Gold (XAUUSD) Accelerates — Yearly Targets May Be Hit Ahead Of Schedule

An independent central bank is seen by most (including this newsletter) as the bedrock of a functional economy. Officials steer the economy by calibrating the benchmark interest rate on which bank loans and mortgages, among other debt, are based.

Corporations and consumers, in general, like low interest rates because the cost of borrowing is cheaper. The former is incentivized to expand and invest, which, in turn, tend to increase income and spending among the latter. But such behavior can overheat the economy, causing prices to shoot up.

U.S. President Donald Trump's repeated calls for Federal Reserve Chair Jerome Powell to cut interest rates might make businesses and people happy — at the cost of letting inflation run rampant again. Factor in Trump's tariffs, which are taxes on imports and hence fundamentally price increases, and inflation could be getting two shots in the arm.

That's why central bankers tend to operate independently from the government. An administration that aims to please the populace might cut rates despite high inflation, leading to further economic difficulties.

It's a relief markets in the U.S. and Europe were on a break for the Good Friday holiday when Trump made his comments.

What you need to know today

Trump again calls for Powell to cut ratesU.S. President Donald Trump said Friday that "if we had a Fed Chairman that understood what he was doing, interest rates would be coming down, too." The White House said Friday that officials are assessing whether they can remove the Fed chair. This is not the first time Trump has criticized Powell's approach to U.S. monetary policy.

Growing disapproval of Trump's economic handlingAccording to a CNBC survey of 1,000 Americans, 55% of respondents disapproved of Trump's handling of the economy, the first time in any CNBC poll that he has been net negative on the economy while president. More Americans now believe the economy will get worse than at any time since 2023, and they are sharply more pessimistic about the stock market, according to survey results.

China keeps interest rates steadyAsia-Pacific markets were mixed Monday. Japan's Nikkei 225 lost roughly 1.3%. However, mainland China's CSI 300 added around 0.3% as the People's Bank of China kept its loan prime rates unchanged. The 1-year LPR currently stands at 3.1% and the 5-year rate is at 3.6%. Economists polled by Reuters had expected this outcome, which suggests the PBOC is prioritizing the stability of the yuan over stimulating the economy.

Beijing vows 'reciprocal countermeasures' China's Ministry of Commerce warned on Monday that Beijing firmly opposes any party reaching a deal at the expense of China's interests. If this happens, China will not accept it and will resolutely take reciprocal countermeasures," according to a CNBC translation. The Trump administration is reportedly planning to use tariff negotiations to pressure U.S. partners into curtailing their dealings with China.

U.S economic activity might 'fall off' in summerThe U.S. economy could be experiencing an elevated level of activity now as shoppers and businesses stock up on goods before tariffs kick in, Chicago Fed President Austan Goolsbee said Sunday. "Activity might look artificially high in the initial, and then by the summer, might fall off — because people have bought it all." Sectors most affected include the auto industry and electric components, Goolsbee said.

Executive order to overhaul State DepartmentThe Trump administration could soon roll out sweeping changes to the U.S. State Department, according to a 16-page draft executive order obtained by CNBC. If enacted, the order would shutter American embassies across Southern Africa, eliminate bureaus that work on issues like democracy and human rights, as well as international organizations like the United Nations.

[PRO] Earnings might displace tariffs as focusMarket gyrations because of Trump tariffs might be subdued — but not entirely subside — this week, according to strategists. Investor attention will turn to first-quarter earnings reports, with Tesla and Alphabet announcing their performance on Tuesday and Thursday, respectively.

Trump tariffs push Asian trade partners to weigh investing in massive Alaska energy project

Alaska has long sought to build an 800-mile pipeline that would eventually cool gas into liquid for export to Asia. The project, which has a staggering price tag topping $40 billion, has been stuck on the drawing board for years.

Alaska LNG, as the project is known, is showing new signs of life — with Trump touting the project as a national priority. U.S. Treasury Secretary Scott Bessent said earlier this month that the liquified natural gas project could play an important role in trade negotiations with South Korea, Japan and Taiwan.

"We are thinking about a big LNG project in Alaska that South Korea, Japan [and] Taiwan are interested in financing and taking a substantial portion of the offtake," Bessent told reporters on April 9, saying such an agreement would help meet Trump's goal of reducing the U.S. trade deficit.

Source: CNBC

Trump’s back and forth tariff game

Recession fears remain elevated

Flash PMI data in the spotlight

Tokyo CPI data, Canada’s retail sales, Earnings results

Source:XM

The combined expenditure in the general public budget and the government fund account, China’s two main fiscal books, rose to 9.26 trillion yuan ($1.3 trillion) in the first three months, an increase of 5.6% from the same period a year earlier, according to Bloomberg calculations based on data released by the Ministry of Finance on Friday. That was the strongest gain for the first quarter in three years.

The numbers meant nearly 22% of the outlays planned for the full year was spent in the period, faster than 21.6% at the same point last year.

