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Trump blasts Fed for blowing US recovery; German business confidence slides – business live Trump blasts Fed for blowing US recovery; German business confidence slides – as it happened
(about 2 hours later)
And finally.... the US stock market had closed for the day. But there’s not much excitement on Wall Street.
The Dow Jones ended the day up a meagre 11 points, or 0.04% (squint and you miss it), while the S&P 500 and the Nasdaq fell around 0.2% each.
With the Iranian sanctions applied, investors are now hoping for a breakthrough in the US-China trade war later this week, when G20 leaders gather.
In the meantime, Trump’s accusation of incompetence at the Federal Reserve hasn’t dampened expectations of a Fed rate cut in July (if only to quieten the White House for a bit).
Goodnight! GW
Some experts are suggesting that America’s new sanctions on Iran’s supreme leader, Ayatollah Ali Khamenei, and eight senior military commanders are more symbolic than practical.
Here’s Bloomberg’s take:
The penalties won’t have a significant impact on a country that’s already in recession and facing heavy sanctions from the U.S. Still, the new restrictions serve as symbolic reprimand for the attacks, according to former Treasury officials.
“It will have an effect because it will annoy the Iranians and make negotiations hard to pull off if the supreme leader is sanctioned,” said Brian O’Toole, a senior fellow at the Atlantic Council who previously worked in the U.S. Treasury Department’s sanctions unit.
Donald Trump’s attack on the “stubborn, childish” Federal Reserve is weighing on the US dollar.Donald Trump’s attack on the “stubborn, childish” Federal Reserve is weighing on the US dollar.
The greenback has dropped by 0.2% against a basket of currencies, nudging the euro up to $1.139.The greenback has dropped by 0.2% against a basket of currencies, nudging the euro up to $1.139.
Investors may feel the president’s criticism will force Fed policymakers to cut interest rates more than once in the coming months, to avoid further tweetblasts.Investors may feel the president’s criticism will force Fed policymakers to cut interest rates more than once in the coming months, to avoid further tweetblasts.
The oil price has dipped back in late trading - perhaps traders are relieved that America has only hit Iran with sanctions, not military action.The oil price has dipped back in late trading - perhaps traders are relieved that America has only hit Iran with sanctions, not military action.
Brent crude (sourced from the North Sea) is down 0.9% at $64.64 per barrel). US crude is flat at $57.50 per barrel.Brent crude (sourced from the North Sea) is down 0.9% at $64.64 per barrel). US crude is flat at $57.50 per barrel.
Here’s the executive order against Iran’s supreme leader, Ayatollah Ali Khamenei, and those in his office.Here’s the executive order against Iran’s supreme leader, Ayatollah Ali Khamenei, and those in his office.
BREAKING: US Treasury Sanctions 8 #Iran IRGC Commanders after Trump order targeting Supreme Leader Khamenei + circle. Statement: pic.twitter.com/MOLZSoJT82BREAKING: US Treasury Sanctions 8 #Iran IRGC Commanders after Trump order targeting Supreme Leader Khamenei + circle. Statement: pic.twitter.com/MOLZSoJT82
Plus the moment it was signed:Plus the moment it was signed:
Pres signs and displays Executive Order for new financial sanctions targeting Supreme Leader & other officials in Iran. Says the Supreme Leader is the one "ultimately responsible for the hostile conduct" of Iran's regime. Pres calls sanction "a strong and proportionate response." pic.twitter.com/8x7kUaV1BBPres signs and displays Executive Order for new financial sanctions targeting Supreme Leader & other officials in Iran. Says the Supreme Leader is the one "ultimately responsible for the hostile conduct" of Iran's regime. Pres calls sanction "a strong and proportionate response." pic.twitter.com/8x7kUaV1BB
Wall Street is taking the new Iranian sanctions in its stride.Wall Street is taking the new Iranian sanctions in its stride.
The Dow is still positive, up 48 points at 26,767 points, as New York traders grab lunch.The Dow is still positive, up 48 points at 26,767 points, as New York traders grab lunch.
President Trump has now signed an executive order in the Oval Office that he said will deny Iran’s supreme leader and others access to financial instruments.President Trump has now signed an executive order in the Oval Office that he said will deny Iran’s supreme leader and others access to financial instruments.
Trump told reporters:Trump told reporters:
“We do not seek conflict with Iran or any other country.“We do not seek conflict with Iran or any other country.
I can only tell you we cannot ever let Iran have a nuclear weapon.I can only tell you we cannot ever let Iran have a nuclear weapon.
The comes a few days after Iran shot down a US drone. The president played down the link, saying fresh sanctions were coming already, but added:The comes a few days after Iran shot down a US drone. The president played down the link, saying fresh sanctions were coming already, but added:
“I think a lot of restraint has been shown by us but that doesn’t mean we’re going to show it in the future.”“I think a lot of restraint has been shown by us but that doesn’t mean we’re going to show it in the future.”
