US: Resumption of equity turmoil - Westpac

In view of Sean Callow, Research Analyst at Westpac, the resumption of US equity turmoil has renewed the search for culprits.

Key Quotes

“President Trump doubled down on his criticism of the Fed in a WSJ interview, saying the Fed is the “biggest risk” to the US economy, “because I think interest rates are being raised too quickly.”

“Fed officials of course are trying to play down such talk.”

“We can also see signs of the impact of higher long term yields on the real economy.”

“Despite the strong job market and high consumer confidence, home sales are falling. Existing home sales in Sep were the lowest since 2015, new home sales the lowest since Dec 2016.”

“For now, the Fed is viewing the housing slowdown as a rare weak spot in a strong economy and is only viewing tariffs as a minor headwind.”

“In contrast, President Trump tweeted that tariffs are “great” in terms of raising revenue and as a bargaining tool for trade negotiations. This fits a news report that the US-China trade war is at the “beginning of the beginning.” This should cool hopes of a breakthrough at the end-Nov G20 meeting between Trump and China’s President Xi.”