Trump vs. Powell and the stock market bubble

Investment Analysis Clubs Macro Economic Trends and Risks
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Politics is banned on METAR. That rule makes sense to prevent partisan bickering that doesn’t improve our investment results.

Unfortunately, President Trump is directly meddling in the economy and the financial markets by unilaterally imposing tariffs and threatening to fire the Chair of the Federal Reserve in order to cut the fed funds rate below its neutral rate.

Trump has violated the Constitution in many ways so we shouldn’t be surprised if he trumps up false accusations against Jerome Powell to attempt to fire him for fraud. Trump changes his mind unpredictably. So it’s impossible to know what he will actually do.

https://www.wsj.com/politics/policy/trump-fire-fed-chair-powell-8e33497e?mod=hp_lead_pos1

Trump Denies He Is Planning to Attempt to Fire Powell

The president raises the prospect that Powell could be removed ‘for fraud’

By Brian Schwartz and Nick Timiraos, The Wall Street Journal, Updated July 16, 2025

WASHINGTON—President Trump denied that he was planning to attempt to fire Federal Reserve Chair Jerome Powell after polling Republican lawmakers during a closed-door meeting about whether he should oust him.

“We’re not planning on doing anything,” Trump told reporters at the White House, adding later, “I don’t rule out anything, but I think it’s highly unlikely. Unless he has to leave for fraud.”

The president suggested he could attempt to remove Powell for cause, arguing the central bank spent too much money on renovations of two historic office buildings…

The Fed’s board approved the construction project in 2017 and the latest renovations began three years ago. The Fed says the building has faced cost overruns due in part to unforeseen construction conditions such as more asbestos than anticipated, toxic contamination in the soil, and a higher-than-expected water table…[end quote]

The Chairman of the Federal Reserve has absolutely nothing to do with the construction budget of a building under renovation. It’s absurd to even suggest such a thing.

The stock market is in a historic bubble. It’s just waiting for a pin to pop it.

Trump firing Powell for a false trumped-up “cause” in order to cut the fed funds rate could be that pin. Trump doesn’t seem to understand that cutting the fed funds rate would cause the markets to expect inflation and raise longer-term bond yields.

The stock market would plunge along with the bond market.

Wendy

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I do not believe a word of it in the linked video.

“Not Planning” to fire Powell.

The entire thing is inflationary but tariffs are deflationary. He is twisting the US economy from importer to exporter.

The PPI came in with a soft number this morning. Production in the US is not inflationary.

If rates were lower, the US would be better able to pay its debts. BUT the market would be totally unforgiving. Lower rates won’t fly.

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You keep saying this. You are always wrong about it.

If the government didn’t pass a budget that adds $4T+ to its debt, it would also be easier to pay off its debts.

The markets are going to freak about this not because the US would be lowering its rates, but because the US is going down a dangerous path of politicizing the Federal Reserve and removing its independence. (We ARE going down a dangerous path overall, but this would be a dangerous addition to that path).

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Yes the tariffs add cost or inflation. But the layoffs happen. It becomes deflationary. Demand in the economy is becoming more shaky and will fall apart.

The markets will freak out because as the layoffs happen and deflation sets in the debts are unsustainable.

The writing is on the wall and rates are rising.

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AI Overview

The first estimate of second-quarter GDP growth is released by the U.S. Bureau of Economic Analysis (BEA) (BEA) on July 30th, which is approximately one month after the quarter ends, according to CBS News.

More specifically:

  • July 30th: is when the “Advance” estimate is released.
  • The BEA releases GDP figures quarterly, with three estimates for each quarter.
  • The second and third estimates are released later in the following months and incorporate more detailed data.
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I agree with you on the FED firing and take over matters. Dangerous as hell.

The markets going into a great depression just fade away. They do not crash. 1929 was followed by a rise in the markets and then the fade away hitting bottom 3 years later.

I think we have about 1.5 years before we hit bottom.

