 Happy Wednesday and welcome back to On The Money. I'm Sylvan Lane, and here's your nightly guide to everything affecting your bills, bank account and bottom line. See something I missed? Let me know at slane@thehill.com or tweet me @SylvanLane. And if you like your newsletter, you can subscribe to it here: http://bit.ly/1NxxW2N. Write us with tips, suggestions and news: slane@thehill.com, vneedham@thehill.com, njagoda@thehill.com and nelis@thehill.com. Follow us on Twitter: @SylvanLane, @VickofTheHill, @NJagoda and @NivElis. THE BIG DEAL--Trump after stock drop: 'The Fed has gone crazy.' President Trump on Wednesday said the Federal Reserve "has gone crazy" with a series of planned interest rate increases after U.S. stocks suffered their worst daily losses since February. Trump told reporters on Air Force One that the Fed had raised rates too quickly after being asked his reaction to Wednesday's massive stock sell-off, according to pool reports. "No, I think the Fed is making a mistake. They're so tight," Trump said. "I think the Fed has gone crazy. So you can say that, 'well that's a lot of safety actually. And it is a lot of safety, and it gives you a lot of margin. But I think the Fed has gone crazy." The Dow Jones Industrial Average dropped 832 points Wednesday afternoon, losing 3.2 percent on the day. The Nasdaq composite fell 4 percent and the S&P 500 lost 3.3 percent as investors sought safe havens from rising interest rates. Trump said the Wednesday stock slide was "actually...a correction that we've been waiting for, for a long time," but reiterated his frustration with the Fed. "I really disagree with what the Fed is doing, okay?," Trump said. I've got more on the developing story here, and keep reading for a breakdown on the bloody day on Wall Street. ON TAP TOMORROW LEADING THE DAY Dow drops more than 800 points amid tech rout, interest rate fears: U.S. stocks slid sharply Wednesday as investors sought safe havens from rising interest rates and the feared reversal of years of consistent gains for technology companies. The Dow Jones Industrial Average dropped 832 points Wednesday afternoon, losing 3.2 percent on the day. The Nasdaq composite fell 4 percent and the S&P 500 lost 3.3 percent as U.S. stocks took their worse daily losses since February. The Dow's Wednesday skid was its third-worst daily loss by points. Stocks in tech companies that led the bull market of the past decade suffered the heaviest losses as investors pulled back from the sector. Shares of Amazon, Netflix, Facebook, Apple and Twitter all fell sharply throughout the day. I unpack what went on today right here. What's going on: - Tech companies had boasted some of the best performing stocks of the recent surge and wooed billions of dollars from investors drawn to booming Silicon Valley titans. But a rash of security breaches, hacks, scandals and federal oversight have made the sector less attractive to traders.
- Investors have also been shaken by rising interest rates and bond yields. Higher borrowing costs typically narrow corporate profit margins and dampen investment. That pushes traders toward Treasuries and other products seen as safe havens.
What happens next: Stocks have been due for a correction, and this could be the start of a small deflation in overvalued equities. It could also be completely irrelevant in two weeks. It's too early to tell how long Wall Street's dismal October will stretch beyond this week, but the stock market was bound to come back to Earth at some point. Chinese intel officer extradited to US to face economic espionage charges: A Chinese intelligence officer has been extradited to the United States to face economic espionage charges, U.S. officials announced Wednesday. The Justice Department said Yanjun Xu, an alleged operative for China's Ministry of State Security, has been arrested and charged with conspiring to commit economic espionage and steal trade secrets from major U.S. aviation and aerospace firms, including GE Aviation, which is based just outside Cincinnati. The development represents a major feat for U.S. officials, who were able to apprehend a Chinese national alleged to be an active member of Beijing's intelligence and security agency operating in China. It also comes as the Trump administration escalates its public criticism of China for what it views as unacceptable behavior by Beijing on several fronts. The Hill's Morgan Chalfant tells us more here about this wild story. The background: - The U.S. alleges that Xu, an unindicted co-conspirator operating in China identified as "CF" and others targeted GE Aviation and other companies in and outside the United States since at least December 2013 in order to steal sensitive trade secrets.
- This included identifying experts working for these firms and recruiting and paying for them to come to China, sometimes under the false pretenses of giving a presentation at a university.
- Xu, a deputy division director in the sixth bureau of the security agency's Jiangsu State Security Department, was primarily responsible for stealing trade secrets and other technical information from U.S. and European aviation and aerospace companies.
Why it matters: The U.S. detainment of a top Chinese intelligence official is the latest blow to the fraught relationship between Washington and Beijing. Tensions between the Trump administration and Xi Jinping government have exploded throughout the year over tariffs and geopolitical maneuvering. Top White House economist 'hopeful' China's woes lead to trade deal: The top White House economist said Wednesday that he's hopeful that China's struggling economy will bring the Trump administration and Beijing closer to resolving their trade war. Kevin Hassett, chairman of the White House Council of Economic Advisers, argued on CNBC Wednesday that China should be eager to strike a trade deal with the U.S. because it would benefit the country's lagging economy. China has suffered from slower growth and a bear stock market through 2018. U.S. tariffs on Chinese exports are also expected to take a serious toll on the country's economy. Hassett said the Chinese economy could rebound quickly with help from the U.S., touting the Trump administration's recent renegotiation of the North American Free Trade Agreement and a trade deal with South Korea. "If something like that happens with China, then everything in China is going to turn around on a dime and we're hopeful that's the scenario that they keep in mind," Hassett said. "We're all at the White House hopeful that talks can resume and that we can move to a positive place with China." I explain the obstacles ahead here. GOOD TO KNOW ODDS AND ENDS - Major League Baseball team owners are asking the IRS to let them in on lucrative tax deduction established through the 2017 tax-cut bill, according to the Wall Street Journal.
- James Murdoch, the outgoing chief executive of 21st Century Fox, is the favorite to replace Elon Musk as the chairman of Tesla, sources told the Financial Times on Wednesday.
- Seventy-eight percent of U.S. workers think that CEOs make too much compared to employees, according to a new survey by beqom, a compensation software company.
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