China has to strengthen public spending to shield the economy as surging American tariffs could send its exports into contraction while a years-long housing market downturn and deflation keep consumer and business sentiment weak. Its growth held up in January-March, but economists broadly expect it to slow sharply from the second quarter after the wave of export front-loading passes and benefits from a consumer trade-in program taper off.

Several major banks have downgraded their forecast on China’s expansion this year to 4% or lower, well below the government’s goal of around 5%. Officials are focusing on implementing supportive measures announced at last month’s parliamentary session, although they also said they have ample scope and tools to add stimulus when necessary.

Faster tax rebate payouts have been cited by some analysts as an option to help offset some squeeze posed by US tariffs on exporters. The payout as a share of exports last month came in at 11%, only up slightly from the level a year earlier, according to Bloomberg calculations based on official data.

The property downturn remained a drag on government income last month, with land sales shrinking 16.5% on year and real estate-related revenues falling 0.1%.

Tax revenue declined on year for a second straight month while the increase in non-tax income almost halved. Local authorities rushed to sell bonds to swap the so-called “hidden debt” onto their books in a program aimed at alleviating their cash strains and reducing excessive fines imposed on businesses, which are a source of non-tax income.

The continued contraction in land sales and tax revenues meant total income under the two major budgets fell 2.6% on year to 6.94 trillion yuan ($950 billion) in the first quarter.

The gap between government income and spending broadened as a result, with the broad budget deficit soaring 41% on year to 2.3 trillion yuan ($315 billion).

Source: Bloomberg Europe

The Trump administration announced plans on Thursday to impose new port fees on Chinese commercial vessels—part of a broader effort to revive America's dwindling shipbuilding industry, which officials now view as a national security risk amid the urgent need to bolster hemispheric defense across the Americas in an increasingly fractured, bipolar world.

"Ships and shipping are vital to American economic security and the free flow of commerce," U.S. Trade Representative Jamieson Greer wrote in a statement, adding, "The Trump administration's actions will begin to reverse Chinese dominance, address threats to the U.S. supply chain, and send a demand signal for U.S.-built ships."

The Federal Register notice titled "Notice of Action and Proposed Action in Section 301 Investigation of China's Targeting the Maritime, Logistics, and Shipbuilding Sectors for Dominance, Request for Comments," published Thursday by the U.S. Trade Representative (USTR), states that new fees will be imposed on all Chinese-built and Chinese-owned ships docking at ports across America. These fees will be based on net tonnage or the volume of goods carried per voyage and will only be charged once per voyage and not per port arrival.

"The fee will be set at $0 for the first 180 days, will then be set at $50/NT, and will increase incrementally over the next three years," the USTR notice read.

• Effective as of April 17, 2025, a fee in the amount of $0 per net ton for the arriving vessel.

• Effective as of October 14, 2025, a fee in the amount of $50 per net ton for the arriving vessel.

• Effective as of April 17, 2026, a fee in the amount of $80 per net ton for the arriving vessel.

• Effective as of April 17, 2027, a fee in the amount of $110 per net ton for the arriving vessel.

• Effective as of April 17, 2028, a fee in the amount of $140 per net ton for the arriving vessel.

The USTR notice explained that "any such fee would be charged per rotation or string of U.S. port calls, and no more than five times a year on an individual vessel."

Service fees for vessel operators of Chinese-built vessels are lower.

• Effective as of April 17, 2025, a fee in the amount of $0 for each container discharged.

• Effective as of October 14, 2025, a fee in the amount of $18 per net ton ($120 per container)

• Effective as of April 17, 2026, a fee in the amount of $23 per net ton ($153 per container)

• Effective as of April 17, 2027, a fee in the amount of $28 per net ton ($195 per container)

• Effective as of April 17, 2028, a fee in the amount of $33 per net ton ($250 per container).

The second phase will begin in three years and target Chinese LNG vessels. USTR explained the purpose of this action:

"To incentivize U.S.-built liquified natural gas (LNG) vessels, limited restrictions on transporting LNG via foreign vessels. These restrictions will increase incrementally over 22 years."

New taxes on Chinese commercial ships add to the complexity of a broadening trade war between the two economic superpowers. Trump recently slapped all Chinese goods entering the U.S. with a 145% effective tariff rate, while Beijing has slapped all U.S. goods entering China with a 125% levy.

The USTR notice continued, "A few comments agreed with the proposals, noting that the proposed fees would address trade imbalances, enhance national security, support investment in the American maritime industrial base, and promote higher environmental and labor standards. One commenter suggested that the proposed fees be captured in a U.S. shipbuilding and mariner compensation trust fund to be expended each year for reviving the U.S. merchant marine."

Time to make America's shipbuilding industry Great Again.

Source: Zero Hedge

Is Trump Planning to Fire the Fed Chair?

