NOEL KING, HOST:
President Trump usually takes a lot of pride in the stock market.
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PRESIDENT DONALD TRUMP: The stock market has hit record numbers.
The stock market is hitting one all-time record after another.
The stock market is soaring to record levels.
The stock market has smashed one record after another.
DAVID GREENE, HOST:
Well, what a difference a couple of weeks can make. The market the president once touted is now headed for its worst December since the Great Depression. And a bad month could make for a bad year, as stocks are on track for their worst year since 2008.
KING: All right. So how did we get to this point? NPR's business editor Uri Berliner is with us. Good morning, Uri.
URI BERLINER, BYLINE: Good morning.
KING: So market downturns do happen. Why is this one happening right now?
BERLINER: Well, the market's been volatile and going largely downhill for about three months now. You know, you can blame any number of culprits - higher interest rates, the trade dispute with China, Brexit, the gloss coming off some of the big tech companies that investors love so much, like Google and Facebook.
But what's happened in the last few days seems to really be coming directly from Washington and the Trump administration. You've had the resignation of Defense Secretary James Mattis, the partial government shutdown and another attack by President Trump against the Federal Reserve. So the turmoil and conflict in Washington has gone to just another level, if that's possible.
KING: So President Trump seems to be setting his sights on the Federal Reserve. He tweeted yesterday that the only problem with the economy is the Federal Reserve. How much does the Fed actually influence markets versus what the president says about the Fed influencing markets?
BERLINER: Well, the Fed policy is just one of a number of factors that influences markets. Other things, like corporate earnings and consumer spending and the global economy and geopolitics and also what a president says and does. But Fed policy does move markets.
KING: There were reports over the weekend that President Trump was considering removing Fed Chair Jerome Powell. Can the president do that?
BERLINER: Well, as far as we know, no president has ever tried to fire the Fed chairman, so the answer to that isn't entirely clear.
The law says members of the Federal Reserve Board, including the Fed chair - they can be removed by the president, but for cause. And presumably, that means breaking the law or some highly unethical act, not a disagreement over interest rates. At least that's the way it's been interpreted by legal scholars, but that statute's never really been tested.
KING: That's interesting. OK. Treasury Secretary Steve Mnuchin made kind of a strange move over the weekend. He called the heads of six top banks, and those bankers then told him, you know, nothing's out of the ordinary. Banks have plenty of liquidity for lending. Mnuchin then tweeted that, which seems like an attempt to calm things down.
But it's worth noting that bank lending is not the issue that people are worried about, right?
BERLINER: Right. And that was what was so unusual, or even strange, about that - not that the Treasury secretary met with the heads of the big banks. That's fairly normal. It is somewhat unusual to tweet about it.
But whether or not borrowers have enough access to credit from banks - that hasn't been raised at all as a concern. So instead of, you know, addressing market fears and concerns, it just seemed to elevate them. The market didn't really like that.
KING: And, Uri, last question for you - is it worth trying to predict whether or not this slide in the markets will continue?
BERLINER: It's not worth me trying to predict it. I can't do that.
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BERLINER: Markets go up and down. At a certain point, they reach a bottom, and people start buying in. But I have no idea whether we're anywhere near that.
KING: NPR's Uri Berliner exercising restraint there. Thanks, Uri.
BERLINER: You're welcome.
KING: All right. Now I want to bring in our White House correspondent Tamara Keith. Good morning, Tam.
TAMARA KEITH, BYLINE: Good morning.
KING: So how is the president reacting to the market slide?
KEITH: I mean, I can't be certain that this is what was happening, but based on all signals, it seems as though he spent a lot of the early part of the day yesterday watching TV and live-tweeting what he was seeing on TV, including, as you referenced, a tweet about the Fed.
He says the only problem our economy has is the Fed. They don't have a feel for the market. They don't understand necessary trade wars or strong dollars, or even Democrat shutdowns over the border.
And then this is where the tweet takes a turn that is a little confusing. The Fed is like a powerful golfer who can't score because he has no touch. He can't putt - exclamation point.
KING: Either a metaphor or an analogy - it's too early for me to tell which...
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KING: ...But an interesting one. And to be fair to President Trump, in many ways, he is right about the economy, or has been right. The economy's been doing well under him, and now we have this, which is quite a change.
KEITH: Yeah, the economy has been doing well. I'm now going to repeat a line that you will hear regularly on Marketplace, the business show, which is that the stock market is not the economy.
KING: Yes.
KEITH: And although sort of psychologically and politically for a lot of people the stock market is a proxy for the economy, in reality, it isn't the economy. But as we heard in the clips at the beginning, President Trump has conflated the two on a regular basis and has made, you know, how are your 401(k)s doing sort of a central selling point for his presidency.
