Trump Takes one Step Back and Another Forward in his Attempt to Reshape the Fed

Central Bank

Political

Summary:

Cobb ruled that Fed governors can only be fired for malfeasance or other actions while in office and said the White House also failed to provide Cook with a chance to formally respond to charges against her.

President Donald Trump's goal of appointing a majority of the Federal Reserve's board of governors faced a setback late Tuesday when a court blocked his unprecedented attempt to fire Lisa Cook.

But the very next next day, his nominee to replace another Fed governor moved forward, giving him one more opportunity during his second term to reshape the Fed.

Over time, Trump will almost certainly get the lower short-term interest rate he is seeking, economists say, although it's unlikely the Fed will shave 3 percentage points from its current level of about 4.3%, as he has demanded, even if he gets most of the seats on the seven-member board.

On Wednesday, Trump got one step closer to reaching a majority when the Senate Banking Committee approved the president's nomination of Stephen Miran, one of his top economic advisers, to an open position on the Fed's board. The full Senate is expected to approve Miran shortly. He could end up participating in the central bank's policy meeting next week, when it is expected to reduce its key interest rate by a quarter-point to about 4.1%.

But he took a step back with Cook after a federal court blocked Trump's attempt to fire her late Tuesday. Jia Cobb, a judge appointed by former president Joe Biden, ruled that the firing was illegal because the administration did not provide sufficient cause to remove her. That means Cook is also likely to participate in next week's Fed meeting.

The Trump administration appealed that ruling Wednesday, and many observers expect the case could end up at the Supreme Court.

Here are where things stand regarding Trump, the Federal Reserve, and its traditional independence.

Trump's ability to fire Cook

Fed governors aren't like Cabinet members or other officials who serve at the pleasure of the president. Under the law governing the Fed, they can't be fired over policy disagreements, but can be dismissed “for cause.”

Trump has accused Cook of committing mortgage fraud when she bought two properties in 2021 —before she joined the Fed — which she said were both “primary residences.” Such a designation can result in lower down payments and mortgage rates than if one of the homes was classified as a rental or second house.

On Tuesday, Cobb ruled that Fed governors can only be fired for malfeasance or other actions while in office and said the White House also failed to provide Cook with a chance to formally respond to charges against her.

The appeals court or the Supreme Court could stay the district court's decision, which would remove Cook from the Fed's board until her case is resolved. The Supreme Court has shown sympathy for Trump's arguments that the president can remove many officials from agencies previously seen as independent. But in a case earlier this year, the Supreme Court said that the central bank is a “unique, semi-private entity” and suggested its officials may have greater protection from being removed by the White House.

Miran's appointment raises concerns over Fed independence

Trump picked Miran to replace former Fed governor Adriana Kugler, who stepped down Aug. 1. Miran would, if approved, simply finish her term, which expires in January.

Miran has taken the unusual step of planning to keep his job as the chair of the White House's Council of Economic Advises if he does win Senate approval. While previous presidents have appointed their aides to the Fed, they have always then stepped down from White House jobs.

Nearly all economists and most Wall Street investors prefer a Fed that is independent from day-to-day politics. They worry that if the Fed falls under the control of the White House, it will keep its key interest rate lower than justified by economic fundamentals to satisfy Trump’s demands for cheaper borrowing.

That could accelerate inflation and over time could also push up longer-term interest rates, such as those on mortgages and car loans. Investors may demand a higher yield to own bonds to offset greater inflation in the future, lifting borrowing costs for the U.S. government and the entire economy.

Where things currently stand with the Fed

If Miran is confirmed, he will be the third Trump appointee to the Fed's seven-member board, after Trump appointed Christopher Waller and Michelle Bowman in his first term. If Cook is able to keep her seat, then Trump's next opportunity would arrive in May, when current Fed Chair Jerome Powell's term ends.

It's possible that Powell could pull an unusual move and remain on the Fed's board even after stepping down as chair. If so, that would deprive Trump of another appointment and would force him to choose a new chair from the existing seven governors.

Powell has declined to answer when he has been asked whether he will leave the board after his term as chair ends. But if he does leave, then Trump could appoint a fourth member and gain a majority.

The four other governors are serving terms that last beyond the end of Trump's time in office. Governors are appointed to 14-year terms, in part to shield them from political pressure.

Still, many governors step down before their terms end, so Trump may have more opportunities to add loyalists to the board.

“Over time the composition of the Fed aligns with the views of the administration because you pick like-minded people,” said Vincent Reinhart, chief economist at BNY, a bank. “The direction of travel is for lower rates.”