The White House has revealed that President Donald Trump is exploring whether he has the authority to fire Federal Reserve Chairman Jerome Powell. This news has sparked widespread debate about the independence of the Federal Reserve and the potential political interference in U.S. monetary policy.

The Federal Reserve, often simply called “the Fed,” is designed to be independent from political pressure, allowing it to make economic decisions without influence from the White House or Congress. However, Trump has been openly critical of Powell in the past, especially when interest rate hikes conflicted with his administration’s economic goals.

What the Law Says About Removing a Fed Chair

Jerome Powell was appointed to a four-year term as Fed Chair in 2018 and, under current law, cannot be removed without cause. The Federal Reserve Act does not clearly outline what constitutes “cause,” and no sitting Fed Chair has ever been fired by a president.

Legal scholars are divided on whether Trump has the legal authority to remove Powell. Some argue that because Powell is also a member of the Federal Reserve Board of Governors, he can only be removed “for cause,” which would require clear evidence of misconduct or failure to fulfill duties. Others suggest that the President might attempt to demote Powell from the chairmanship without removing him entirely from the board, a move that would still be controversial.

Potential Consequences for Markets and Policy

If Trump attempts to fire or demote Powell, it could severely shake investor confidence and challenge the global perception of U.S. financial independence. Markets tend to react strongly to signs of political interference in monetary policy, and such a move could increase volatility in the stock and bond markets.

Furthermore, it could set a dangerous precedent for future administrations, allowing presidents to pressure central bank leaders into making politically favorable decisions rather than sound economic ones.

For now, Powell remains in his position, but the situation is being closely monitored by financial markets, legal experts, and political analysts alike.

Source: CryptoSlate

Speaking to reporters, White House National Economic Council Director Kevin Hassett said Trump was studying whether firing Powell was an option.

Fed independence at risk? Trump reportedly planning to fire Powell

According to media reports citing sources, US President Trump has been privately discussing the possibility of replacing Federal Reserve Chairman Powell for months, but he has not yet made a final decision on this.

Powell, 72, is a Republican who was nominated by Trump as Fed chairman during his first term. Powell won the trust of the previous US President Biden and was able to get a second term as Fed chairman in 2022. His term will end in May next year.

As early as Trump's first term as US President (2017-2021), he and Powell disagreed. Trump repeatedly asked Powell to cut interest rates, while the latter insisted on maintaining the independence of the Federal Reserve.

After Trump started his second term, the conflict between him and Powell has intensified. While launching radical trade policies, Trump continued to pressure Powell to cut interest rates, but Powell remained unmoved.

People familiar with the matter revealed that in several meetings at his private estate in Florida, Mar-a-Lago, Trump and former Federal Reserve Governor Kevin Walsh discussed the possibility of firing Powell before the end of his term and may consider Walsh to take over as Fed chairman.

Walsh is understood to have dissuaded Trump from firing Powell, arguing that he should be allowed to complete his term and that the Fed's independence should not be interfered with. The conversation with Walsh continued into February of this year, and other advisers to Trump even discussed firing Powell with him in early March.

As early as 2017, Trump considered Walsh as the chairman of the Federal Reserve before choosing Powell, who officially took office the following year.

Trump team divided

In a meeting in the Oval Office of the White House on Thursday, Trump said he believed he had the power to fire Powell.

"If I wanted him out, he'd be out in a heartbeat, believe me," Trump said.

He added that he was unhappy with Powell and accused him of playing politics on interest rates.

If Trump does try to fire Powell, the matter would almost certainly be appealed to the Supreme Court, a move that would not only put pressure on Powell's successor but could also roil markets as they worry about the precedent of a Fed chair being removed over policy differences.

Trump's advisers are divided over whether to take action, and it is unclear whether Trump will actually do so.

Inside the White House, Treasury Secretary Jeff Bessant has long opposed the idea of ​​replacing Powell, arguing that the move is extremely risky and offers little benefit. He said this week that the Fed's independence in monetary policy is a "treasure that can never be destroyed" in the United States.

Some advisers, however, have advocated for a more direct challenge to Powell, arguing that the Fed and its backers in Washington and on Wall Street have overly glorified the institution’s independence, an independence that has no constitutional backing and is not conducive to economic development.

Trump has trouble firing Powell

There is no legal precedent as to whether the president has the power to fire the Fed chairman before the end of his term.

Trump has previously admitted that the law is not clear on this. He said in October 2023: "I wanted to fire him (Powell) at the time (referring to the first term), but the question is whether you really have the power to do so."

Powell made it clear six years ago that if his position was challenged, he would fight through legal means, and his recent public statements show that this position has not changed.

The top Fed officials had prepared for this: once Powell's position as chairman of the Federal Reserve is challenged, the Federal Open Market Committee (FOMC), the independent body responsible for setting interest rates at the Fed, will immediately hold a meeting to re-elect Powell as chairman of the committee.

Source: Cailianshe