"If He's So Good, Why Is This Happening?": Trump Reportedly Blames Mnuchin For Market Carnage

Update (7 pm ET): And like clockwork, President Trump fired off a Friday night tweet dismissing the WSJ report as another piece of Fake News. Trump said he's "extremely happy" with Mnuchin, and accused the WSJ of quoting "phony" sources, adding that, if the reporters had only approached him for comment, he would have killed the story right then and there.

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President Trump's volatile temper and readiness to blame members of his cabinet for defying him or making decisions that hurt the president's image has been well-documented. And as a handful of Trump's cabinet members are reportedly facing the possibility of being fired or otherwise ousted before the end of the year - and Jeff Sessions has already been fired - we can now add yet another name to that list: Treasury Secretary Steven Mnuchin.

According to the Wall Street Journal, President Trump has been "expressing dissatisfaction" with Mnuchin, as the falling stock market has helped sour the president's attitude toward a key member of his administration who has previously been seen as relatively secure in his standing.

The upshot of the report is that Trump is blaming Mnuchin for picking Jerome Powell to lead the Federal Reserve. Powell isn't very popular in the West Wing right now, as Trump has made abundantly clear with his repeated attacks on the Fed. Trump has blamed Powell for insisting on raising interest rates, and even hinted at times that he could be open to making a change at the central bank, something that has evoked nothing short of abject horror on Wall Street.


It's also worth noting that Trump had said earlier in his term that he would prefer the dollar to weaken; instead, it has strengthened, driven by the same expectations about higher interest rates that are rattling stocks. Mnuchin's early resistance to Trump's trade war also reportedly helped sour their relationship (though Trump's repeated attempts to foil Mnuchin-led talks with the Chinese have only contributed to the market's dyspepsia over the past few months).

In conversations with his advisors, Trump has reportedly expressed regrets about picking Mnuchin and mused about whether he should have tapped some one else, possibly Jamie Dimon, which is surprising considering some of Dimon's more recent comments.

Of course, as WSJ makes clear, just because Trump is frustrated with Mnuchin right now doesn't mean that Mnuchin will be fired.

In conversations with advisers in recent weeks, Mr. Trump has also voiced displeasure with Mr. Mnuchin over the turbulent stock market and the Treasury chief’s skepticism toward the sort of punitive trade actions the White House has taken against China, the people said.

Looking back to his appointment of Mr. Mnuchin in 2016, Mr. Trump has mused to advisers about whether he should have tapped someone else, mentioning JPMorgan Chase & Co. Chief Executive Jamie Dimon as an alternative. A spokesman for Mr. Dimon declined to comment.

Aides fall in and out of favor in a White House known for high turnover, and Mr. Trump’s pique doesn’t necessarily mean Mr. Mnuchin is in danger of losing influence or being replaced. As Mr. Trump prepares for a meeting with Chinese leader Xi Jinping at the Group of 20 summit on Nov. 30, he has relied on Mr. Mnuchin in sounding out Beijing on a trade deal.

The White House denied the rumors in a statement to WSJ, instead insisting that Mnuchin's relationship with the president remains on solid footing.

"The president has long been clear about his views on the Fed," said White House spokeswoman Lindsay Walters in a statement.

"He has a good relationship with Secretary Mnuchin and is thankful for all the work he does on behalf of his administration and the American people," she added.

But WSJ's sources reportedly said that Trump has continued to criticize Mnuchin both to his face and in private as stocks have entered correction territory.

In a conversation with someone who praised Mr. Mnuchin’s performance, Mr. Trump mentioned the volatile stock market. Aides have said he views the market as a barometer of his White House performance every bit as important as his poll ratings.

"If he’s so good, why is this happening?" Mr. Trump said of Mr. Mnuchin, according to a person familiar with the matter.

Trump has also reportedly made cutting remarks about Mnuchin's free-trade leanings during meetings, while also bashing the secretary because his efforts to negotiate a trade deal have come up short. Consider this particularly memorable exchange.

"The secretary fell into a Chinese trap, becoming the advocate of compromise and accommodation - and Trump saw that," said Mr. Trump’s former chief strategist, Steve Bannon.

Mr. Trump has made note of Mr. Mnuchin’s trepidation about tariffs. At a meeting to discuss China trade policies in the past month, Mr. Mnuchin at one point mentioned that "our trade strategy with China is working really well." He then used the word "we" in reference to the administration’s tough-on-China trade practices.

"What do you mean 'we', Steve?" Mr. Trump said, people familiar with the meeting said.

But while the Fed is probably reluctant to risk looking like it is bowing to presidential pressure, rumors have been circulating that the central bank could cut back on rate hikes next year. And comments from Fed Vice Chairman Richard Clarida during a recent CNBC interview seemed to suggest that the central bank could be changing its views on our proximity to the neutral rate. Several important investors have warned that the Fed should reconsider further hikes.

And even as Trump sees the market's performance as a gauge of his own effectiveness in office, the president could just as easily blame the market's performance on the Democrats. After all, Trump warned voters before the election: "If you want stocks to sink, vote Democrat."