“Legally the President can fire the Chairman of the Federal Reserve under a specified cause” but Deep State would have us believe otherwise.

Even ZeroHedge.coM get’s it wrong—VERY WRONG!

Trump’s New Chief Of Staff: President “Now Realizes He Doesn’t Have Ability” To Fire Powell


With traders already exhausted, angry and confused by the relentless barrage that has hit stocks in recent weeks, a weekend report from Bloomberg that Trump was contemplating firing Fed chair Powell only added to their dread, for the simple reason that such an action would pull the rug from under the already depressed S&P and send markets in the and US tumbling even more (see “Rattled Markets Would ‘Erupt’ If Trump Fired the Fed Chairman“). And not just any markets, but those which president Trump considers the best real-time barometer of his presidency (there is a reason why Trump, who would constantly tweet praising the S&P’s all time highs on the way up has been silent on the current level of the stock market which is 2.5% away from a bear market).

Which is why shortly after the Bloomberg report hit, perhaps having realized the even greater danger the market faces should investors dump in the holiday-shortened Monday session ahead of a possible Powell firing, Trump unleashed a damage control barrage when he first made Steven Mnuchin tweet late on Saturday that he “never suggested firing Chairman Jay Powell” nor does he believe he  have the right to do so…

… And then on Sunday morning, sent Mick Mulvaney, his acting chief of staff, to tell ABC’s “This Week” that that Trump “now realizes” that he “does not have the ability” to fire Powell, and added that it was “not unusual for a president to complain about the Fed” and that he had spoken to Mnuchin about Trump’s view of the Fed.

Mulvaney, who in 2016 infamous said “Yes, I’m supporting Donald Trump, I am doing so as enthusiastically as I can given the fact that I think he is a terrible human being but the choice on the other side is just as bad”, also touched on the other key issue affecting the US and which has led to what will likely be a protracted government shutdown, when he said that Mexico will “participate” in funding the border wall, whose funding proposals are in the $1.6-$5.0billion range.

Meanwhile, despite the surge in assurances from Trump’s inner circle that he won’t fire Powell, former Fed Vice Chair and NY Fed president Bill Dudley told Bloomberg in a phone interview that he doubts Trump would try to remove the Fed chief, but if he did, and if sticking around the Fed is legally possible, “my advice to him — I would stay on as a governor,” Dudley said in a phone interview. “You have to protect the institution.

Additionally, Bloomberg also reported that if Powell stayed, his colleagues could elect him as chairman for monetary policy, even if he were no longer head of the Fed Board, according to University of Pennsylvania Fed historian Peter Conti-Brown.

And while Dudley tried to depoliticize the feud between Trump and Powell, saying that “certainly the Fed doesn’t want to get into it with the president” and adding that “they have been silent on this — and I think that is the right approach”, the fact that he would urge Powell to stay on suggests that an informal Trump “resistance” splinter group may be forming within the US central bank too.

As for whether Trump will or will not fire Powell, it will ultimately depend on what the market does next, because while it is easy for Mnuchin and Mulvaney to vow that Trump now has no intentions of letting Powell go, that will all change should the S&P drop another 5%, 10% or more and – deep in a bear market – Trump is desperate to find a distraction, one which in addition to HFTs is – most naturally – the head of the Fed, even if this particular Fed chair is merely scrambling to undo decades of monetary mistakes made by his predecessors.


This entry was posted in Uncategorized. Bookmark the permalink.