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Globe and Mail
7 days ago
- Business
- Globe and Mail
An open letter to President Trump: Your threats against Powell are unbecoming, dangerous and must stop
Dear President Trump: At this stage, I feel compelled to send you a letter regarding the constant badgering and pressure you are applying openly to the Fed Chairman. First, it was all the verbal pressure to cut interest rates, and not by a little, but by a full -300 basis points. That would be a case of being careful what you wish for — because taking the funds rate to, or below, 1.5% would surely only occur in the context of a financial market calamity or an outright economic recession. But somehow, this is no longer about business. It has become personal for you — a crusade to destroy Jay Powell. Now, I have had issues with the Fed Chairman's policies too, and I respect your view that he has been 'too slow' to ease policy. But I was also critical about how far he tightened policy in the rate-hiking cycle during the Biden tenure. So, my comments here are completely apolitical — just to set the record straight. The fact that everyone is now talking about Jay Powell either being fired or pressured to resign early, to me, is an undesirable and unwarranted distraction. And it is dangerous. The insults and name-calling are totally unnecessary and are better left to kids in the schoolyard. And, I must say, that putting the blame on cost overruns for the Fed building renovations is more than a little over the top, but reportedly a means for you to fire the Chairman with 'cause.' As I watch all the political pundits and market types wax on about how other past Presidents, from LBJ (on Martin) to Nixon (on Burns) to Reagan (on Volcker), did their utmost to pressure the Fed Chairmen of the day to cut interest rates (what President doesn't want lower rates?), they did so privately. People didn't find out about these episodes until many years after the fact (only Burns ended up caving, but not before he suffered a nervous breakdown). Your current strategy of attacking Powell out in the open to such an acrimonious degree is unbecoming and tarnishes America's reputation as being the world's primary source of stability. I would hazard to say that this open warfare has been at the root of the steep decline in the U.S. dollar this year, which has completely wiped out the gains made in the stock market (at least for a typical European investor). I do appreciate your desire to have the Fed cut rates sooner, and by a whole lot, to help contain or even reverse the rising tide of interest expense on the incredibly bloated level of public debt. I have two things to say about this. First, it is dangerous to use the Fed as a tool to cut the deficit in such a manner. Second, having the Fed ease policy and then cause a loss of confidence in the bond market will be self-defeating. You see, the Fed only really controls the overnight rate, and the impact of monetary policy extends out to one-year T-bills at most. If the bond market thinks the Fed has made a mistake, yields beyond the one-year maturity could become unhinged and could rise, and that would end up lifting debt-servicing charges. After all, nearly $16 trillion of the $24 trillion of privately-held marketable debt has a maturity profile beyond one year. This is not a distinction without a difference, and it is critical to understand that the Fed does NOT control the bond market — instead, as we saw last September with the jumbo rate cut and the ensuing rise in longer-term rates, the bond market controls the Fed! In Jay Powell's defense, he never said he was not going to cut rates. He only said not right away. He wants to make sure that he doesn't make the same inflationary misstep that he made in 2021 and early 2022 when he left rates too low for too long. Ironically, it was the inflation genie he let out of the bottle at that time that caused the cost-of-living to emerge as the number-one issue for voters in last November's election — the same issue that caused the demise of Joe Biden's presidency long before his horrific performance at the debate. I actually think that instead of berating Powell and continuously threatening to fire him, perhaps a dose of gratitude should be in store instead. After all, the Fed's role in perpetuating that 2021-2023 inflation cycle is one of the primary reasons you are President today. And now Powell is doing his best to ensure that inflation does not flare up again, which again deserves praise rather than criticism. If the central bank cuts rates prematurely and we get another inflation cycle, the results for the GOP in next year's mid-terms won't be that favorable. This is what goes unsaid. By being prudent and patient, Powell is actually doing you a big favor, sir. Instead, the Fed Chairman gets excoriated. I recommend that this rancor and threat of dismissal stop. Making matters worse is that everyone in your Administration is piling on. Congressional Republicans are so intimidated that they have gone silent. We have Kevin Warsh, who I understand is on your short list for the next Chairman appointment, who said this week that the Fed has gone beyond the standards of traditional central banking. He was the most ardent hawk at the Fed during his tenure as Governor from 2006 to 2011, a time when the central bank expanded its balance sheet by +$2 trillion. Talk about the pot calling the kettle black. As for all the criticism about Jay Powell being 'political,' dare