Trump suddenly wants to change the head of the Federal Reserve! This is a big deal, and the market is going to suffer!
Core meaning:
The timing is very insidious! Trump specifically chose to announce it on a Friday when global markets are closed, clearly knowing this is bad news! He wants everyone to digest it over the weekend, preferably to forget about it a bit. This operation itself reveals his guilt.
This is a disguised way of firing Powell! Powell is supposed to serve until May next year, but announcing a successor nearly a year early? That's extremely rare! This is no different from directly saying 'get lost.' Once the news broke, Powell immediately became the 'outdated chairman,' no one listens to him anymore, and the market is entirely focused on what his successor has to say. It's obvious they are undermining him!
What Trump wants is a 'obedient dog,' not an independent central bank! He has long been annoyed that Powell hasn't lowered interest rates satisfactorily. Now nominating a new person is 100% about finding someone willing to follow his orders and aggressively cut rates! Who knows, they might have even made private promises. Think about it, he just called for a '100-point rate cut' yesterday, and today he announces a change of personnel; these two messages together are full of gunpowder!
The 'golden signboard' of the Federal Reserve is about to be smashed! The most valuable thing about the Federal Reserve is its image of 'not being political' and 'stable as a rock.' With Trump's actions, its independence is shattered! If Powell refuses to leave and the new boss hints at opposing his policies, then the Federal Reserve will be in chaos, and its image of 'keeping promises' will be completely ruined; the market will definitely be in turmoil! At that time, Powell might really be forced to resign.
Who the new candidate is is crucial, but it's all troublesome! Promoting from within the Federal Reserve? The market might accept it better, but such people are hard to satisfy Trump's 'immediate aggressive rate cut' crazy demands. Finding someone 'obedient' from outside? That would further confirm that the Federal Reserve has become Trump's toy.
This time is more dangerous than last time, with no way out! Last month, Trump shouted about firing Powell, and as soon as the market fell, he immediately backed down. But this time is different! Once the new chairman's name is announced, if the market crashes, it will be like spilled water that cannot be taken back! No one can clean up the mess!
Follow me, and I'll help you see through the phenomenon to the essence, together we will navigate through the bull and bear markets.
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