Sentiment 🔴 Camouflaged Institutional Risk — the threat of Powell's dismissal does not crash the market today, but prepares for tomorrow's implosion.
🔥🏛️🔥The First Step to Dismantling the Fed?
🧨 “It may not be disastrous… for now”
Capital Economics issued a warning: the dismissal of Jerome Powell by President Trump may not provoke an immediate collapse — but it would be the first step towards dismantling the independence of the Federal Reserve.
In a note sent to clients this Monday, Paul Ashworth, chief economist for North America at the consultancy, wrote:
“Trump could minimize the impact of the dismissal by quickly appointing a relatively qualified substitute, such as Kevin Hassett or Kevin Warsh.”
The presence of Warsh, a former Fed member and a figure with some market credibility, could “prevent a total disaster,” according to Ashworth.
But the illusion lasts little.
“Warsh would only have one vote within a hostile FOMC, making it impossible to force the interest rate cuts that Trump desires.”
In other words: there is no easy solution.
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🔥 Trump raises the tone and prepares the scapegoat
On the same Monday that Capital Economics' warning was published, Donald Trump publicly attacked Jerome Powell again, calling him:
“Big loser”
“Mr. Very Late”
Trump accuses the Fed chair of not acting quickly enough to cut interest rates and claims that current monetary policy is choking the American economy.
According to the Wall Street Journal, the strategy is drawn up:
Trump would be laying the groundwork to blame Powell for any recession derived from his own tariff policy.
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📉 Wall Street smells institutional rupture
The market did not remain indifferent.
The major averages on Wall Street fell more than 2% this Monday, reflecting the nervousness with institutional instability:
• The drop in indices was fueled by comments from the White House indicating that Trump's team was exploring the legal possibility of removing Powell from office.
Analysts consulted by Capital Economics warn that this would not be an isolated move.
Dismissing Powell would be just the beginning.
“If Trump is determined to lower interest rates, then he will have to dismiss the other six members of the Fed Board as well,” wrote Ashworth.
“This would trigger a more severe market reaction, with the dollar falling and long-term interest rates skyrocketing.”
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⛳ Final Conclusion
Trump may not blow up the market with Powell's dismissal — but he could distort the American monetary authority.
The market, for now, remains calm because it speculates about “acceptable” substitutes.
But everyone knows: the goal is to force interest rate cuts.
And for that, it is not enough to just change the name on the Fed's door.
It will be necessary to dismantle the FOMC.
Replace thought with submission.
This is the real risk.
Not the dismissal itself — but the precedent.
If Trump starts the attack on the Fed today, who will hold the dollar tomorrow?
E##TrumpVsPowell ##BinanceAlphaAlert #FederalReserveIndependenceb #USStockDrop
