Posts
There
is a new hashtag = #plungeprotectionteam
=
on Twitter
Mnuchin
Called Bank CEOs To Check Liquidity, Calm Markets; Has Monday Call
With Plunge Protection Team
24
December, 2018
Update: With
everyone suddenly freaking out over whether (and why) Mnuchin really
made the kind of "liquidity test" call to bank CEOs that
was reserved for the depth of the financial crisis, moments ago
Mnuchin himself tweeted out details of his Sunday call (from Cabo),
the gist of which is that Mnuchin was checking bank liquidity levels
for "loans and other market operations" with the CEOs of
the 6 largest banks, and even more importantly, on Monday
Mnuchin will hold a call with the President's Working Group on
Financial Markets, better known as the Plunge
Protection Team.
In
other words, what was expected to be a sleepy Monday half-day
session, is about to get a lot more violent.
The
full text from Mnuchin's statement:
Secretary Mnuchin convened individual calls with the CEOs of the nation's six largest banks
The banks all confirmed ample liquidity is available for lending to consumer and business markets.
Washington — 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.
Tomorrow, the Secretary will convene a call with the President's Working Group on financial markets, 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.
"We continue to see strong economic growth in the U.S. economy with robust activity from consumers and business," stated Secretary Mnuchin and added "With the govemment shutdown, Treasury will have critical employees to maintain its core operations at Fiscal Services, IRS, and other critical functions within the department."
And
the tweet in question:
Needless
to say, Mnuchin's official statement has just led to a major headache
for banks because as CNBC's Scott Wapner correctly notes, banks now
have an obligation to publicly report what was discussed on the call
with Mnuchin:
Every CEO on those calls has an obligation now to publicly reveal what was specifically discussed with @stevenmnuchin1 and what the context was.
Meanwhile,
this is what "liquidity confirmed" may look like:
As
to whether this will help to stabilize markets, well...
Which
of course, is the whole point: as
we have said on various occasions before, the only way for the Fed to
not only relent but go "all in" dovish, perhaps with QE4 on
top, is by crashing the market first.
* * *
EARLIER:
Having
quickly tried to stymie any panic yesterday about rumors that
Trump wants to fire Jay Powell:
"I never suggested firing Chairman Jay Powell, nor do I believe I have the right to do so."
Treasury
Secretary Mnuchin reported ly
interrupted his time in Cabo San Lucas, Mexico, to call the
chief executives of some of the country's largest banks in an effort
to calm any further collapse in the market when Wall Street
opens Monday.
"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."
We
suspect Mr. Mnuchin is calling the wrong guys - does he not think
they have been pulling every lever to try and stop the utter carnage
in their own stock prices (which are down 12 of the last 13 days in
the biggest crash since Aug 2011's USA downgrade)...
In
his conversations with executives, CNN
reports that 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."
If
systems remain normal, why are the stocks of the world's largest and
most systemic financial companies also collapsing?
And
if systems are normal, why is the Treasury Secretary interrupting his
Mexican riviera time with Mrs. Mnuchin to beg the banks to do
something?
Given
the drop in USDJPY early indications already, we suspect Sunday night
futures may not obey the Treasury Secretary's wishes.
Plunge protection team ready
Here we go: Mnuchin has a call with the Plunge Protection Team on Monday.
MNUCHIN WILL CONVENE A CALL ON MONDAY WITH PRESIDENT'S WORKING GROUP ON FINANCIAL MARKETS, WHICH INCLUDES OFFICIALS
FROM FED, SEC, CFTC
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