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If the Fed loses its independence, I feel the Fed will also lose the ability to actually lower rates. I think Treasury auctions will require higher yields. Or will simply require the Fed to be the primary buyer of our debt. (At that point why bother issuing the bonds? Just have the Fed crank the presses and hand over the currency to the Treasury).

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How many people will need to be laid off to cause DE-flation? Now, you’re talking 1929 style.

I think we have about 1.5 years before we hit bottom.

Good. When will it actually start to head downward? I’ll be honest I checked the markets before I wrote this because the nature of your statement made me think it was one of those Dow down 1200 points days.

Let’s see… 1.5 years before things start getting better…? That would put it right about the middle of the presidential term. Another well-known market timing rubric. The first 2 years force idiot or much needed but painful policies down people’s throats and scare everybody. Then do everything you can to goose things back up in time for the campaign season. I’ve see some research showing that it works. The market timing thing I mean

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I am not sure that a lower FED funds rate would mean lower IS Treasury rates.

It could go the other way.

Cheers
Qazulight

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That is what I was getting at two posts above. The FED funds rate is not going to influence how much buyers at auction are going to pay for our debt. TIG, I’m pretty sure, has no idea about that.

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Correct the old math lower rates are better for the government but the realities are not going there.

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yep that is his bet

20/20

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[quote=“FCorelli, post:8, topic:119953”]
Then do everything you can to goose things back up in time for the campaign season.
[/quote]

yep that is his bet

20/20

Then why the grandiose pronouncements on the economy when it’s just the same old predictable pony show?

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It is not the same. We are in a trade war, layoffs are going to be massive, the housing market may slide, AI may fall flat, and the bond market is worried about getting paid back. That is not the same ol same ol.

His gambit…keyword gambit…

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But it bottoms out in badness in est 18 months? How bad can it get in 18 months? What is “massive” unemployment? It won’t even approach COVID levels.

I’m not saying we won’t have a recession, the market won’t slide, unemployment won’t increase. They can and will ta some point. I just don’t see anything approaching your grandiose forecast which, I hate to say it man, but you sound like a hororscope. Vaguely plausible but no details or “news you can use.”

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Covid was a complete stop

Different animal

Ah I have documented 1890, 1921, 1922, and 1929 repeatedly here.

If you spend no time reading those repeated writings, you need to go back and study those tariff depression years.

If you invest without a full picture that’s not on me.

Before you do the self study you badly need, do you trust the current charcter who praises McKinley to not bring us a depression? All the news details are in that answer. We are not allowed politics here. Self study.

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Covid was a complete stop

Different animal

Ok this is just more claptrap to be frank. Nobody was comparing the Covid environment anything. But you presented it as if I had. This is where people feign understanding so they can immediately start talking about what they want to talk about. You must be running for something

Ah I have documented 1890, 1921, 1922, and 1929 repeatedly here.
If you spend no time reading those repeated writings, you need to go back and study those tariff depression years.
If you invest without a full picture that’s not on me.

You’ve completely lost it. This is typical of certain internet types on the web. Like asking a question and being told to “read the terms of agreement.” 50 pages of legalese but no way of knowing exactly what they want you to see in there. Why would anybody who wants to be taken seriously simply tell people to look up months, or years of dubious pronouncements with no references?

And lastly…, all this time you think I’ve been talking about “investment advice” or something? That’s the problem. I think we’ve all learned what we needed to know here.

Enjoy the four day weekend

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Didn’t you present an opening, though, by saying:

Pete

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When you talk that way defensively there is little I can say. You might want to check yourself.

We are each entitled to our opinions. We are each entitled to bring what facts we can to the discussion.

I can not bring political announcements to this discussion. You know that.

You are having difficulty, which does not mean anyone else has “completely lost it”. We each operate as best we can. I do not have a problem.

That statement sounds like you need to depend on the internet folks to steer your ship. It is not just me but “types”.

What would that be?

BTW I gave no advice to anyone here.

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If we remember 1999 there was a drop in (should say Oct-Nov?)November. Then the market topped out in March. There is a rise in the markets for 4 months. Give or take rough numbers.

Things are not immediate.