Trump Takes Swipe at Fed as Stocks Tumble

The stock market took a massive dive today – here’s how Trump explained what happened

Trump Calls Stock Sell-Off 'A Correction,' Says Federal Reserve is 'Crazy'

USA consumer price inflation is now above 2% and the unemployment rate is the lowest in about 40 years. One is that USA bond yields are poised to soar. On Tuesday, 10-year Treasury yields hit a seven-year intraday high of 3.26 per cent, up more than 15 basis points from October 1.

The S&P 500 posted its fifth straight decline, plummeting almost 3.3%. Economic experts are split on how long the strong economy will continue, and some investors are convinced that a number of stocks - particularly technology companies - are overpriced and were due for a slide. He has shirked any criticism of the ballooning deficit, tried to jawbone foreign leaders to lower oil prices, and repeatedly attacked the central bank for raising interest rates.

Donald Kohn, who served for eight years on the Fed board, said he thought Trump's criticism would have no effect on Fed policy. (See also: The 2007-2008 Financial Crisis In Review).

Trump has said he likes low interest rates, in part because of his background in real estate. "The fundamentals of the United States economy continue to be strong", he said.

Seoul fell more than three per cent and Sydney and Singapore both dropped two per cent.

Stocks tend to slump after rapid rate spikes.

He said on Thursday that rates were likely to head higher.

But one unintended outcome is that raising interest rates can scare off investors and precipitate a sell off in equities.

So, no, the rout wasn't caused by growing worry over Trump's trade wars, which the International Monetary Fund cited in cutting its outlook for global growth on Tuesday.

"The Fed is making a mistake", Trump told reporters as he arrived for a rally in Erie, Pennsylvania.

Higher yields make bonds more attractive investments, which can siphon buyers away from stocks.

His comments follow a volatile day of trading in the stock markets. London also lost almost 2 percent, Frankfurt fell 1.5 percent, and Tokyo plunged almost 4 percent. In Japan, 10-year bonds are not even paying 15 basis points.

The good news is that Corporate America is minting money right now.

But those bonds issued a year ago look less attractive in comparison.

The price of gold - a safe haven for investors - rose 2.9% to $1,223.50 and ounce. Core inflation held steady at 2.2% when consensus was for an increase to 2.3%. He also said, "No, I'm not going to fire him (Powell)".

Should I panic about rising rates?

Despite last night's sell-off, the S&P 500 would still need to more than double its losses. For one thing, it was yet another sign of more Fed hikes to come.

The cost to borrow money is on the rise.

The Fed has been revising its own growth forecasts higher through the year, as the impact of recent tax cuts and increased federal spending have been felt. "The problem in my opinion is Treasuries and the Fed". That would help the case for holding onto stocks. "They're raising rates and it's ridiculous".

"It seems like the Fed is continuing on the course that markets expect, to raise interest rates given the tight labour market", said Phillip Swagel, who was a top Treasury official during the George W. Bush administration.

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But data since the Fed's last meeting in September has been in line with the central bank's portrait of an economy in which historically low unemployment will be coupled with inflation running near the central bank's 2 percent target for the foreseeable future.

This story was reported by The Associated Press.

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