Trump asked officials if he can legally fire Fed chair

Traders work on the floor of the New York Stock Exchange in New York Monday Dec. 24 2018

Traders work on the floor of the New York Stock Exchange in New York Monday Dec. 24 2018

US Treasury Secretary Steve Mnuchin looked to quash big-bank worries over recent plunging stock markets and reports that US President Donald Trump might sack his Federal Reserve chief by reassuring the financial community on Sunday that market liquidity is in good shape.

The mixed regional bag came after Mnuchin spent much of the weekend in damage control mode following multiple media outlets reporting that Trump had privately asked cabinet members if he has the authority to fire Fed Chairman Jerome Powell. The benchmark S&P 500 stock index (.SPX) is on pace for its biggest percentage decline in December since the Great Depression.

Mnuchin and other senior administration officials had been discussing for days how to calm investors without coming across as desperate or preachy, but they have struggled to find the right balance, leaving an opening for Trump to continue berating the Fed.

Bloomberg News reported on Saturday morning that Trump has discussed firing Powell over concerns about slowing the economy, though his advisers aren't certain he'll take the plunge. "Feel the market, don't just go by meaningless numbers", he said.

"The Fed is like a powerful golfer who can't score because he has no touch - he can't putt!" he added.

USA markets were hit hard Monday, with selling intensifying into the close.

US Treasury Secretary Steven Mnuchin is to hold a telephone conference on Monday with top market regulators, after the Dow and the Nasdaq suffered their worst week since 2008.

Even with USA stock markets on the skids for weeks, and the federal government in a partial shutdown since Saturday, many market-watchers wondered whether there's something more systemic going on.

They're stunned by Treasury Secretary Steve Mnuchin's odd call to bank CEOs.

All three United States indexes closed lower last week, with the technology-focused Nasdaq down 20% since its peak, placing it in so-called "bear market" territory. Rather, it's created to make sure key market participants are communicating about critical issues.

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"He also confirmed that they have not experienced any clearance or margin issues, and that the markets continue to function properly".

In a November 27 interview with The Washington Post, Trump said: "I'm not happy with the Fed".

President Trump, meanwhile, renewed his verbal assault on the Federal Reserve on Monday, blaming the central bank for mounting fears over the USA economy and comparing it to a blundering golfer.

"The law is, at best, ambiguous", Cornerstone Macro partner Roberto Perli wrote on Monday. The group includes market regulators and Federal Reserve governors, among others.

"Typically, "for cause" is understood to apply to situations where someone commits egregious ethical violations, crimes, fails alcohol or drug tests, etc.", Perli said.

According to Bloomberg, it's unclear whether Trump has the legal authority to fire Powell, as the rules about removing the head of the Federal Reserve are ambiguous. I think he's trying to do what he thinks is best.

The economy and financial markets - stocks, bonds, commodities - are made up of a constellation of factors that are not synchronized.

The mood on Wall Street contrasts with the normal pattern around the holidays, when optimistic investors often push stocks higher in a "Santa Claus rally".

"We are dealing with one of the more respected parts of the administration from a Wall Street point of view".

The team was also convened during the 2007-09 financial crisis.

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