Mnuchin thinks there's a simple reason the Dow is poised for its worst December since 1931
MARKETWATCH 7:04 AM ET 12/19/2018
Treasury Secretary Steven Mnuchin has weighed and measured the recent destruction that put the Dow Jones Industrial Average on track for its worst December since 1931, and he appears to have drawn his own conclusions as to the impetus.
Mnuchin during a Tuesday interview with Bloomberg News in Washington (
Bloomberg - Are you a robot? 18/mnuchin-blames-volcker-rule-high-speed-trading-for-volatility) said that the effect of the financial-crisis-era Volcker rule and high-frequency trading have combined to sap liquidity in the market and insert an unprecedented measure of volatility in assets.
The Volcker rule refers to the controversial standards put in place to prohibit banks from trading for their own accounts, in the wake of the 2007-09 financial crisis, while high-frequency trading refers to superpowered computers engineered to execute transactions at lightning-quick speeds, which has become arguably the dominant force in the market over the years since its advent.
Back-to-back declines of more than 500 points in the Dow , beginning Friday, pushed the blue-chip benchmark deeper into correction territory, usually defined as a drop of at least 10% from a recent peak.
In fact, if the Dow were to finish the month at its current level, down about 7%, it would mark the worst December since 1931, when it fell 17.01%, according to Dow Jones Market Data.