Why the Federal Reserve May Be Secretly Trying to Tank the Stock Market – by Robert Gehl
Is this another example of the “Deep State” at work?
It seems the Federal Reserve might actively try to stop a massive stock market rally, a rally that threatens to take down a president who has taken to tweeting on the successes of Wall Street.
The CEO of Euro Pacific Capital told TheStreet that the boost that former Fed Chair Janet Yellen gave the stock market could expire under President Donald Trump. “I don’t know if the Fed has much love for Trump,” he said, adding that the Fed had the markets’ back during the Obama Administration.
“Maybe the Fed would be happy to see a bear market that could be blamed on Trump.” This could be a correction of as much as 20 percent, Schiff said.
One event that Schiff thinks is a harbinger of things to come is that many investors have lost their euphoria after the Trump election victory, which propelled the stock market through much of 2017.
“We’ve had a huge move up since the election of Trump even though prior to the election the expectation was if Trump won it [would be a disaster for markets],” he said.
When asked if the two straight quarters of double-digit earnings growth has sparked the rally in stocks this year, as opposed to solely Trump, Schiff pointed to earnings headwinds in the retail sector.
As one of her last acts, Chairwoman Janet Yellen gave Wells Fargo a smack that was unprecedented in American history. They have been barred from growing any further after it was revealed that they opened credit card accounts and checking accounts for customers without their knowledge. It’s a “cease and desist” order.
Aside from putting the board on notice, the cease-and-desist order is expected to light a fire under Wells CEO Timothy Sloan and get him to change the culture more quickly than he’s been doing since taking over in late 2016.
On Monday, Jerome H. Powell was formally sworn in as chairman of the reserve. Without providing much insight, he promised to remain “vigilant” about risks to the system.
Powell is a Republican. He said that he was committed to “explaining what we’re doing and why we are doing it” as the central bank works to sustain the ongoing economic recovery and oversee some of the nation’s largest financial institutions.
“Today, unemployment is low, the economy is growing, and inflation is low,” Powell said in a video posted on the Fed’s website, the Los Angeles Times reports. “Through our decisions on monetary policy, we will support continued economic growth, a healthy job market and price stability.”
Powell also said that the “financial system is now far stronger and more resilient than it was before the financial crisis.”
“We intend to keep it that way,” Powell said. “My colleagues and I will remain vigilant, and we are prepared to respond to evolving risks.”
Powell has served as Fed governor since 2012 and supported Yellen’s gradual increase in interest rates and tougher oversight of the nation’s largest banks. He voted along with Yellen on Friday to order Wells Fargo to cap its growth and improve its corporate governance in the wake of the bank’s unauthorized accounts scandal.