I say that he is a Republican but during your first term as President, he both raised (2018) and cut (2019) rates; as he did in Biden's four-year term — cutting in 2020 and expanding the balance sheet dramatically into 2022; to only then embark on the most radical tightening in monetary policy since the early 1980s. Yes, Mr. Powell has made mistakes, but every central bank chief in the past has. That is the price of being human. I am trying to convince you, Mr. President, that what Jay Powell is doing is trying to fulfill your election promise to the public to ensure that inflation stays low. Cutting rates -300 basis points now, with the unemployment rate a snick above 4%, the effect of the tariffs still unknown, the stock market on wheels, industrial commodities on an uptrend, credit spreads uber-tight, and the dollar on a visible downtrend will do the opposite of what you want. If what you want is low and stable price inflation. I seriously think you should reconsider your strategy and approach, because Powell actually has your back. Instead of accepting that premise, you are stabbing him in the back. If you do end up creating the conditions for Powell's early departure and select a new Fed Chairman, that will cause the FOMC to shift gears before the time is right. What is going to be most at risk (over and beyond financial and economic stability) will be your legacy. Please give that some careful thought, sir. Remember what inflation did to Jimmy Carter and to Joe Biden, due at least in part to irresponsible Fed policy. Also, remember that it was Jay Powell who did everything he did to help get you re-elected back in November 2020. After cutting rates three times in late 2019, he went on to slice them to zero in the immediate aftermath of the pandemic and embarked on a $3 trillion quantitative easing program to help save the economy. Mr. President, that was all done on your watch. My friend and your Special Assistant, Joe Lavorgna, was on CNBC last week lambasting the Fed and itemizing how wrong it has been on so many forecasts in the past. It is not advised for one economist with a track record of his own to attack other economists, but so be it. This is the environment we are in. Replete with rancor. Joe's major point is that the Fed is understating the downward push on inflation coming from the AI-induced productivity boom. Now, he said that the productivity benefits are already here but, in fact, the four-quarter trend in nonfarm business productivity is only running at +1.3%. And forecasting what the new trend growth rate is going to be in terms of productivity is pure guesswork. Monetary policy must be as precise as possible and not based on throwing darts at the board. Moreover, Joe didn't mention this, but he surely must know it being a reputable economist, that there is an offset from productivity shifts due to a technological shift in terms of a higher real or natural rate of interest. I won't bore you with an economic dissertation, but this increase in what is called R-star will offset at least part of the dampening impact on inflation expectations when it comes time to determining where 'nominal' yields should be going. Everybody talks about how Alan Greenspan got this right, except for the fact that the bond market figured this out from mid-1998 to early 2000, when the yield on the 10-year T-note shot up more than +200 basis points. You are entitled to your opinion — I am talking about Joe, Mr. President, not you — but you can't have your own facts. Mr. President, I fully admit from afar that I am truly worried about the economic advice you are receiving from your inner circle. The truth can often be uncomfortable, but I don't sense they are being altogether that truthful, especially when they espouse a premature cut in the funds rate. The risk of a bond market backlash — and the dollar too — is not trivial. I also heard from former St. Louis Fed President Jim Bullard, who stated this week that the president should be able to pick and choose who leads the Fed at any time, to the effect that the May retirement date should be a relic of the past. Well, from my lens, it was you, President Trump, who chose Jay Powell for this job eight years ago. And while I have had my disagreements with Mr. Powell time and again, he really has not done that bad of a job. Yes, he bungled the 'transitory' file in 2021 and into 2022. But think of the bright side, Mr. President. That mistake helped get you elected! If Powell makes the same mistake twice, you may well get 'Bidened' yourself, and that is the last thing you want to have happen prior to the November 2026 mid-term elections. Please take this advice in the respectful manner it is intended. Nobody else in your inner circle is going to tell you the truth for fear of recrimination. But I would pivot if I were in your shoes, sir, from so sharply criticizing Jay Powell to praising him. And please do not fire him or encourage him to resign. So, consider this to be an 'awareness' letter — and when you get the chance, as a point of emphasis, be sure to thank Jay Powell in your next comment on Truth Social because he is at least partly responsible for you having the keys to the White House. Imagine the benefits that accrue either later this year or in 2026 when BOTH interest rates and underlying inflation will be falling in tandem. Chances are that, at that time, you will have wished Powell was still at the helm. Respectfully yours, David Rosenberg, founder of Rosenberg Research.
