Latest news with #FedIndependence
Yahoo
21 hours ago
- Business
- Yahoo
The Trump-Powell feud keeps heating up. Meet the betting markets' top picks to replace the Fed chief.
The Trump-Powell feud escalated this week. Polymarket shows a 70% odds Powell will be replaced, a development that would be a blow to Fed independence. These are the top four frontrunners for Jerome Powell's job. As President Donald Trump continues his crusade against Fed Chair Jerome Powell, investors are grabbing their popcorn and gambling on Powell's replacement like it's the Super Bowl. The events of recent weeks have turned the normally boring topic of Federal Reserve leadership into something of a soap opera. Powell's in hot water for what administration officials say is mismanagement of the Fed's building renovation. Trump reportedly drew up, then withdrew, plans to fire Powell. Other Fed governors are piling on Powell for his hesitancy to cut interest rates. Powell's firing would be a blow to Fed independence and seriously disturb markets, as investors would no longer view the central bank as an independent decision-making body, but an arm of the executive. It's a trying time for Fed watchers, but bets are already being placed on who will step into Powell's shoes, whether Trump fires him or he survives until 2026. Here's who's being scouted as the next Fed boss, along with the Polymarket odds of their appointment as of Friday, July 18. Scott Bessent Who is he: Treasury Secretary Polymarket odds: 23% Market commentary: Bessent is the top pick to replace Powell, but he's in a tricky position as Trump's right-hand man for all things markets. Trump himself has flagged Bessent as a potential candidate for Fed chair, but the president said on Tuesday that he likes Bessent where he is now. When Bessent first assumed the role of Treasury Secretary, Wall Street believed he would promote policies that appeased markets. However, he's often come out on Trump's side when stocks have crumbled, stating that he and the president aren't concerned about a little volatility. Nobel Laureate Paul Krugman wasn't particularly bullish on Bessent in a recent Substack post. "What Trump looks for in his personnel choices is, above all, groveling loyalty. So anyone he chooses will, more or less by definition, be a spineless toady. Even if the appointee looks qualified for the position, we can be sure that he or she will indulge and cheer on every Trump idea, no matter how bad," Krugman wrote. "I call this Bessent's Law because when Trump chose Scott Bessent as Treasury Secretary a number of Wall Street people assured us that he was a good, competent choice." Key quote: Bessent's been tight-lipped about any Powell replacement details. "There's a formal process that's already starting. There are a lot of great candidates and we'll see how rapidly it progresses," Bessent told Bloomberg on Tuesday. Kevin Warsh Who is he: Former Federal Reserve Governor Polymarket odds: 20% Market commentary: Warsh is seriously pulling out all the stops for the chance to take Powell's job. In a twist, he was passed over for Fed Chair in 2017, when Trump picked Powell to replace Janet Yellen. Earlier in July, Warsh appeared on Fox Business, where he pushed for lower interest rates and argued that "tariffs are not inflationary." His current stance is an interesting reversal from his time as a hawkish Federal Reserve Governor from 2006 to 2011, when he expressed concern that aggressive rate cuts could lead to higher inflation. Neil Dutta, head of economics at Renaissance Macro, said he thinks Warsh is one of the worst picks for Fed Chair. Key quote: "I don't think we need continuity when the central bank doesn't have credibility," Warsh said on CNBC on Thursday, criticizing Powell's decision to make a jumbo 50 basis point rate cut last September. "We need regime change at the Fed." Kevin Hasset Who is he: National Economic Council Director Polymarket odds: 16% Market commentary: There's another Kevin in the running. As Trump's current economic advisor, Wall Street strategists think Hasset is likely to follow Trump's orders. When asked about Hasset during a press briefing, Trump said "Kevin is fantastic." Hasset has been critical of the Federal Reserve's renovation project budget and has voiced support toward the idea of firing Powell. But similar to Bessent, Hasset hasn't commented much on whether Trump has asked him to be the next Fed chair. However, he has backed Trump's call to cut interest rates by up to three points. "Kevin Hassett and Scott Bessent are blatant political picks, which may struggle to achieve Senate confirmation," Michael Brown, senior research strategist at Pepperstone Group, wrote in a note late last month. Key quote: "The president has policy disagreements. He thinks that the Fed has been mismanaged. He's been discussing his own view about what policy should be, but he's not disrespecting the independence of the Fed," Hasset said on NBC News on July 16. Christopher Waller Who is he: Federal Reserve Governor Polymarket odds: 12% Market commentary: Waller is gaining momentum in the race as a dark horse candidate, receiving a 9% boost on Polymarket early Friday after giving a speech arguing for a July rate cut. Waller cited weak private payroll growth as one of the main reasons for the Fed to lower rates at this month's meeting. Out of all the options, Waller would probably be the one most palatable to investors, as his arguments for cutting are the least political, and he would represent a fairly establishment pick to run the central bank. "He is not talking about cost overruns on the Eccles