Asia stocks mixed after Mnuchin's weekend of triage

Posted December 26, 2018

The current USA bull market - a run-up in stocks free without any declines of 20 per cent or more - began in March 9, 2009, and became the longest ever as of August 22.

The S&P 500 stock index tumbled 2.7 percent on Monday in its worst-ever trading session before the Christmas holiday. "The reality is that the president no longer has a team of credible leaders to manage the American and the global economy". But the President has it exactly backwards: according to research conducted by myself and my colleague Dr. Mike Ellington, the Fed should be raising interest rates even faster. Still, sources have previously told CNN that Trump was upset with Mnuchin over his advice to appoint Powell as Federal Reserve chairman.

Mnuchin recommended Powell's nomination, raising speculation that Trump could turn his wrath to the Treasury secretary, whom he can more easily dismiss.

President Donald Trump expressed confidence on Tuesday in Treasury Secretary Steven Mnuchin, who is struggling to contain his first real crisis but has failed to assuage investors unnerved by turmoil in Washington.

- Too many Fed rate hikes?

Last week, the Federal Reserve announced it will raise interest rates to a range of 2.25 percent to 2.5 percent. Those increases mean higher costs for mortgages, auto loans and other forms of debts that affect households. Those measures are meant to prevent the economy from overheating. But that logic looks questionable given that last week's rate hike was accompanied by a downward revision to its growth and inflation forecasts.

The president said he aimed to have a "renovated or brand new" barrier stretching up to 885km across the 3,219km border by Election Day 2020, without explaining how it was going to be paid for.

"Even if 20 percent is just a psychological number, it is psychologically very important", Chris Zaccarelli, chief investment officer at the Independent Advisor Alliance, said by phone.

The development comes after Mnuchin, in an effort to assure investors shaken by the falling stock market, reached out to the heads of the six major banks on Sunday to see if they had enough cash on hand in advance of Monday's opening bell.

But the comments were widely criticized by market watchers for raising new doubts, fears that were already brewing because of a partial USA government shutdown over Trump's battle with congressional Democrats to finance a wall on the border with Mexico.

The travails over the Fed come as the global economy shows signs of sluggishness. Adobe rose 3.1 percent to $211.53. Speaking on Fox News Sunday, Acting Chief of Staff Mick Mulvaney said it was "very possible" that the shutdown could continue into the new year.

However, analysts said prospects for a global economic slowdown in the coming year-which would weaken crude demand-and rising USA shale output are dampening sentiment and limiting any rebound from the current 15-month lows. The Nasdaq slid into a bear market Friday as a sell-off in Apple, Google's parent Alphabet and other big names weighed on the technology-heavy index. Leveraged trading is high risk and not suitable for all. Looking at the charts, one could think that U.S. economy is already in a recession, but that is not quite the case just yet.