Forbes
23-05-2025
- Business
- Forbes
Why CMOs Can't Afford To Ignore Hispanic Marketing Now
The signs of an economic recession are becoming increasingly difficult to ignore: declining consumer confidence, a cooling housing market, and persistent market volatility. As Chief Marketing Officers (CMOs) face mounting pressure to trim budgets and optimize marketing investments, critical decisions must be made about where to allocate resources—and where to cut back. Over the past few weeks, as companies have started reporting weaker sales during Q1, several mentioned the Hispanic consumer as a soft driver of these results, and some recognized the need for additional focus and investment in this segment to reverse their performance. Historically, one of the first areas to see reductions during economic downturns has been multicultural marketing. Often deemed "incremental" or "nice to have," these investments have been deprioritized in favor of what is perceived as core marketing strategies. However, in 2025, taking this same approach could prove to be a costly mistake—particularly when it comes to the Hispanic consumer segment. Hispanics are the largest and fastest-growing ethnic minority group in the United States, accounting for nearly 20% of the U.S. population, and 51% of the population growth when compared to the previous census, according to the U.S. Census Bureau. This figure is projected to rise to 28% by 2060. Not only is this demographic growing rapidly, but it also wields significant economic clout. In 2022, the total buying power of U.S. Hispanics reached an estimated $2.8 trillion, making it equivalent to the world's fifth-largest GDP if it were a standalone economy. Moreover, Hispanic consumers are disproportionately younger than the general population, with a median age of 30 compared to 38 for the overall U.S. population. This represents a critical opportunity for brands targeting Millennials, Gen Z, and emerging Gen Alpha consumers. The Hispanic segment is not just a growing market—it's where the future of consumer spending lies. In times of economic uncertainty, it might seem logical to focus solely on "safe bets," but brands that overlook the Hispanic segment risk alienating a critical audience that can drive growth even during a downturn. Moreover, research has helped marketers understand that investment in Hispanic creative can yield a higher ROI than investment in non-Hispanic creative, so the concept of 'safe bets' also needs to be revisited. Here are six key actions CMOs should consider when it comes to Hispanic marketing investments in 2025: 1. Invest Where the Growth Is The Hispanic consumer segment has been a consistent driver of the U.S. population and economic growth. CMOs should allocate at least 10% of their marketing budget to Hispanic-specific programs that leverage culturally relevant channels and messaging. Platforms like Univision, Telemundo, and digital-first spaces such as TikTok, Instagram, and YouTube are particularly effective for engaging this demographic. 2. Craft Messaging That Resonates During a recession, consumers are more drawn to messages that highlight comfort, stability, and family. These themes align closely with core Hispanic cultural values, making it essential for brands to craft campaigns that feel authentic and relatable. Highlighting the importance of home, family, and resilience can create emotional connections that translate into long-term brand loyalty. 3. Prioritize Storytelling That Feels Familiar Hispanic consumers respond well to storytelling that is contextual, entertaining, and infused with humor. Ads that incorporate language, humor, cultural traditions, and everyday scenarios can create a sense of familiarity and trust. 4. Double Down on Loyalty Strategies Hispanic consumers are highly brand-loyal, especially when brands make an effort to acknowledge and celebrate their cultural identity. Loyalty programs that offer personalized rewards, community engagement, or exclusive experiences can deepen the connection with this audience. Importantly, brands should ensure that loyalty strategies are inclusive and consider specific cultural nuances. 5. Emphasize Value without Sacrificing Quality In a recession, value-driven messaging is key, but it shouldn't compromise quality. Hispanic consumers are discerning shoppers who appreciate brands that offer value alongside premium experiences. By emphasizing affordability, durability, and utility—along with culturally relevant branding—companies can remain relevant even in challenging times. 