building or lowering the cost of government finance or 'regime change,' but he is talking about the shifting balance of risks in the economy," Dutta wrote in a note on Thursday. "There is a huge distance from him — someone who has an intellectual consistent/defensible/sound position — and the sycophants (Hassett, Bowman, Warsh) who are extensions of DJT," Warren Pies, founder of 3Fourteen Research, wrote in an X post on Thursday. Key quote: "While the labor market looks fine on the surface, once we account for expected data revisions, private-sector payroll growth is near stall speed, and other data suggest that the downside risks to the labor market have increased. With inflation near target and the upside risks to inflation limited, we should not wait until the labor market deteriorates before we cut the policy rate," Waller said on Thursday. 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
Bloomberg
3 days ago
- Business
- Bloomberg
Bloomberg Surveillance TV: July 18th, 2025
- Christopher Waller, Member-Board of Governors at the Federal Reserve - Paul Atkins, Chairman of the SEC - Peter Oppenheimer, Chief Global Equity Strategist at Goldman Sachs - Sonal Desai, CIO: Fixed Income at Franklin Templeton Christopher Waller, Member-Board of Governors at the Federal Reserve, joins for a discussion on Fed rate cuts and Fed independence. Paul Atkins, Chairman of the SEC, discusses regulation and the recent Stablecoin bill. Peter Oppenheimer, Chief Global Equity Strategist at Goldman Sachs, talks about the outlook for global and US equities amid an uncertain inflation and policy path. Sonal Desai, CIO: Fixed Income at Franklin Templeton, discusses warnings signals from the bond market.
Yahoo
6 days ago
- Business
- Yahoo
Jamie Dimon just sent Donald Trump a warning about meddling with the Fed
Jamie Dimon is warned against messing with Fed independence on Tuesday. Interfering with the Fed could lead to big consequences, Dimon said. Trump and other administration officials have been highly critical of Fed Chair Powell this year. Jamie Dimon is sending President Donald Trump a message: Cool it on haranguing with Jerome Powell to cut rates. On Tuesday, the JPMorgan CEO touched on the feud between Trump and the Fed chair. Dimon said it's important for the central bank to maintain its independence, referring to Trump's threats to fire Powell or announce a new Fed chair months in advance, a move that could undermine Powell's decision-making. "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. Trump has made it clear that he isn't happy with Powell, whom he appointed in 2017. The president has repeatedly put pressure on the Fed chief this year to lower interest rates immediately, calling Powell "Too Late," a "major loser," and a "very dumb, hardheaded person" in posts on Truth Social. Trump also said earlier this year that he was considering removing Powell from his post, before he clarified that he had no intention of firing the Fed chair before the end of his term next year. But the president and other members of his administration have continued to lob criticism at Powell. In June, a Wall Street Journal report said that Trump was considering announcing a new Fed chair as soon as this fall. Treasury Secretary Scott Bessent — one of the contenders for the next Fed chief, according to the Journal's report — also floated the idea of a "shadow Fed Chair" in October of last year. The shadow chair would be a Fed Chair announced before the end of Powell's term, who could indicate to markets what to expect after Powell is gone, Bessent told Barron's at the time. National Economic Council Director Kevin Hassett, another reported contender for Fed chair, said on Tuesday that Trump didn't want to fire Powell, but "certainly" could if there was a cause. Lately, the administration has said that one possible cause for Powell's removal could be the renovation of the Fed building in Washington, DC. Russell Vought, who runs the Office of Management and Budget, said Powell's oversight of the work amounted to mismanagement of the central bank. Market pros have warned that meddling with the Fed's independence could have significant consequences on financial markets. That's because the Fed lowering interest rates prematurely could loosen inflation expectations in the economy and lower the credibility of the Fed, making inflation harder to fight in the future. If Trump were to move forward with an early announcement of the next Fed chair, bond yields could actually move higher as investors grow more concerned about the inflation outlook, analysts previously told Business Insider. The next Fed chair also isn't guaranteed to cut rates when their term begins, as the central bank's policymaking committee needs to come to a consensus before making changes to the benchmark rate. 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
7 days ago
- Business
- Yahoo
Why Trump removing Powell is the market's most underestimated risk
