Sunday, December 23, 2018

Mnuchin in Panic Mode Calls Top Banksters From Cabo San Lucas Vacation Spot

UPDATE below: Mnuchin Sets Up Conference Call With Plunge Protection Team

In addition to doing his part to expand the trade deficit by vacationing in Cabo San Lucas, Mexico, a  report indicates that Treasury Secretary Steven Mnuchin is attempting to head off a Monday morning panic sell-off in the stock market.

In a precautionary (panic?) move, Mnuchin spent Sunday on the phone speaking with the chief executives of some of the country's largest banks to avoid yet more stock market selling when Wall Street opens Monday, reports CNN.

The secretary, who has been visiting his children in Cabo San Lucas, Mexico, according to CNN, tried to get ahead of further market weakness following reports that President Donald Trump was consulting advisers about whether he had the legal authority to fire Federal Reserve Chairman Jay Powell.

"It's being pre-emptive," a person familiar with the matter told CNN. "It's sending the proper message to the market so they can calculate the real picture into their Monday opening. They don't have to wait until something happens to be reassured."

In his conversations with executives, the person said, Mnuchin sought to convey the strength of the US economy despite recent market turbulence.

"The market volatility is not changing the strong fundamentals of the economy," said the person. "Systems remain normal."

Of course, as I am forecasting in the EPJ Daily Alert, the odds of a recession developing in 2019 are extremely high, regardless of what Mnuchin says to his bankster buddies.

Based on the data I watch, I am likely to forecast a recession in the ALERT  soon.

I hasten to add, as far as the stock market break, I put out a sell-short advisory in the ALERT within two days of the stock market top.

Below is what I wrote in the EPJ Dail Alert on Friday, October 5 (red highlight in original) within days of the stock market top. The stock market actually peaked on October 3:

The odds of the economy and stock market chugging along without a significant break are very low.
Money supply growth just does not appear strong enough to sustain the stock market strength and general overall strong economic numbers.

The foundational current weakness in the stock market is likely the current sluggish money supply growth. It suggests at a minimum a very dangerous period ahead fo the general stock market....with the present stock market weakness in a sluggish money supply environment, I expect it to get much more serious on the downside.
I am now advising short-term aggressive risk-oriented traders to go short the general market.
This is how things stand now:

I doubt very much this is the end to stock market downside activity. Though it is possible to have what I call "one day wonders" upside action from time to time. The big question though is: Do we see things turn into a full-fledged recession?

The answer: Very likely, but I will probably wait until the end of February and pull the trigger and make my recession forecast official at that time.


Tomorrow (Monday), the Secretary will convene a call with the President’s Working Group on financial markets (aka The Plunge Protection Team), which he chairs. This includes the Board of Governors of the Federal Reserve System, the Securities and Exchange Commission, and the Commodities Futures Trading Commission. He has also invited the office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation to participate as well. These key regulators will discuss coordination efforts to assure normal market operations.


Here is the list of banksters Mnuchin spoke to on Sunday ahead of the Plunge Protection conference call (via The Treasury)
 Secretary Mnuchin conducted a series of calls today with the CEOs of the nations six largest banks: Brian Moynihan, Bank of America; Michael Corbat, Citi; David Solomon, Goldman Sachs; Jamie Dimon, JP Morgan Chase, James Gorman, Morgan Stanley; Tim Sloan, Wells Fargo. The CEOs confirmed that they have ample liquidity available for lending to consumer, business markets, and all other market operations. He also confirmed that they have not experienced any clearance or margin issues and that the markets continue to function properly.


I hasten to add.

While the stock market is weak at this point, there does not appear to be any significant liquidity issues in the banking system, which makes Mnuchin's calls unusual and very close to batshit crazy.

The scheduled conference call with the Plunge Protection Team just makes things even more odd.


Krugman's take. LOL, ok I give this one to Krug.


  1. With the progression of the boom/bust business cycle (towards the bust portion), I dont know why anyone would hesitate to subscribe to the EPJ Daily Alert. Nobody is offering a deal this sweet, to get Austrian School analysis on the market.

  2. Screw this putz! Bring on the price discovery long overdue.

  3. " These key regulators will discuss coordination efforts to assure normal market operations."

    1. "These key regulators..."

    2. "...will discuss coordination efforts..."

    3. " assure normal market operations."

    SOOOO much is wrong with this one sentence, not counting cross statement analysis and more. Look at the three numbered phrases. You don't think there's a problem here? It's time to wake up and smell the reefer.