Source: AP

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Manuel

Cryptocurrency

Political

President Trump’s CFTC chair nominee Brian Quintenz alleged that Tyler Winklevoss attempted to derail his confirmation after Quintenz refused to promise favorable treatment regarding the exchange’s past litigation with the commission.

According to private text messages released by Quintenz on Sept. 10, Winklevoss shared Gemini’s 13-page complaint against the CFTC Inspector General in a July 2025 exchange.

He claimed the agency pursued “dubious false statements charges” and “selectively and unfairly weaponized” enforcement against the company.

Winklevoss described seven years of “lawfare trophy hunting” by the commission in the leaked messages.

Transparency claims

Winklevoss questioned why the CFTC sued Gemini rather than “parties that defrauded us of $10mil” or CBOE. He also questioned why the commission continued pursuing Gemini “after it knew its investigation was started based on a false whistleblower.”

Quintenz consistently refused to make specific commitments, stating that “any decision or response to your complaint should be made by and given the full weight of the confirmed chair.”

He committed only to addressing matters “fully and fairly if and when I am confirmed,” while emphasizing the importance of proper process.

Winklevoss then expressed disappointment that Quintenz hadn’t reviewed their complaint despite previous discussions.

Additionally, the Gemini co-founder stressed that “cultural reform, which includes rectifying what happened to us, should be the highest priority” and urged Quintenz to align with President Donald Trump’s mandate to end regulatory warfare.

Quintenz explained his approach of waiting for confirmation before forming judgments. He added that he decided “to wait until I can get into the role to get that view as opposed to trying to get it now through current leadership.”

He described having “a very poor experience with that on every important issue or decision so far” when dealing with existing commission staff.

The message release comes two days before Gemini’s planned IPO on Sept. 12.

Quintenz claimed that Winklevoss contacted Trump in an effort to pause his confirmation for undisclosed reasons following their exchange.

He added that he disclosed the discussions with Winklevoss to protect the President from misinformation and demonstrate his commitment to transparency over personal advancement.

Source: Cryptoslate

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Manuel

Economic

Stocks

US stocks mostly edged higher on Wednesday as Oracle's (ORCL) blowout revenue forecast lifted AI hopes, as its shares had their best day in over three decades. Meanwhile, wholesale inflation unexpectedly declined last month, bolstering the case for the Federal Reserve to cut rates next week.

The S&P 500 (^GSPC) climbed 0.3% to notch a fresh record, while the Nasdaq Composite (^IXIC) also closed above the flatline to eke out its own record. The Dow Jones Industrial Average (^DJI), which includes fewer tech stocks, fell 0.5% from its record high.

Oracle stunned Wall Street as its CEO said its cloud revenue will skyrocket thanks to a big jump in bookings from the "who's who of AI." Its shares ended the day over 36% higher, amid optimism that the AI infrastructure build-out — seen as fueling stock gains — is finally picking up pace.

Elsewhere, a reading on wholesale inflation came in much cooler than expected, showing producer prices actually declined on a month-over-month basis vs. expectations for a 0.3% increase. Year over year, the Producer Price Index is up 2.6%, also lower than expectations for 3.3%. The data sets the stage for the Consumer Price Index (CPI) release on Thursday, the last clue to price pressures before the Fed's policy meeting next week.

Markets have been more focused on labor market data, however, to gauge the Fed's next move. A revision to US job numbers on Tuesday confirmed weakness in that market, cementing the conviction that a September rate cut is coming and stoking a rally in stocks.

Fed governor Lisa Cook is likely to take part in that Fed rate decision next week, after a judge blocked President Trump from removing her amid allegations of mortgage fraud. Trump has targeted Cook in pursuit of lower interest rates.

On the trade front, Trump has urged the EU to join the US in imposing new 100% tariffs on India and China, media reports said. The tariff hikes are meant to push Russia — President Putin in particular — to participate in talks on the Ukraine war. Tensions in the region are rising after NATO member Poland shot down Russian drones that entered its airspace.

Source: Yahoo Finance

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Manuel

Cryptocurrency

Ethena’s synthetic stablecoin, USDe, has climbed to over $13 billion in circulation less than a day after it was listed on Binance.

DeFiLlama data shows supply jumped nearly 2% in 24 hours to about $13.2 billion, making it the fastest-growing stablecoin in the past day.

This rapid expansion has been ongoing over the past month, with the protocol adding more than $3 billion to its footprint after it crossed $10 billion in August. Notably, USDe is the third-largest stablecoin in the industry, controlling around 5% of the $287 billion stablecoin market.

Meanwhile, the timing of this growth reflects several reinforcing factors designed to boost the stablecoin’s growth.