Fed independence is in the spotlight once again as White House officials criticize Fed deficits. However, the stock market isn't pricing in the full extent of the risk, according to Deutsche Bank. Fed Chair Powell's removal would cause a meltdown in the currency and bond markets. Markets are cruising at all-time highs, but a major risk lurks below the surface: the end of Fed independence. It's no secret that President Donald Trump and Federal Reserve Chair Jerome Powell do not see eye-to-eye. The president has repeatedly called for Powell to cut rates and threatened to fire him. Last week, the feud escalated to another level when Russell Vought, a senior Trump administrator, criticized Powell for renovations of the Federal Reserve headquarters running over budget and said he should be investigated for mismanagement. This shouldn't be dismissed as bluster from the administration, Deutsche Bank warned on Friday. George Saravelos, the bank's global head of FX research, said investors are seriously overlooking the danger of Trump removing Powell. Markets are pricing in just a 20% chance of Powell's removal this year, and the dollar index is indicating that investors aren't detecting a threat to Fed independence. If Trump were to remove Powell, the consequences would be severe, Saravelos said. "In extreme cases, both the currency and the bond market can collapse as inflation expectations move higher, real yields drop and broader risk premia increase on the back of institutional erosion," Saravelos wrote. The Trump-Powell feud poses severe risks to the currency and bond market. In the event of Powell's removal, Saravelos anticipates the dollar would immediately plunge 3%-4%. This would be followed by a 30-40 basis point sell-off in US Treasurys, especially among longer-dated bonds. Borrowing costs would rise overnight and inflation would creep up, leading to the exact opposite of what Trump intended by firing Powell. Additionally, the growing budget deficit is already posing a threat to bond yields, meaning that the consequences of Powell's removal would be amplified. "This raises the risk of far larger and more disruptive price moves than ones we have outlined here," Saravelos wrote. As tariff deadlines are pushed back and stocks soar to new highs, perhaps investors believe the TACO trade will act as a backstop for markets again. But Saravelos doesn't think investors should brush off Trump's threats when it comes to Fed independence, as there is historic precedent for the central bank being influenced by political pressure. In the 1970s, President Richard Nixon pressured Fed Chair Arthur Burns to keep rates low, worsening the country's stagflation crisis. Saravelos believes the implications would be more serious today, as the US has much higher debt levels, and capital markets are much more concentrated in the US. Even if Trump doesn't go through with his threats of removing Powell, the ongoing feud still injects lasting uncertainty into markets. "We would expect a sustained and persistent risk premium to be subsequently embedded in both the US dollar and the Treasury market, with exceptionally high sensitivity to both the mix of data and the conduct of monetary policy in the subsequent months," Saravelos wrote. "In sum, we consider the removal of Chair Powell as one of the largest under-priced event risks over the coming months." 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
26-06-2025
- Business
- Yahoo
Morning Bid: Trump punches at Powell, dollar recoils
A look at the day ahead in European and global markets from Ankur Banerjee Just as investor sentiment was recovering from the latest geopolitical jolt, buoyed by the Israel-Iran ceasefire, President Donald Trump rattled markets again with an attack on the Fed chair that revived worries over the central bank's independence. The result has been another bout of dollar selling, which pushed the euro to its strongest level since November 2021 and the Swiss franc to its highest in a decade. A report from the Wall Street Journal said Trump has toyed with the idea of naming Fed Chair Jerome Powell's replacement as early as September, which could undermine Powell's authority for the remainder of his term to next May. Trump has repeatedly chastised Powell for not cutting interest rates and said he was "terrible" in the latest attack on Wednesday, eroding investor faith in the U.S. central bank's independence in setting policy. Earlier this month, Trump openly contemplated firing Powell and even mused about making himself the Fed chair, although he subsequently backed off. "I know within three or four people who I'm going to pick," Trump told reporters on Wednesday, when asked if he is interviewing candidates to replace Powell. All that uncertainty, along with Trump's chaotic trade policies and their potential threat to economic growth, have taken a toll on the U.S. dollar as investors look to move their money elsewhere. The dollar index, which measures the currency against six other units, is down 10% this year and on course for a sixth straight month in the red. The last time it had a run like this was in 2017. While the "sell America" theme has faded somewhat in the past few weeks, as evidenced by U.S. stocks hitting record highs, investors remain worried about the dollar and how Trump's tariff policies could affect it. Trump's tariffs are coming back onto the markets' radar as the clock ticks down to his July 9 deadline for trade deals. In Thursday's Asia trade, futures indicated a muted open for European stock markets. Investors will keep an eye on defence stocks after NATO leaders backed the big increase in defence spending that Trump had demanded. The big news in the corporate world was Shell denying it was in talks to buy British rival BP, after the Wall Street Journal reported on Wednesday that the oil majors were in early discussions about a takeover. Key developments that could influence markets on Thursday: Economic events: Germany Gfk consumer sentiment for July Trying to keep up with the latest tariff news? Our new daily news digest offers a rundown of the top market-moving headlines impacting global trade. Sign up for Tariff Watch here. (By Ankur Banerjee; Editing by Edmund Klamann) Sign in to access your portfolio
