Trump speaks to reporters while departing for travel to Iowa from the White House in Washington

President Trump said that the Federal Reserve has "gone crazy" on short-term interest rates, marking his latest swipe at policy makers in reaction to the stock market's tumble on Wednesday. The Fed is doing what it thinks is necessary, but I don't like what they're doing because we have inflation really checked and we have a lot of good things happening.

"The Fed has gone insane", Mr. Trump told reporters while traveling to Erie, Pennsylvania, for a campaign rally.

After a long stretch of relative calm, the stock market has suffered sharp losses over the last week as bond yields surged.

Last week's jump in yields followed strong USA data but many analysts have been anticipating dynamics in the bond market to change due to expectations that central banks in Europe and Japan will soon phase out bond-buying programs.

Adams said investors have concerns about their future profitability, too, making technology stocks more volatile in the last few months. The Fed has predicted that unemployment will remain below 4 percent through 2020 and inflation is expected to track around 2 percent, conditions that Federal Reserve chief Jerome H. Powell called "remarkably positive".

The benchmark Nikkei 225 dropped almost two percent at the open and extended losses to below the three-percent mark, as traders fretted about surging interest rates and an ongoing trade spat.


Larry Benedict, founder of the Opportunistic Trader, said that even while some of the largest names in tech - including Netflix, Amazon, Google and Facebook - saw some of the steepest dips, they are all up significantly for the year.

Higher interest rates tend to moderate economic growth and makes borrowing more expensive for the US government as well as businesses and consumers. An additional 1.5-percentage-point fall would confirm a correction for that index.

On Wednesday, the Dow fell 831 points, or 3.1 percent, to 25,598.

The Federal Reserve is mandated by Congress to aim for low inflation and low unemployment. Trump has been publicly criticizing the Fed since July for interest-rate increases and declared he was "not happy" in September when the central bank raised rates for the third time this year.

Trump's remarks, almost unprecedented for a USA leader, may roil markets further in retreat on the heels of hefty tariffs imposed on aluminum and steel imports from much of the world, and about half of US imports from China.

The turmoil on stock markets came a day after the International Monetary Fund slashed its global growth forecast on worries about trade wars and weakness in emerging markets. In Paris, shares in Kering fell almost 10 percent, LVMH over seven percent and Hermes around five percent.



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