Over the past months, market interest in stablecoins has accelerated after President Donald Trump signed the GENIUS Act, the first federal law providing a framework for these assets.

That regulatory clarity, coupled with Ethena’s significant yields of around 10%, has drawn capital from investors who see DeFi returns as more attractive than US Treasurys.

Binance’s integration offers USDe $4B opportunity

This milestone comes as Binance added USDe to its platform this week.

Guy Young, Ethena Labs’ founder, said the listing highlights Binance’s rare decision to back an external project after extensive due diligence.

He described the integration as a turning point, with Binance’s $130 billion in assets and $40 billion in stablecoins offering a massive distribution channel. Ethena´s USDe Stablecoin Surges to Over $13B After Binance Listing_1

Ethena´s USDe Stablecoin Surges to Over $13B After Binance Listing_1

Considering this, Young said he expects USDe adoption on Binance to eventually mirror its penetration on Bybit, where it accounts for around 12% of total dollar balances.

According to him: “USDe penetration for USD assets on other CEXs sits at roughly ~12% which would correspond to >$4.0 billion of USDe on Binance.”

According to the announcement, the token will be paired against Tether’s USDT and integrated into Binance Earn, allowing users to collect weekly dollar-denominated rewards for simply holding USDe on the exchange.

Later this month, it will be accepted as collateral across Binance’s futures and perpetual markets.

Source: Cryptoslate

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Manuel

Economic

Political

Mexico said on Wednesday it will raise tariffs on automobiles from China and other Asian countries to 50%, in a broad overhaul of import levies the government said would protect jobs and analysts said was aimed at placating the United States.

The Economy Ministry said the moves, which will increase tariffs to varying degrees on goods across multiple sectors including textiles, steel and automotive, would impact $52 billion of imports.

"They already have tariffs," Economy Minister Marcelo Ebrard told reporters when asked about the import levies on Chinese cars, which are currently 20%. "What we will do is raise them to the maximum level allowed."

"Without a certain level of protection, you almost can't compete," he added.

Ebrard said the measures, which come just within limits imposed by the World Trade Organization, were intended to protect jobs in Mexico as Chinese cars were entering the local market "below what we call reference prices."

The plan still needs to be approved by Congress, where the government holds a significant majority.

The tariffs will impact countries that do not have trade deals with Mexico, especially China, South Korea, India, Indonesia, Russia, Thailand and Turkey, the Economy Ministry said in a document about the plan.

The move comes as the United States pushes countries in Latin America to limit their economic ties with China, with which it competes for influence in the region.

Ebrard had earlier this year spoken against tariff measures, saying they were at odds with economic growth and keeping inflation down.

RESPONDING TO U.S. PRESSURE

Banco BASE analyst Gabriela Siller said the tariffs would likely boost demand for Chinese vehicles in the very short-term.

"Tariffs on countries with which Mexico does not have trade agreements have two objectives," she said on social media. "First, more revenue and second, to look good to Trump."

John Price, managing director at Americas Market Intelligence, said that Mexico, which exports many of its own vehicles to the U.S., is responding to U.S. pressure while trying to protect its economy.

"The Mexicans are trying to placate the Americans, but protect their industrial policy that's worked so well for them over the last 30 years," he said after the government announced it was looking to raise an additional $3.76 billion in tariff measures next year.

The United States and Mexico, which share a free trade agreement along with Canada, are each other's top trade partners. The agreement, which has spared Mexico the brunt of much of the tariffs from U.S. President Donald Trump's administration, is set for review next year.

Following reports last month that Mexico could raise tariffs on Chinese goods, Chinese Foreign Ministry spokesperson Guo Jiakun said China opposed restrictions made "under the coercion of others" and that it believed countries would "remain independent."

Source: Reuters

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Adam

Stocks

Economic

Wall Street trading desks expect a hot inflation print when the consumer price index hits Thursday, but they aren’t preparing for a big reaction from stocks with jobs dominating the market narrative.

Options traders are betting the S&P 500 Index will post a modest swing of nearly 0.7% in either direction following the CPI report, according to Stuart Kaiser, Citigroup Inc.’s head of US equity trading strategy. That’s less than the average realized CPI day move of 0.9% over the past year, and below expectations for the next jobs report on Oct. 3. And Kaiser thinks the implied move is high.

It’s all about how traders are gaming out the Federal Reserve’s interest-rate path. US jobs data is showing weakness at a level that threatens economic growth, so the central bank is expected to reduce the fed funds rate by a quarter of a percentage point when its meeting concludes on Sept. 17 and perhaps continue with more cuts at its meetings in October and December.

