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Yahoo
25 minutes ago
- Yahoo
'A dreadful idea': Why Wall Street's brightest minds hate the idea of Trump firing Fed Chair Powell
Markets are not on board with Donald Trump's crusade against Fed chair Jerome Powell. Stocks tumbled on reports this week that Trump was ready to fire Powell. Bank CEOs and analysts weighed in on the issue and raised several concerns. Markets do not want the president to mess around with the Fed. This was made clear in April when Donald Trump first threatened to fire Chairman Jerome Powell, and again on Wednesday as investors reacted to reports that Trump was getting ready to oust Powell. After a brief spasm of volatility in Wednesday's trading session, markets recovered after Trump said he wasn't actually about to fire Powell. It's unclear how, when, or if Trump will try to remove the Fed chief from his position, or if such a move would even work to lower interest rates as Trump has said he wants. Yet, Wall Street is certain of one thing: It would be bad for markets. Here's what five top minds on Wall Street had to say about the Trump-Powell feud. Brian Moynihan, Bank of America CEO It's critical for the economy for the Fed to remain independent from politics, Bank of America's Brian Moynihan said. "The Fed is an independent agency, and they're meant to be outside the purview of the executive and Congress," he said, speaking to Bloomberg on Wednesday. "Because if we drop rates too far, inflation may kick up, and then you have to raise them back quickly," he added, when speaking about the issues a new Fed Chair would need to consider. Other administration officials have floated the idea of a shadow Fed Chair, an incoming central bank chief announced before the end of Powell's term, who could indicate to markets what to expect after Powell is gone. Trump, meanwhile, was reportedly considering announcing a new Fed Chair as soon as this fall, an unprecedented move that could be read as trying to undermine Powell's influence over markets. Jamie Dimon, JPMorganChase CEO The JPMorgan boss also said it was critical for the central bank to maintain its independence on Tuesday, before reports of Trump speaking to lawmakers began to circulate. "The president said he's not going to try to remove Jay Powell," Dimon said after JPMorgan reported its earnings for the quarter. "The independence of the Fed is absolutely critical, and not just for the current Fed chairman, who I respect, but for the next Fed chairman." "Playing around with the Fed can often have adverse consequences, absolutely opposite of what you might be hoping for," Dimon later added, referring to the idea that hotter inflation could call for higher interest rates in the future. Roger Altman, Evercore founder and former Deputy Treasury Secretary It's doubtful whether Trump was truly planning on firing Powell in the first place. But, if the president were seriously thinking about it, that would be "among the worst ideas," Altman said, speaking to CNBC on Wednesday. "It's a dreadful idea. And President Trump would severely regret that," he said. Historically, economies with a politically controlled central bank have struggled when compared to economies where the central bank remains independent, Altman said. He pointed to the "stark" difference between nations with independent policymakers and nations like Turkey and Argentina. It's also unclear whether Trump could succeed in removing Powell from the Fed. Powell could be unwilling to leave if Trump were to fire him, meaning the issue could escalate to the courts, Altman speculated. The Supreme Court this year already said that it was not legal for the president to fire the head of the central bank. "I think it would be a failed effort to oust him, and I think President Trump is too smart to go down that road. He probably likes trolling Chairman Powell, but I don't think he really plans to do this," Altman said. David Solomon, Goldman Sachs CEO Goldman Sachs CEO David Solomon also underscored the importance of the Fed remaining independent from politics. "With respect to monetary policy, I think central bank independence, Fed independence, is very important, and it's something we should fight to preserve," Solomon said, speaking to CNBC on Wednesday. Solomon added that he believed there was a "reasonable" chance the Fed would cut interest rates once or twice this year, though he wasn't certain. Inflation looks to be on the right track, which should give the central bank room to cut rates, but the impact of tariffs still needs to be seen, he said. Deutsche Bank If Trump were to move forward with firing Powell, the volatility in markets could be far greater than what investors saw on Wednesday, when reports of Trump speaking to lawmakers originally surfaced, Jim Reid, an analyst at Deutsche Bank, wrote on Thursday. US stocks sold off sharply as investors digested the news, but reversed course after Trump downplayed the likelihood he would fire Powell. Treasury yields, a reflection of interest rate expectations in the economy, also surged, while the US dollar weakened against other currencies, like the euro. "If you wanted to make a very crude calculation about what the immediate impact would be if he did fire Powell, you could multiply these numbers by four," analysts said, speculating the 10-year Treasury yield could rise as much as 20 basis points, while the 30-year yield could rise as much as 45 basis points. The US dollar could also fall nearly 6% against the euro, the bank estimated. Trump firing Powell is also unlikely to lead to lower rates, as the Fed needs to come to a consensus before changing the set interest rate level, economists wrote in a separate note on Wednesday. The event could also raise concerns about the Fed's credibility, which could create "considerable risks to price stability," they added. Read the original article on Business Insider Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
25 minutes ago
- Yahoo
WNBA players call league's current proposal 'unsustainable,' stay 'committed to the fight' for better CBA
The WNBA players union and league officials had a face-to-face meeting on Thursday in Indianapolis regarding a new collective bargaining agreement. However, the meeting did not result in the two sides getting any closer to a new deal. "The WNBA's response to our proposals fails to address the priorities we've voiced from the day we opted out," said a statement issued by the WNBPA, "a transformational CBA that delivers our rightful share of the business that we've built, improves working conditions, and ensures the success we create lifts both today's players and the generation that follow." "We've told the League and teams exactly why their proposal falls so short," the statement continued. "This business is booming — media rights, ratings, revenue, team valuations, expansion fees, attendance, and ticket sales — are all up in historic fashion. "But shortchanging the working women who make this business possible stalls growth. The only thing more unsustainable than the current system is pretending it can go on forever." The statement ended by saying "We are committed to the fight" and that the players were "committed to returning to the negotiating table." This story will be updated.