6. Consider Hispanic Consumers as Trendsetters We've all heard that 'necessity is the mother of all invention,' and periods of economic uncertainty when consumers feel pressured, can unlock new consumption behaviors, innovative uses of products and services, and unique combinations that haven't been seen before. Think, for example, about the launch of Airbnb in 2008 during the recession or the launch of Old Navy in the early 90s, which focused on cost-conscious families. Investing in consumer research, ethnographic studies, and in-depth consumer connections will unlock new insights that can benefit businesses both short and long term. If your target audience includes any of the following, a multicultural marketing strategy is no longer optional—it's essential: • 18-35-year-olds - Millennials and Gen Zers are among the most diverse generations in U.S. history, with Hispanics making up a significant portion. • Tweens and teens - Nearly 25% of U.S. children under 18 are Hispanic, making this demographic critical for brands with long-term ambitions. • Small-business owners - According to the Stanford Latino Entrepreneurship Initiative, Hispanic entrepreneurs are starting businesses at a rate three times higher than that of the general population. • Geographically concentrated markets - States like Texas, Florida, New York, and California are home to more than half of the U.S. Hispanic population. • Families - Hispanic households are more likely to include children and extended family members, making family-centric marketing strategies particularly effective. In previous recessions, brands that maintained—or even increased—their marketing investments emerged stronger and more competitive when the economy rebounded. Today, the Hispanic consumer segment represents a unique opportunity to future-proof your brand and drive meaningful growth, even in the face of economic uncertainty. For CMOs, the question isn't whether to invest in Hispanic marketing—it's whether you can afford not to.
Yahoo
18-05-2025
- Business
- Yahoo
As Trump targets DEI, some Oklahoma nonprofits say donors are backing out
Funding challenges are a constant in the nonprofit sector as organizations try to survive economic recessions, the COVID-19 pandemic and federal budget cuts. Phones at the Oklahoma Center for Nonprofits have been ringing off the hook as organizations seek money and support to keep them afloat, said Marnie Taylor, the group's executive director. But some organizations in Oklahoma are facing a new wave of funding challenges as corporate donors pull back their charitable giving to nonprofits aimed at diversity, equity and inclusion efforts. The Trump administration has applied increasing pressure to defund DEI initiatives, even outside of the public sector. More: Performers, LGBTQ+ advocates fear potential impact of anti-drag bills on OKC's Pride festivals Board members of Oklahoma Pride Alliance said they've lost some annual corporate sponsors for Oklahoma City PrideFest, leaving them to fill a $150,000 fundraising gap for their annual festival in downtown Oklahoma City. "A lot of corporations are pulling their DEI [policies] and their support for LGBTQ+ employees in the workplace, which is really difficult to see," said Oklahoma Pride Alliance President Kylan Durant. "We thought we were making some big progress, I would say, over the last decade." Another Oklahoma-based LGBTQ+ advocacy group, Freedom Oklahoma, also has seen corporate sponsors disappear. Nicole McAfee, the group's executive director, said while Freedom Oklahoma isn't new to politically based funding cuts, pushback from corporate sponsors has ramped up with the second Trump administration. McAfee estimated the group has lost out on tens of thousands of dollars, and is prepared to see those numbers grow. 'We often get apologies from people who have to be the bearer of bad news,' McAfee said. 'Just an assessment that as they think about their profits and their risks, they've decided that it feels too risky to contribute to organizations that have any stances that are seen as especially politicized right now.' In January, President Donald Trump began issuing executive orders to dismantle DEI programs across the federal government and in higher education. The president also signed an executive order at the beginning of his second term banning transgender troops from serving openly in the U.S. military. The political atmosphere is especially charged in Oklahoma. Lawmakers considered banning state employees from displaying Pride flags earlier this year and voted to ban state funds from supporting diversity, equity and inclusion initiatives at higher education institutions. Senate Bill 796 was approved by the governor in May. About two in five corporations are decreasing their marketing efforts for Pride Month, according to Gravity Research, a Washington, D.C.