It’s official: America is imposing new sanctions on Iran, which target Tehran’s supreme leader, and top officials.It’s official: America is imposing new sanctions on Iran, which target Tehran’s supreme leader, and top officials.
Mark Knoller of CBS has the details:Mark Knoller of CBS has the details:
.@POTUS summons press pool to Oval Office as he signs order imposing new "hard hitting" sanction on Iran, to deny Supreme Leader and other Iranian officials access to financial instruments within US jurisdiction. Says US will continue to increase pressure on Iran regime..@POTUS summons press pool to Oval Office as he signs order imposing new "hard hitting" sanction on Iran, to deny Supreme Leader and other Iranian officials access to financial instruments within US jurisdiction. Says US will continue to increase pressure on Iran regime.
Pres Trump reiterates he doesn't seek conflict with Iran, but remains determined that Iran never acquire nuclear weapons. "I think a lot of restraint has been shown by us but that doesn’t mean we’re going to show it in the future,” Trump said, per pool reporter @jfritze.Pres Trump reiterates he doesn't seek conflict with Iran, but remains determined that Iran never acquire nuclear weapons. "I think a lot of restraint has been shown by us but that doesn’t mean we’re going to show it in the future,” Trump said, per pool reporter @jfritze.
Asked if the new sanctions on Iran were a response to the drone shootdown, he said "you could problaby add that into this” but added, “Ttis was something that was going to happen anyway.” pic.twitter.com/WWOMXscbPmAsked if the new sanctions on Iran were a response to the drone shootdown, he said "you could problaby add that into this” but added, “Ttis was something that was going to happen anyway.” pic.twitter.com/WWOMXscbPm
In the City, the FTSE 100 index of top blue-chip shares has closed just 9 points higher at 7,416.In the City, the FTSE 100 index of top blue-chip shares has closed just 9 points higher at 7,416.
It was a largely subdued day, with the weak German business confidence data hitting sentiment.It was a largely subdued day, with the weak German business confidence data hitting sentiment.
More (sceptical) reaction:More (sceptical) reaction:
There is no evidence whatsoever to suggest GDP would have gotten close to the 4s or 5s. Also the market rallied hard this month because the Fed signaled that it is likely to cut rates in July. https://t.co/V8lzY3qV8OThere is no evidence whatsoever to suggest GDP would have gotten close to the 4s or 5s. Also the market rallied hard this month because the Fed signaled that it is likely to cut rates in July. https://t.co/V8lzY3qV8O
A quick recap:
President Donald Trump has fired another salvo of criticism at America’s central bankers, claiming they have damaged stock prices and economic growth.
In a twitter flurry, Trump claimed the Federal Reserve “doesn’t know what it’s doing” and raised interest rates too quickly.
Comparing the Fed to a “stubborn child” (?!) for not cutting borrowing costs by now, Trump tweeted:
“Think of what it could have been if the Fed had gotten it right.”
Trump also hinted that America could withdraw military support from the Gulf region, claiming that China and Japan should take a bigger lead in protecting oil shipments in the area.
The comments came as oil prices hit three-week highs, as investors braced for new US sanctions on Iran.
Trump’s Iranian ambassador has now weighed in, suggesting an international “tanker protection force” in the wake of recent Gulf attacks. This is helping to pull crude prices lower -- Brent is back below $65 per barrel.
US proposes tanker protection force in wake of Gulf attacks
Bitcoin has also been surging, hitting a 15-month high over $11,000 overnight. Experts say Facebook’s new Libra currency is reigniting interest in cryptocoins.
German business confidence, though, has hit its lowest level in four years - signalling weakness in the euro area.
Donald Trump’s attack on the Federal Reserve today is just the “latest diatribe” in “long-running attack” against the central bank
So warns the Financial Times:
He has over the past year called the central bank his “biggest threat” and said he was “not even a little bit happy” with chairman Jay Powell.
Earlier this month, he said the Fed was being “very, very disruptive” by raising interest rates too fast and giving China an edge in trade negotiations as a result.
The criticism comes even after the Fed last week signalled a strong possibility of cutting rates this year and some central bank members argued for immediate action to cut them in order to counter weak growth momentum and inflation.
Trump says Fed ‘doesn’t know what it is doing’ https://t.co/uHNTc3S7F5 via @financialtimes
Britain and America’s stock markets remain “blandly positive this Monday despite Trump’s inflammatory remarks regarding both the Fed and the Strait of Hormuz”, comments Connor Campbell of City firm SpreadEx.
Donald Trump has also won a legal battle over his steel tariffs, although it’s not the end of the matter.
