The Mar-a-Lago Accord Confirmed: Miran Brings Trump's Reset To The Fed

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Source: fxempire

Source: finance.yahoo

Source:investing

President Donald Trump has moved to fire Federal Reserve Governor Lisa Cook after she refused his demand to resign over a claim by a top administration official that she lied on mortgage applications. The escalation sets the stage for a lawsuit that will help determine the extent of White House control over the US central bank.

Trump said in an Aug. 25 letter posted on Truth Social that he had “sufficient cause” to fire Cook, an acknowledgment by the president that he needs a valid reason to dismiss her under US law. Cook was accused of engaging in so-called mortgage occupancy fraud by falsely labeling a secondary home as her primary residence. No charges have been filed.

The move to dismiss Cook could give Trump a chance to name someone to the Feb board as he pressures officials to lower interest rates. Trump has repeatedly attacked Fed Chair Jerome Powell, who has also resisted the president’s demands to resign.

Cook’s high-profile defense attorney, Abbe Lowell, has pledged to file “a lawsuit challenging this illegal action.” Such a move would allow Cook to immediately ask for what’s known as a preliminary injunction, which would block her removal while the lawsuit moves forward.

Both sides would file briefs outlining their arguments, giving the Trump administration a chance to provide more details of its allegations against Cook. The filings could give Cook a chance to argue that her firing was unjustified and politically motivated.

The outcome could hinge on whether Cook can convince the judge that she — and the Fed — would suffer “irreparable harm” during the case if the status quo weren’t maintained. A decision on a preliminary injunction, which could be issued quickly, would be crucial because it may be months or longer before a judge rules on the actual merits of the case, including whether Cook was fired “for cause,” meaning for good reason.

It’s far from clear that the Trump administration’s mortgage allegations against Cook are enough to meet the “for cause” bar. There hasn’t yet been a formal investigation and she hasn’t been charged with anything, let alone convicted. That means Trump’s allegations are just that — allegations.

Cook could argue that unproven accusations are not enough to justify her termination. She could also argue that the allegations are irrelevant to her job, given that the alleged conduct took place a year before Cook’s appointment and had nothing to do with her duties as Fed governor.

Cook, appointed by President Joe Biden in 2022 to a term that was set to expire in 2038, has already said Trump doesn’t have cause to fire her.

“President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so,” Cook said in a statement released by her attorney. “I will not resign. I will continue to carry out my duties to help the American economy as I have been doing since 2022.”

Section 10 of the Federal Reserve Act, the 1913 law that governs the central bank, says members of the Fed’s Board of Governors can be “removed for cause,” although the statute doesn’t specify exactly what “cause” means.

Laws that do describe “for cause” generally define the term as encompassing three possibilities: inefficiency; neglect of duty; and malfeasance, meaning wrongdoing, in office. There’s no consensus on what those terms, which gained prominence in Congress more than a century ago, mean. A judge would have to decide whether Cook’s alleged mortgage fraud amounted to any of the three.

Clear legal precedents would be few and far between. The Supreme Court has never considered whether a president had adequate grounds to dismiss an official for cause.

Maybe not. Both sides could appeal an injunction ruling to a federal appeals court, which could be asked to expedite the case. A panel of three judges would issue a decision, possibly after holding a hearing.

If Cook’s request for an injunction were denied and the ruling were upheld on appeal, her firing would remain in effect. If the injunction were granted and backed by an appeals court, Cook could remain in office while the case moves forward.

The Supreme Court, where Trump has a 6-3 conservative majority, could have the final say. A decision by the nation’s highest court on an injunction in all likelihood would resolve the dispute long before any trial. Although the losing side could continue litigating the case, the chances of the justices effectively reversing themselves later on would be small.

The biggest hint came in May, when the justices cleared the way for Trump to oust officials at two other government agencies without having to give a justification. In doing so, the court majority said the decision didn’t mean the president wielded similar authority at the Fed, indicating that Trump can’t simply fire Fed officials without any grounds. The court called the central bank a “uniquely structured, quasi-private entity.”

At the time, Powell was in Trump’s cross-hairs. The ruling was interpreted as leaving open the possibility that Powell could be fired for cause. And Trump’s Supreme Court track record is likely to put him in a strong position should a case involving Powell — or Cook — land there.

The court’s conservative supermajority has repeatedly declined to second-guess Trump’s judgments, granting a barrage of requests to let policies of his that are under legal challenge take effect this year.

