Article By Melanie Kramer
Art Cashin, managing director of trading floor operations for investment firm UBS Financial Services, has firmly blamed United States President Donald Trump for the stock market volatility that caused the recent Dow Jones Industrial Average sell-off.
Veteran stock market trader Cashin blamed the latest government shutdown and Trump’s attacks on the Federal Reserve for the Dow Jones sell-off, telling CNBC:
I think we lost maybe a couple of thousand points that we didn’t need to because of the disruptions that we saw.
Cashin told CNBC that “more quiet” from Washington could have allowed stock trading averages to recover, as expected end-of-year selling came to an end.
The Federal Reserve is Normalizing Rates
The Federal Reserve is bearing the brunt of Trump‘s critiques over economic threats as it continues to raise interest rates to more normal levels.
Lower interest rates enjoyed by the US and around the globe over the last decade were a direct response to the threat of major economic depression in the aftermath of the banking crisis. They formed part of a strategy of quantitative easing (QE) which is now morphing into “normalization” as central banks cease boosting economies to let them operate under their own natural mechanisms.
Higher interest rates combined with trade woes and stock market fluctuations are fueling recession fears. More hikes from the Federal Reserve may cut into Trump’s high hopes for the US economy. Trump believes the Federal Reserve is raising interest rates too quickly. Cashin said:
The president doesn’t seem to realize that the more he talks about what the Fed should do, the more that inhibits the Fed from doing it because they don’t want to look subservient to what’s going on. So that’s a bit of a problem.
Trading expert Jack Bouroudjian, chief economist and co-founder of the Universal Compute Exchange, agreed with Cashin, predicting the stock market could form a V-shaped bottom — meaning that stocks are mispriced at the top of selling. Bouroudjian said:
Taking a little froth out of the market…is probably the best and healthiest thing we could possibly ask for.
The Dow ended Friday trading 0.33% down and up slightly across the entire trading week despite massive mid-week plunges which followed impressive, albeit uneven, rallies.
Featured Image from Shutterstock. Price Charts from TradingView.