-based company that advises companies on social, political and reputational risks. After conservative activists confronted employees and vandalized Pride displays last year, Target is scaling back its Pride collection this year and won't carry the merchandise in all stores, according to USA TODAY. Bud Light, owned by beer giant Anheuser-Busch, is still struggling from repercussions over a 2024 social media campaign with transgender influencer Dylan Mulvaney. LGBTQ+ pride celebrations across the country, such as San Francisco Pride and the Houston Pride Festival and Parade, are reporting their corporate sponsors are withdrawing support. Durant said Oklahoma Pride Alliance hopes to raise more money for PrideFest this year through small donations, merchandise sales and VIP tickets. The nonprofit started an initiative to raise money called "Pride by the People." Fundraising events have included drag shows, yoga and T-shirt sales. PrideFest will be June 27-29 in Scissortail Park in downtown Oklahoma City. The group estimated the event, which draws as many as 45,000 people, will cost $330,500. 'Coming together with other queer people really builds community, so that you fight for each other and find each other and really create these coalitions of other queer people to stand together with and support and build community with,' Durant said. 'That's just something that I'm really reminding people of is that the level of visibility that PrideFest creates is incredibly important, because it draws the community together.' Like Oklahoma Pride Alliance, Freedom Oklahoma has moved to asking its base of supporters to donate to the cause, even in small amounts. 'It's both continuing to do that work and figuring out where we build those networks to help sustain this funding through really tough moments, and it's also continuing to figure out how we build across organizations who are facing similar fears in this moment to create some sustainability in a moment where the scarcity feels especially scary,' McAfee said. This article originally appeared on Oklahoman: Oklahoma PrideFest losing sponsors as corporate giving drops
Forbes
13-05-2025
- Business
- Forbes
Why This Soaring 8.1% CEF Dividend Thrives On Market Crashes
Stock market crash and panic, financial losses, economic recession concept. Red arrow over negative ... More financial figures. Digital 3D render. I get it: For many CEF people, the rough start to 2025 conjures (painful!) memories of 2022. It's an easy comparison to make. But we must resist doing so. Because unlike in 2022, today's volatility is caused by panic alone. That's the kind of situation we contrarians love! Nonetheless, I get it if you still want to be cautious. With that in mind, I've got a fund that gives us full market exposure with a key 'hedge'—and a growing 8.1% dividend, too. But I'm getting ahead of myself. Let's first talk about what's causing this 'Chicken Littleism' in the first place. It's two things, really. But we'll start with this chart: US GDP No doubt about it, this chart shows that the US economy contracted in the first quarter. It's something we've heard a lot about since the latest GDP report came out on April 30. That GDP report was the first real evidence of contraction, worries about which have weighed on the S&P 500 all year: Its total return down about 4% so far in 2025, as I write this. If this sounds familiar, it's because it's right where stocks were at this point in 2022: But this is no 2022. Unlike then, we're not facing soaring inflation and the prospect of spiking interest rates. Instead? Irrational panic. Let's talk about what really happened with GDP in these past three months. Bloomberg characterizes it simply: 'The economic contraction last quarter was driven by imports.' In other words, the economy contracted because imports surged as businesses and consumers bought more imported goods before President Trump's tariffs kicked in. This is a quirk of how GDP is measured: Economists subtract the value of imports when calculating it, so higher imports made the first quarter's numbers look worse