Yahoo
25 minutes ago
- Yahoo
Powell defends $2.5 billion Fed renovation in letter to White House
Jerome Powell offered his first detailed defense of a $2.5 billion renovation of the Federal Reserve's headquarters, arguing in a Thursday letter to White House budget director Russell Vought that "we take seriously the responsibility to be good stewards of public resources." It was a point-by-point response to a July 10 letter Powell received from Vought that raised a number of concerns about cost overruns and certain design elements, while warning that 'the president is extremely troubled by your management of the Federal Reserve system.' "Instead of attempting to right the Fed's fiscal ship, you have plowed ahead with an ostentatious overhaul of your Washington DC headquarters," Vought wrote to Powell last Thursday, citing plans for rooftop terrace gardens, VIP private dining rooms and elevators, water features, and marble. Trump himself has criticized the project over the past week, even saying it "sort of is" a fireable offense. On Wednesday Trump said he didn't plan to fire Powell but also left the door open to that possibility while talking about the renovation project. "I don't rule out anything, but I think it's highly unlikely, unless he has to leave for fraud." Powell in his Thursday letter said "we take seriously the responsibility to be good stewards of public resources" and "we have taken great care to ensure the project is carefully overseen since it was first approved by the Board in 2017." The two buildings along the National Mall were in need of 'significant structural repairs,' he noted, to make them safe and healthy for workers. They had not had a comprehensive renovation since they were built in the 1930s. The Fed submitted designs to the National Capital Planning Commission (NCPC) and received approval from that agency in 2020 and 2021. 'Since the plan's approval by the NCPC, the Board has made a small number of design changes to scale back or eliminate certain elements and has added no new elements,' Powell wrote in the letter. He stressed that the changes were intended to simplify construction and reduce the likelihood of further delays and cost increases. He said that although the Fed board's initial design included new water features for the 1951 Constitution Avenue building, they have been eliminated. Fountains that were original to the Eccles building are being restored. No VIP dining rooms are being constructed, he said, there is no VIP elevator. 'Guidance from the NCPC states that agencies should submit revised project information for approved projects only if substantial changes are made in either the design or plan of the project after NCPC review,' Powell wrote. 'The Board does not regard any of these changes as warranting further review.' Many of these statements generally align with what Powell told Senate lawmakers on June 25 when asked about media reports on the project. On that day, Republican senators asked him about media reports that described the expenses and features of the Fed renovation project and cited allegations that the cost of the renovation has increased by more than 30% to $2.5 billion. Citing media reports, GOP senators said plans showed the renovated buildings will include rooftop garden terraces, ornate water features, new elevators that deliver board members directly to their VIP dining suite, and the use of white marble with a private art collection in the basement. Powell called the media reports quoted by senators "misleading and inaccurate," saying that there was no VIP dining room nor new marble. Powell stressed during his testimony that there are no new water features, no beehives, no rooftop terrace gardens, and no special elevators. "So all the sort of inflammatory things that the media said are either not in the current plan or just inaccurate," Powell said. In his letter to Powell, Vought said that Powell's testimony raised serious questions about the project's compliance with the National Capital Planning Act, which requires that projects like the Fed headquarters be approved by the National Capital Planning Commission (NCPC). The NCPC did approve a plan in 2021, Vought said, but Powell's testimony "appears to reveal the project is out of compliance with the approved plan." That, he said, would be a violation of the National Capital Planning Act and require the Fed to halt construction and obtain a new approval from NCPC. But Powell said Thursday in his letter that "the project is proceeding in accordance with the plan that the NCPC approved in September 2021." Click here for in-depth analysis of the latest stock market news and events moving stock prices Sign in to access your portfolio