Supreme Court judges have turned down a challenge from US companies who said they were suffering higher prices and “ongoing harm” because of the tariff regime (which makes imports of steel more expensive).
Associated Press has the details:
The Supreme Court is rejecting an early challenge to President Donald Trump’s authority to impose tariffs on imported steel based on national security concerns.
The justices did not comment on Monday in leaving in place a decision by the Court of International Trade that ruled against steel importers and other users of imported steel who challenged the 25% tariff on steel that Trump imposed in 2018.
The importers argue that Trump does not have unbounded authority under the Constitution to regulate trade. They say that job belongs to Congress.
The legal challenge is at an early stage, before a federal appeals court has weighed in. The case could return to the Supreme Court later.
Donald Trump is right about one thing, though - this has been a vintage month for the stock market.
The Dow Jones is up nearly 8% this month, which the president called “one of the best” June’s in US history. It’s actually the best in over 80 years, since June 1938, when the Dow surged by an astonishing 24.3%.
This month’s rally follows a torrid May, and was sparked by suggestions of US interest rate cuts and fresh stimulus in the eurozone.
As Marketwatch puts it:
The rally for equities has been partly supported by the Fed, which concluded its Wednesday rate-setting meeting by signaling a willingness too trim rates as soon as the end of the July 30-31 gathering to curb the effects of tariff clashes between the U.S. and international trade partners, notably China, that have roiled global economies and threaten to disrupt global supply chains.
Ding ding! The New York stock market is open, and shares are rising despite geopolitical tensions in the Gulf.
The Dow Jones industrial average (which tracks 30 of the biggest US companies) has gained 77 points or 0.3% in early trading to 26,796. That takes it closer to last year’s record highs.
The S&P 500 (the broader stocks index) has gained just 1 point to 2,951 -- having hit its own record highs last week.
Could we see all time highs today? $SPX pic.twitter.com/yujmjpp5Y6
Donald Trump’s tweetstorm failed to address the fact that his trade dispute with China has been weighing on markets for some time.
Rupert Thompson, head of research at Kingswood, points out that investors are hoping for a breakthrough at the G20 meeting of world leaders on Friday and Saturday.
The meeting of Presidents Xi and Trump at the G20 gathering later this week will be critical.
Most likely, Trump will back away to some extent from the sharp increase in tariffs planned for early July. But a full-blown trade deal looks very unlikely. With equities riding high, the pressure on Trump to reach an early deal has been reduced.
In the meantime, hopes of US interest rate cuts are keeping markets buoyant, he adds.
One of the president’s top advisors, Kellyanne Conway, has been discussing Iran at the White House:
At WH driveway gaggle, @KellyannePolls says new sanctiions against Iran are coming, yet @POTUS doesn't want war & wants Iran to come to the negotiating table. She says he won't allow Iran to engage in nuclear blackmail, disrupt global oil markets or terrorize its own people. pic.twitter.com/lebT6BnqVb
Donald Trump is now turning his attention to America’s central bankers, accusing them of incompetence.
In another Twitter blast from the White House, Trump claims the Fed has hurt US growth by leaving interest rates too high.
He claims GDP could be growing at up to 5% per year, not the 3.1% per year recorded in the first quarter of 2019.
Despite a Federal Reserve that doesn’t know what it is doing - raised rates far to fast (very low inflation, other parts of world slowing, lowering & easing) & did large scale tightening, $50 Billion/month, we are on course to have one of the best Months of June in U.S. history..
....Think of what it could have been if the Fed had gotten it right. Thousands of points higher on the Dow, and GDP in the 4’s or even 5’s. Now they stick, like a stubborn child, when we need rates cuts, & easing, to make up for what other countries are doing against us. Blew it!
The Fed is widely expected to cut interest rates in July, in response to slowing growth and weak inflation. That’s unlikely to win them any plaudits from Trump, who has been banging the rate cut drum for months (and now looks vindicated).
Does Donald Trump really want Chinese and Japanese warships cruising around the Persian Gulf? It’s only recently they were engaged in cat-and-mouse manoeuvres around the Senkaku Islands.....
Doug Saunders of the Globe and Mail points out that Japan’s navy isn’t allowed to head off into international action anyway.
In which the US president asked China and Japan to establish a large-scale military presence in the Middle East, and Japan to turn its Maritime Defence Force, constitutionally limited to domestic defence since WWII, into a full-scale global navy again https://t.co/SxtswlMWsP
The Atlantic’s David Frum also has concerns....
Trump calls for bigger and more aggressive Chinese Navy https://t.co/GJYD3OSccV
Bloomberg’s Stephen Stapczynski is querying the president’s math(s):
China gets about 1/3 of its oil from vessels that travel through the Strait of Hormuz, according to calculations based on US EIA and China customs data https://t.co/7faTdU0xjI