Trump Plans to Convene Plunge Protection Team (PPT)

In lieu of firing Powell, President Trump has a new idea: Convene the PPT

President Trump now advocates intervening in the markets if he does not like the direction of the stock market. This is seriously crazy, but please consider Top Trump official calls bankers, will convene 'Plunge Protection Team'

U.S. President Donald Trump’s Treasury secretary called top U.S. bankers on Sunday amid an ongoing rout on Wall Street and made plans to convene a group of officials known as the “Plunge Protection Team.”

“Today I convened individual calls with the CEOs of the nation’s six largest banks,” Treasury Secretary Steven Mnuchin said on Twitter shortly before financial markets were due to open in Asia.

The Treasury said in a statement that Mnuchin talked with the chief executives of Bank of America (BAC.N), Citi (C.N), Goldman Sachs (GS.N), JP Morgan Chase (JPM.N), Morgan Stanley (MS.N) and Wells Fargo (WFC.N).

“The CEOs confirmed that they have ample liquidity available for lending,” the Treasury said.

The Treasury said Mnuchin will convene a call on Monday with the president’s Working Group on Financial Markets, which includes Washington’s main stewards of the U.S. financial system and is sometimes referred to as the “Plunge Protection Team.”

The group, which was also convened in 2009 during the latter stage of the financial crisis, includes officials from the Federal Reserve as well as the Securities and Exchange Commission.

Seriously Crazy

This administration is seriously crazy.

Might I point out there are already breakers if the market falls too far, too fast. Also note that Yapping No Longer Works.

Here's the Bear Market Reality: Expect Much Worse.

The PPT isn't going to stop the decline unless it buys the entire market.

Dear Secretary Mnuchin, I have a question, if the stock market is undervalued and investors will rotate from bonds to stocks as you stated, why do we need a PPT?

Of course, Treasury Secretary Mnuchin is Totally Clueless About How Markets Function. It is mathematically impossible for investors to rotate into stocks.

Wow. Such stupidity.

Mike "Mish" Shedlock

Comments (36)
No. 1-16
Petersticks
Petersticks

Mish, can you explain why is it mathematically impossible? If I’m not mistaken Martin Armstrong is calling for that same scenario with the sovereign debt crisis. Thanks.

2banana
2banana

Besides taking and jawboning...

What can they really seriously do?

killben
killben

If Trump wants to ensure a crash, this is way to do it. Time somebody lit a fire to the tinder of overvalued stocks.

Six000mileyear
Six000mileyear

I think President Trump is calling the top US bank CEO's / PPT before any of the first level market circuit breakers are activated in order to soothe the market with words instead of shots of liquidity. Trump has to know Wall Street will listen to itself more than the President. Since CEO's all claim they have strong balance sheets and sufficient liquidity, Trump can say the CEO's lied about their strength when the liquidity crisis DOES hit. The FED can then be dismantled for "just cause", its members misleading the president about their financial health.

The question is how does the liquidity crisis transpire, inside or outside the US? A hard Brexit is a good candidate. Italy is having problems. China has manufacturing and real estate gluts, along with the debt to create them.

AWC
AWC

Not quite there yet, but this all culminates in a statement along the lines of "Whatever it Takes." Including direct purchase of equities, securities (Pensions?) and the launching of some scheme like a "Universal Basic Income." I wouldn't sell these nuts short. They are capable of stunts beyond the wildest imaginations.

Casual_Observer
Casual_Observer

You cant have it both ways with Trump. He is an abject failure on all fronts and may be a traitor. This is from a Trump voter who once hoped he would be the middle America needed to govern.

At this point dont be shocked if America functions more like the countries Trump once joked about when he said he wished America would try having leaders for life.

gregggg
gregggg

We need the Plunge Protection Team to keep the market from finding its true value after 24 months of irrational exuberance?

Carl_R
Carl_R

Trump is no more crazy now than he was when he was running for office. I don't understand why anyone would be surprised at anything he has done in office. Polished politicians sometimes paint one face while they campaign, and have a different one in office. Not so with Trump. It baffles me why anyone would have voted for him, but since they did, they have no standing to complain.

Sechel
Sechel

So the market declined by 2% and Mnuchin is now worried we're going to have a liquidity crisis? Rather than assuage the market of concerns this act only creates it.

The Trump team have been nothing but disruptive. Talk of tarriffs, blowing up budget negotiations over a wall and the unprecedented firing of a federal reserve head. Calling up a few large banks can't fix that.

Odd thing is that nobody at the Federal Reserve or the Treasury is concerned about excesses in the financial markets such as the over-heated leveraged loan market feeding collateralized loan oblgigations so what is Mnuchin's plan? Do nothing and give the banks more money if something were to go wrong?

Sechel
Sechel

This really isn't new. But it is odd they chose now to convene it

The group, which was also convened in 2009 during the latter stage of the financial crisis, includes officials from the Federal Reserve as well as the Securities and Exchange Commission.

Bam_Man
Bam_Man

Heaven forbid that we should actually have something resembling true Price Discovery in these so-called "financial markets".

riten
riten

Do they realize that this amounts to a stock market fraud?

RonJ
RonJ

"President Trump now advocates intervening in the markets if he does not like the direction of the stock market. This is seriously crazy..."

Let me know when "they" stop intervening in the markets. The so called PPT goes back to 1987.

Greenspan held rates artificially low to create a housing bubble (intervention) and Bernanke held them at ZIRP for years after it burst. Congress told FASB to allow banks to lie about the value of their assets, which jump started the 2009 bull market.

Then there is the Bullard manipulation of 2014, when during a stock market dump he said QE shouldn't end, goosing it to a new all time high. Later he said he remarks were misunderstood- after Japan announced it was taking over QE.

Yellen was asked when she was going to raise rates, as QE ended and she responded soon. This upset the market, so the comment was walked back. Intervention of another kind, as is the wording of the FED announcement the market waits breathlessly for, after every FED meeting.

lol
lol

DC gettin desperate,Treasury will start buyin stocks directly if the PPT/other central banks doesn't step up share purchases.Could we see the treasury as the largest shareholders in the FANGS in 2019????

bradw2k
bradw2k

Better than a phone call would be if they met in a dark high-rise lounge with a low ceiling à la Atlas.