Trump’s War on Powell: Will Shadow Fed Crash Markets? - Weekly Recap

About this Video

• Video Title: Trump’s War on Powell: Will Shadow Fed Crash Markets? - Weekly Recap
• Channel: Infranomics
• Speakers: The transcript doesn't name the speaker.
• Duration: 00:29:26

Introduction

This video provides a weekly recap of significant economic events, focusing on the escalating conflict between the Trump administration and Federal Reserve Chair Jerome Powell. The video analyzes the potential impact of a "shadow Fed" strategy on market performance, considering factors like jobless claims, bond auctions, FOMC meeting minutes, and new tariffs.

Key Takeaways

1. Rising Continuing Jobless Claims: While initial jobless claims remain low, continuing claims are rising, a potential precursor to a recession, although the speaker doesn't predict one.
2. Strong Bond Auctions: The 10-year and 30-year Treasury bond auctions showed strong demand, with stop-throughs indicating higher-than-expected prices. This is viewed as a bullish signal, despite a weaker 3-year auction. The speaker notes the importance of the decreasing supply of long-term bonds and its effect on rising rates.
3. FOMC Meeting Minutes: The minutes reveal a data-dependent approach by the Fed, acknowledging softening in the labor market and upward inflation risks, primarily due to tariffs. Disinflation is observed, with inflation slowing but not declining. The economy's growth expectations have also fallen, suggesting potential stagflation.
4. Shadow Fed and Potential Powell Dismissal: The video discusses the "shadow Fed" concept and the Trump administration's actions, potentially laying groundwork to justify firing Jerome Powell. A letter from the OMB director cites the Fed's deficit, renovations, and alleges Powell lied.
5. Potential Fed Chair Candidates and Market Response: The video mentions potential successors to Powell (Kevin Warsh and Kevin Hasset), noting Governor Waller's actions possibly as an audition for the role. Recent market reactions show rising rates, a stronger dollar (short-term), and increases in gold and Bitcoin, interpreted as a "risk-on" sentiment. The speaker expresses skepticism about the stock market's valuation, given the potential for increased inflation and the impact on tech companies.