Federal Housing Finance Agency Director Bill Pulte, a staunch Trump ally, alleged on social media that Cook lied on loan applications for two properties — one in Michigan and one in Georgia — claiming she would use each property as her primary residence to secure more favorable loan terms. He said the applications were filed two weeks apart.

In his letter, Trump said it was “inconceivable” that Cook was not aware of requirements in two separate mortgage applications taken out in the same year requiring her to maintain each property as her primary residence.

“At minimum, the conduct at issue exhibits the sort of gross negligence in financial transactions that calls into question your experience and trustworthiness as a financial regulator,” Trump wrote.

The Trump administration has made similar claims against two other high-profile critics of the president, California Senator Adam Schiff and New York Attorney General Letitia James. Both have denied wrongdoing.

Source: Bloomberg Europe

Investors wondering what President Donald Trump's move to fire Federal Reserve Governor Lisa Cook might mean for financial markets today can look back half a century for some insight. President Richard Nixon, aiming to clinch a second term in the White House, pressured then-Fed Chair Arthur Burns to loosen monetary policy before the 1972 election. Tape recordings of Oval Office discussions show Nixon, who went on to resign in 1974 for abuses tied to the Watergate scandal, used both direct and indirect actions to coerce Burns . More than 50 years later, Nomura currency strategists led by Craig Chan said Trump's decision to fire Cook, the first African-American woman to sit on the Fed, may "refocus" investors on how the market reacted to Nixon's attempt to steer the central bank, using the earlier move as a possible guidepost for what to expect now. In the current case, Trump cited unproven allegations of false statements Cook made when applying for a mortgage. Cook said the president "has no authority" to fire her. To be sure, Chan said history "may not be a perfect match" given other variables and how markets have changed since the era of fixed exchange rates, the gold standard and the Bretton Woods post-war monetary system. Still, the Nomura analyst noted historical parallels between Trump's attempt to fire Cook on Monday and Nixon's push for less-restrictive monetary policy in the early 1970s. Here's a look back at how markets fared back in the Nixon years, according to Chan: Currency The ICE U.S. Dollar Index (DXY) , which measures the U.S. greenback against a basket of foreign currencies, saw a massive drop after the U.S. left the gold standard and suffered massive balance of payments deficits under Nixon. The index first rose 0.5% from Nov. 6, 1972 — the day before the election — to a peak in January of the following year, which coincided with a high in stocks. But the dollar index then turned south, tumbling 18% to a July 1973 low. Stocks Similarly, a rise in stocks gave way to an eye-popping slide. The Dow Jones Industrial Average added more than 6% between Nov. 6, 1972 and its peak in mid-January of 1973, right around the time of Nixon's second inauguration. But within a year of hitting that high, the blue-chip average plunged as much as 19%. Within two years of that Jan. 1973 peak, the 30-stock average at one point plummeted as much as 44%. Treasurys As inflation accelerated, the yield on the U.S. 10-year Treasury note surged. In total, the 10-year yield rose more than 130 basis points between Nov. 6, 1972 and a high on Aug. 7, 1973. At one point, the yield touched a high of 7.58% — more than three percentage points above today's level around 4.3%. Nomura's outlook for today The stock market on Tuesday morning appeared to shake off much of the impact of the attempt to fire Cook. So far this year, the stock market has looked past Trump's pressure on the Fed, despite rising concerns over the central bank losing its independence and the effect that might have on inflation. However, the U.S. dollar took a hit Tuesday with the ICE U.S. Dollar Index down 0.3% vs. a basket of other currencies, bringing its decline for the year to nearly 10%. Gold futures were jumping on concern what a politicized Fed would mean for its inflation-fighting credentials. Chan and team, informed by the Nixon parallel, sees "risks to a weaker USD if the market fears a loss to Fed independence."

Source: CNBC

On Aug 12, Washington and Beijing extended their tariff truce by 90 days, averting immediate escalation. The US currently applies a 10% baseline tariff and higher “reciprocal” rates — generally in the teens up to around 50% — on selected partners.Malaysia’s package, per official statements and local reporting, includes up to US$150 billion (RM631.12 billion) in equipment purchases over five years and about US$3.4 billion a year of US liquefied natural gas (LNG) via Petronas, alongside cross-border investments. Indonesia’s reciprocal rate is set at 19% under a recent bilateral deal.

On Aug 16, US President Donald Trump warned on social media that if US courts struck down his tariff authority, the country could face “irreversible losses” and even a repeat of the 1929 Great Depression. For investors, the message was clear: politics and law are now part of the market risk premium.

