- Assuming Mnuchin is not a novice and stupid, he is, after all, an ex Goldman Sachs banker, what could possibly have made Mnuchin call the 6 CEOs (on 23 Dec Sunday) and have an (emergency) meeting on the 24 Dec with the Plunge Protection Team, and publicly announced all these? The simple answer may be that: Mnuchin has been informed that a certain financial entity has collapsed. He, thus, made the calls to the 6 CEOs warning them and asking about liquidity issues and called for a meeting with the Plunge Protection Team. Ie. his actions are to pre-empt the public knowledge/announcement of the collapsed entity. The only question is which entity? Deutsche Bank? ….
- See also:
* Mnuchin Called Bank CEOs To Check Liquidity, Calm Markets; Has Monday Call With Plunge Protection Team
* Futures Suddenly Plunge Ahead Of Mnuchin’s “Plunge Protection Team” Meeting
- A Horrified Wall Street Reacts To The Mnuchin Massacre
by Tyler Durden, https://www.zerohedge.com/
… While the reasons for the relentless three month selloff are legion, starting with the “renormalization” (i.e., bursting) of the biggest asset bubble blown in history by the Fed and other central banks, and continuing through trade war tensions, rising and/or falling interest rates, political gridlock and instability in the US and elsewhere, peak profit fears, and economic slowdown concerns, the immediate catalysts for today’s plunge are two: Trump’s ongoing feud with the Federal Reserve (which today we learned, can’t putt) and its Chairman, Jerome Powell, who may or may not be fired soon, and Mnuchin bizarre, crisis-era announcement that bank liquidity is fine, even though not a single person in the market doubted that not to be the case, prompting a chill down traders’ spines that bank liquidity was not, in fact, fine.
So while we got the market’s verdict loud and clear to what will forever be known as the “Mnuchin Massacre”, here is a sample of what analysts, investors and pundits are saying:
Cowen & Co.’s Jaret Seiberg
* “None of these controversies are positive,” the senior policy analyst wrote. “All of them put the economy at risk, which is negative for financial firms and housing. And all three incidents are unforced errors,” Seiberg wrote, referring to Trump’s discussion of Fed Chairman Jerome Powell’s ouster, the partial government shutdown and Mnuchin raising questions about financial stability.
* “Our broad concern is that Team Trump might trigger the very downturn it wants to avoid.”
Amundi Pioneer Asset Management’s, Paresh Upadhyaya
* Mnuchin’s statement about banks “clearly backfired,” Upadhyaya said. “It smacks of desperation and nervousness. I found it odd that he spoke to them about liquidity when it’s obvious that banks would be aware of it. I’m not sure what they planned to achieve with this plunge protection team since none of the agencies involved have legal authority to intervene in the equity markets.”
* The portfolio manager sees little risk of Powell being ousted. He said that Trump’s undermining of the Fed could reduce the appeal of the U.S. dollar. What’s more troubling is the selloff in bank stocks, which signals distress in the credit market.
MRV Associates Inc.’s Mayra Rodriguez Valladares
* “The timing is terrible” amid thin markets before a holiday, said Valladares, a former Fed foreign-exchange analyst who conducts training for bankers and regulators. “It’s going to make people in the markets even more nervous.”
* “When you have a president treating Powell as a pinata, it’s really terrible and undermines the credibility of the central bank as an independent authority.”
Whalen Global Advisors’ Christopher Whalen
* Mnuchin’s tweet about his talks with bank CEOs was “not helpful,” Whalen said.
* “It is normal for a secretary of the Treasury to talk to banks privately, but not on Twitter,” he said, citing a “near disaster” in 2008 when markets cratered after then-Treasury Secretary Henry Paulson discussed buying bad bank assets.