KING: Which is really interesting because people do worry about how what their 401(k)s are doing. And when they see them shrinking, you know, it tends...
KEITH: Yeah.
KING: ...To lead to a lot of concern. President Trump had planned to go to his Florida club for Christmas. He instead stayed in Washington to deal with the shutdown. Now, you and I both know it's not always fun to work on the holidays. What has the president been saying about this move to stay in Washington instead of going away?
KEITH: Well, he - there's another tweet. There's a tweet for that, too. He - and it's unclear whether he was being facetious or serious, but many people took this as serious. He tweeted, I am all alone, poor me, in the White House waiting for the Democrats to come back and make a deal on desperately needed border security. And the tweet goes on, but the point there is that negotiations aren't really happening. There were some - just as the shutdown started - some talks. But Congress has gone home. The president is stuck in Washington, D.C. He's not in Florida. And there's really no progress in sight on the shutdown. Nancy Pelosi and Chuck Schumer, the Democratic leaders, sent out a statement of their own. And they said - I'll read part of it - it's Christmas Eve, and President Trump is plunging the country into chaos. They go on to say that every time they talk to somebody from - different from the White House, they get a different answer about what the president would accept to end the shutdown. And that leaves them really not knowing where this stands at any given moment.
KING: Tamara, are you going to be watching the president's Twitter feed today, or are you taking some time off for Christmas Day?
KEITH: I will be watching the president's Twitter feed. My hope is that he spends quality time with his family and doesn't tweet, but you never know.
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KING: NPR's White House correspondent Tamara Keith. She's also host of the NPR Politics Podcast. Thanks, Tam.
KEITH: You're welcome.
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KING: All right. Israel's government wants to move its elections up.
GREENE: Yeah. These elections were scheduled for November 2019, but now Israel's governing coalition says the elections are going to be held in April. Prime Minister Benjamin Netanyahu will be running for a fourth consecutive term. And if he wins, it would pave the way for him becoming the longest serving leader in Israel's history.
KING: NPR's Daniel Estrin is in Jerusalem. Good morning, Danny.
DANIEL ESTRIN, BYLINE: Good morning.
KING: So why would the government want to move elections up?
ESTRIN: Well, Netanyahu announced this, and he didn't actually give a reason. But early elections have been expected. His governing coalition has become unstable. His defense minister recently quit. There have been other disagreements. But political observers here suspect that there is one big reason Netanyahu wants elections now, and that is to fight for his political survival. He is a suspect in three separate corruption cases. We've been talking a lot about that over the last couple of months. And just a few days ago, there were reports that a top justice official in Israel concluded that Netanyahu should face criminal charges.
KING: Wow.
ESTRIN: So yeah. It seems like it's only a matter of time before Netanyahu will have to face the music. And analysts here say that by calling elections now, Netanyahu hopes that Israel's attorney general will delay an announcement on an indictment so he's not seen as interfering in the elections. And then Netanyahu bets that he'll win the elections and win a fresh mandate from the public. And then that would dissuade the attorney general from issuing an indictment at all.
KING: I mean, this is really interesting because he's obviously being followed - Netanyahu is - by the shadow of corruption if he's potentially facing criminal charges - brings up a really interesting question, which is, does he have any serious challengers? And if he doesn't, why not?
ESTRIN: Not really. The newest opinion poll out predicts that Netanyahu will win and will win big. There is one popular former army general who may run maybe on the center-left - maybe not. We don't know. And the latest poll shows him as a runner-up and still quite far behind Netanyahu. Netanyahu is going into this election after a very strong year. He's presenting himself as having very good relations with the leaders of rising powers in the world - Russia, China, India, rising nationalist leaders in Europe. He's been hinting of warming ties with Gulf Arab states, and he's been in power for almost a decade now. He's facing a very weak opposition.
KING: So what are going to be the big issues in this campaign? If these corruption charges aren't, what will be - what will everyone be talking about?
ESTRIN: Well, the corruption allegations will be a major issue and prominent.
KING: OK.
ESTRIN: And I think as one analyst put it, people will be asking, is Netanyahu a crook or Houdini? The biggest issue I think here, as it usually is in elections, is what's called security. The U.S. withdrawal from Syria has people worried here. There are concerns about escalating tensions with the militant Hezbollah group in Lebanon. There's been violence in Gaza and the West Bank recently. And any of those fronts could heat up. So Netanyahu will be tested on how he'll handle those issues. But this is also a referendum on the way the government and the way Israel's going - the ideological, right-wing, religious, nationalist direction Israel is headed. One big issue, I should mention, is that the White House has vowed to release its peace proposal for Israelis and Palestinians. Maybe Trump will delay that because of these elections.
KING: NPR's Daniel Estrin in Jerusalem. Thanks so much.
ESTRIN: You're welcome. Transcript provided by NPR, Copyright NPR.