than they would've been otherwise. In other words, the economy did not shrink because Americans were buying less. It just appeared to shrink because they were buying more. Weird, I know, but the truth is this wasn't a 'real' contraction, like in 2020 and 2008, the last times the US economy (and stocks) went deeply into the red. And what we saw in the first quarter of 2025 was much less severe than at this point in 2022, after the US economy had contracted 1% in the first quarter of that year. So we're left with a market that's had as steep a selloff as it saw in 2022 but with less steep of an economic contraction. The bottom line: This selloff is more about fear than the economy's fundamentals. If we see GDP rise in the next quarter, stocks will probably breathe a sigh of relief and rise, especially when investors remember what happened after the first quarter of 2022. If you'd bought at the end of that quarter, you've enjoyed a 9.4% annualized profit, as of this writing. I think that's a clear indication that times like this are when we should buy, not sell. But if you're still worried about short-term volatility, I understand—a lot has happened since January 1. And luckily there is a way to mitigate risk. Which brings us to the strategy (and ticker) I want to talk to you about today. For those concerned about more volatility, a smart move now is to buy a closed-end fund (CEF) that holds the S&P 500 and also sells call options against its holdings. I say it's a smart move because an option-selling strategy gets the fund cash that it can pay out to investors as dividends. That's because the fund sells the option to investors for a fee—called a 'premium' in option-speak. Whether or not the investor winds up buying the stock, the fund keeps the premium and uses it to fund the dividend. One such fund is the Nuveen S&P 500 Dynamic Overwrite Fund (SPXX), which, similar to an index fund, holds all the stocks in the S&P 500. So you're getting exposure to US blue chips like Visa (V), JPMorgan Chase & Co. (JPM) and Microsoft (MSFT), just as you would through a popular index fund like the SPDR S&P 500 ETF Trust (SPY) but with a twist: Instead of the index-average 1.4% dividend, you're getting a rich 8.1% dividend through SPXX. What's more, that payout has actually grown over the last five tumultuous years: SPXX Distribution Better still, unlike with ETFs, which never trade at a discount, we can pick up SPXX at a 3% discount to net asset value (NAV, or the value of its underlying holdings). So we're essentially buying the S&P 500 for 97 cents on the dollar. A small discount, to be sure—but a discount nonetheless! Another thing to remember is that call-option premiums rise with volatility. In other words, the wilder the market, the more stable this fund's payout gets. All of this means that we have a rare opportunity to buy not only a hedging tool, but a way to build our dividends when market panics come our way. But there is one thing to keep in mind before you rush out and buy this one: Its option strategy is great for income, but it does stunt the fund's growth in a rising market, as its best performers are sold, or 'called away.' This is why I don't recommend holding covered-call CEFs focused on an index, like SPXX, for the long run: SPXX Total Returns So while SPXX can play a role in your portfolio, I recommend full-fledged stock CEFs, both for the long term and today, with stocks oversold in relation to economic fundamentals. Michael Foster is the Lead Research Analyst for Contrarian Outlook. For more great income ideas, click here for our latest report 'Indestructible Income: 5 Bargain Funds with Steady 8.6% Dividends.' Disclosure: none
Reuters
06-05-2025
- Business
- Reuters
Marriott cuts 2025 revenue outlook as travel demand slows
May 6 (Reuters) - Hotel operator Marriott International (MAR.O), opens new tab trimmed its 2025 room revenue forecast on Tuesday, as it braces for slowing travel demand in the U.S. amid tariffs-induced fears of an economic recession. The company expects room revenue growth of 1.5% to 3.5% for the year, compared with 2% to 4% it forecast earlier. The Reuters Tariff Watch newsletter is your daily guide to the latest global trade and tariff news. Sign up here. Last week, rival Hilton (HLT.N), opens new tab cut its forecast for room revenue growth, while vacation rental company Airbnb (ABNB.O), opens new tab said the booking window is shortening, indicating increased consumer uncertainty and caution in travel spending.
