PrefBlog

Trump continues to attack the Fed:

President Trump responded to falling stock prices on Thursday by continuing to throw rocks at the Federal Reserve, which he has described as “crazy,” “loco,” “going wild” and “out of control” for slowly raising interest rates against the backdrop of a booming economy.

No other modern president has publicly attacked the Fed with such venom or frequency. Indeed, some scholars said the only close historical parallel was with President Andrew Jackson, who campaigned successfully in the 1830s to close the Fed’s predecessor, the Second Bank of the United States.
…
“I think the Fed has gone crazy,” he told reporters on Wednesday afternoon. Later in the day, speaking with Fox News, he continued to increase the heat. “The Fed is going wild,” he said. “I don’t know what their problem is. They are raising interest rates and it’s ridiculous.”

“It’s not right,” he said Thursday. “It’s not necessary, and I think I know more about it than they do.”

I’m not sure how much support he’ll find for that last assertion!

Liquidity is often discussed on PrefBlog. It may be becoming an issue in the Indian equity market:

Fund managers who’d hoped for private-equity type returns by discovering jewels buried in the haystacks of public markets were essentially souping up performance by forgoing liquidity. Now that the markets are punishing them for that recklessness, the search for the elusive alpha is over — in infrastructure; power; banking and finance; small-, mid- and micro-cap shares; transport and logistics; value stocks; state owned firms; business cycles; and every other fad.
…
A rush for the exits may cause its own problems, especially when it comes to handling redemption pressures. On conservative estimates, it would take more than 30 days to offload a quarter of the net assets of one small Indian infrastructure fund, Bloomberg’s liquidity tools show. A fifth of a large tax-saver fund would need more than 180 days to dismantle, so thin is the liquidity of the stocks it holds. (By contrast, a typical index fund tracking the Nifty 50 can be
entirely liquidated in less than three days.)

This entry was posted on Friday, October 12th, 2018 at 7:12 pm and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.