From tariffs to tokens: The US policy arc

The GENIUS Act (July 2025) requires payment stablecoins to maintain 1:1 reserves in high-quality liquid assets with monthly disclosures.In parallel, H.R.1 — the One Big Beautiful Bill Act — enacted broad tax and fiscal changes that interact with tariff revenues and capital flows. Together, these measures show Washington’s intent to fuse fiscal tools with monetary architecture.On Aug 22, Trump announced a new tariff investigation into furniture imports, signalling that sector-specific actions remain in play, and tariffs are not a one-off weapon but a flexible instrument.

Embedding the dollar in code

Policymakers, including Treasury Secretary Scott Bessent, have argued that compliant stablecoins could support demand for US government debt, creating a feedback loop between digital dollar usage and Treasury bill issuance.Every coin issued is another slice of Treasury debt absorbed. It looks like innovation, but in practice it is fiscal engineering disguised in digital code.

October’s diplomatic pivot

After Federal Reserve (Fed) Chair Jerome Powell’s Jackson Hole remarks, market-implied odds for a September rate cut rose above 90%. But consensus optimism itself carries risk: if the Fed holds steady in September, US equities could see a sharp 10%-15% correction — a reminder that when markets are one-sided, disappointment can amplify volatility.Yet some analysts suggest that Trump may prefer to delay any monetary easing until after the October Asean and Apec summits, keeping the rate decision as a bargaining chip in negotiations with Beijing.

This aligns with his broader playbook: tariffs as the stick, a postponed rate cut as the carrot. In this choreography, monetary policy becomes part of the diplomatic script.Attention now turns to the Asean Summit in Kuala Lumpur (Oct 26–28) and the Apec Leaders’ Meeting in Korea (Oct 31–Nov 1). While both Trump and Chinese President Xi Jinping are invited, regional reporting suggests China’s Xi may skip the Asean leg. That kind of choreography rarely happens by accident; it suggests October will be about more than photo-ops.

China’s parallel strategy

Since 2024, Beijing has advanced digital yuan pilots along Belt and Road trade corridors while allowing Hong Kong to test stablecoins backed by real-world assets.Crucially, China has not mandated adoption. Instead, it offers multi-rail payment systems, regional clearinghouses, and commodity-linked settlement mechanisms — options that appeal to Gulf and Southeast Asian economies seeking flexibility.Beijing’s quiet message: it doesn’t need to confront the dollar head-on, it just needs to offer an alternative road that others find practical to walk.

Asean’s balancing act

From Malaysia’s semiconductor adjustments to Vietnam’s ongoing tariff talks with Washington and Indonesia’s fixed-rate agreement, Asean members are adapting with a mix of negotiation and diversification.Prime Minister Datuk Seri Anwar Ibrahim has championed a vision for a “civilisational cooperative financial architecture” — keeping the dollar in play while building ethical, compliant, and regionally anchored alternatives.If US-compliant stablecoins dominate cross-border settlements, Asean risks having its financial flows governed by external code rather than regional priorities. For policymakers in the region, that is less about ideology and more about survival.

Rare earths: The silent card

Over 85% of global rare earth processing capacity remains in China. While Beijing has avoided overtly weaponising this leverage, even minor regulatory shifts could ripple across global supply chains, from defence to clean tech.By pushing high tariffs across multiple regions, Washington risks driving partners towards Beijing’s orbit — not just in trade, but in technology standards and payment systems.

Conclusion: The system designers will prevail

Through November 2025, markets will be watching whether extended US–China talks yield tangible agreements or simply prolong uncertainty. A roadmap on tariffs, currency coordination, or digital payments could stabilise markets; failure would likely entrench the rivalry.In this environment, lasting influence may rest less with those who command the loudest headlines and more with those who design systems — monetary, legal, and technological — that others choose to join.

For Malaysia, the October summits are more than diplomatic milestones — they are a chance to align its capital markets with emerging multi-currency settlement frameworks. A successful outcome could reinforce Malaysia’s role as a regional clearing hub, attracting new investment flows into its bond and equity markets while safeguarding monetary sovereignty.

For domestic investors, industries such as electronics — where electrical and electronic equipment made up the largest share of Malaysia’s exports in 2024 (around US$121 billion) — and energy — where Petronas has committed to around US$3.4 billion in annual LNG purchases — will likely be among the earliest to feel ripple effects in supply-chain shifts, export demand, or financing flows, reinforcing Malaysia’s financial positioning as both a regional and local priority.

Source: Theedgemarkets