On Thursday evening, we documented the extent to which recent market turmoil has rattled Donald Trump who, according to sources who spoke to the Washington Post, has recently called business leaders and financial executives to “sound them out” on the US economy.
That sounds quite a bit like what happened in December, when Steve Mnuchin called the CEOs of America’s largest banks on a Sunday to ask about “liquidity”, an ill-fated effort to shore up market sentiment which backfired in spectacular fashion the following day. Basically, Mnuchin’s press release documenting the calls amounted to yelling “fire” in a crowded theatre.
Around the same time, a Trump official was said to have called at least one prominent financial luminary for advice on how to stanch the bleeding on Wall Street, where US stocks were on their way to logging the worst December since the Great Depression.
Well, as it turns out, Trump held a conference call with none other than Jamie Dimon on Wednesday this week, when the 2s10s inverted and the Dow crashed 800 points, in the benchmark’s worst day of the year.
(By the time Trump spoke to Dimon, the Dow was in free fall Wednesday)
Also on the call were Bank of America’s Brian Moynihan and Citi’s Michael Corbat.
The three executives were in Washington for a pre-scheduled meeting with Mnuchin, sources told Bloomberg.
Why would they need to be on the phone with Trump if they were in Washington? Why not just meet him at the White House? Well, because the president wasn’t there, of course. Rather, he’s at his resort in Bedminster playing golf.
Presumably, Dimon, Moynihan and Corbat emphasized to Trump that the trade war is causing considerable angst among market participants and it seems likely they also suggested that his criticism of the Fed isn’t helping, although if they did, it hasn’t deterred Trump.
CNBC, citing a source familiar with the calls, says “the president asked the three men to give him a read on the health of the US consumer [and] also discussed the Federal Reserve and the global economic slowdown that has central banks around the world moving to ease monetary conditions”.
On Christmas Eve, during a call with someone CNBC described as “a well-known investor”, a Trump official was told to advise the president to i) cease and desist from criticizing Jerome Powell on Twitter, ii) stop firing people and iii) strike a trade deal with China.
In the nine months since, the president has done none of those things.
On Friday, the latest read on consumer sentiment suggested Trump’s badgering of the Fed, to the extent it was in part responsible for the July rate cut, is backfiring. Americans are getting nervous about the possibility that a recession is in the cards.
CNBC’s source said the executives told Trump on Wednesday’s call that the consumer is fine, but that Americans would be “doing even better if issues such as the China-US trade war were resolved”.
Senior administration officials this week told the network that the president and Peter Navarro are alone at the White House in blaming the Fed for market volatility, but the same sources said Trump isn’t likely to stop criticizing monetary policy and demanding rate cuts.
Ultimately, Trump can call all of the bank executives he wants, but the bottom line is that until he decides to actually listen to people who know what they’re talking about, it’s not going to make any difference.
One imagines it was all Dimon could do not to call Trump a “nervous mess“, as the President branded the legendary banker last September, when the market was sitting at record highs.