Wall Street is acutely focused on the Fed’s thinking, with more than a full percentage point of rate cuts priced in over the next year. Rising inflation could derail that.

“We do not think there is a credible threat to the print that would force the Fed to remain paused in September,” Andrew Tyler, JPMorgan Chase & Co.’s global head of market intelligence, wrote in a note to clients on Monday. “However, we do think a materially hawkish print here adjusts the Fed’s reaction function to October and December meetings.”

Stock Traders No Longer Fear Inflation as Jobs Take Spotlight_1

Several big banks have adjusted their forecasts on the assumption that the Fed will cut rates more than they had been expecting. For example, Barclays economists now expect three quarter-point cuts this year, followed by another two in 2026.

The CPI report will add to the mosaic of data prints US traders will need to parse for additional clues on the Fed’s interest-rate path.

If consumer prices spike in this report, “then it is likely we see inflation acceleration into year-end and into 2026,” Tyler wrote. That outcome is likely to keep the Fed on hold at its October and December meetings, particularly as economic growth metrics like gross domestic product continue to move higher, according to Tyler.

Trading Inflation

Economists forecast a 0.3% rise in the August core CPI reading, which excludes food and energy costs, from a month earlier. That would leave it up 3.1% year-over-year — well above the Fed’s 2% target and matching the readings from the prior month.

In the most likely scenario laid out by Tyler’s team, core CPI rises between 0.3% and 0.35% from a month ago, and the S&P 500 swings between a loss of 0.25% and a gain of as much as 0.5%. If core CPI is between 0.25% and 0.3% from the prior month, JPMorgan’s trading desk expects the S&P 500 to advance 1% to 1.5%, Tyler wrote. A print below 0.25% could spark a rally between 1.25% to 1.75% in the S&P 500, he added.

If core CPI jumps more than 0.4% from the prior month, the S&P 500 will respond with a drop of as much as 2%, according to Tyler. But he sees just a 5% chance of that happening.

With growth remaining resilient, traders are pricing in little risk over the next few weeks. The Atlanta Fed’s GDPNow model sees real gross domestic product climbing at a 3% annual rate in the third quarter, down slightly from 3.3% in the second quarter but still relatively strong.

That helps explain why the Cboe Volatility Index, or VIX, sits well below the key 20 level where traders start getting concerned. Meanwhile, the Citigroup US Economic Surprise Index, a rolling measure of whether economic indicators are clocking in above or below expectations, sits near the highest level since January.

Stock Traders No Longer Fear Inflation as Jobs Take Spotlight_2

A rising surprise index typically is encouraging for stocks. But in this case, if the economy has more positive surprises in store, it may complicate the Fed’s goal of reining in inflation and force the central bank to keep interest rates higher for longer.

“It will all depend on the labor market,” Citigroup’s Kaiser said. “If the Fed cuts rates in October, it probably means labor data remains under pressure and inflation is not surprising to the upside.”

Source: Bloomberg

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Adam

Commodity

A safe haven asset that's doubled in value in the past three years, draws more investors while geopolitics become more turbulent, and keeps getting its analyst price targets raised as the Fed prepares to smash the rate cut button. That might sound like a crypto sales pitch. But it's gold (GC=F).

By the numbers, the precious metal is shimmering. Gold prices are up more than 40% this year, far outpacing the S&P 500’s (^GSPC) 10% gain. Even bitcoin (BTC-USD), which has enjoyed a record-setting year thanks to the Trump administration's embrace, has been left in the yellow-speckled dust with a mere 20% gain.

Unlike the stock market and its rising tides, there are people on the other end of this trade. Gold's rise also serves as a barometer of the economic mood — and not in a good way.

Many of the factors lifting gold prices would be considered disconcerting outside of the context of an appreciating asset. Gold's identity and benefit as a store of value are intertwined with financial turmoil. People, governments, and institutions don't normally seek refuge when things are going well, and typically, when they do, they are competing with the US dollar and various iterations of longer-term bonds.

On the other hand, the peak of the 5,000-year-old store of value comes not in spite of, but alongside a record high for tech stocks and an overall embrace of bullishness in the stock market.

The potential for lower interest rates, as a salve to a struggling labor market, has electrified the markets. What on its face was the bad news of higher unemployment also came with the good news of an expected rate cut, perhaps even a jumbo cut. Lower rates tend to mean higher gold prices, as the safe-haven asset becomes more attractive compared to risk-free investments.

Even before all of that, however, the post-pandemic era of global politics has shaken up long-standing alliances and given rise to new tensions among governments. President Trump's trade policy injected fresh uncertainty into the economic outlook and prompted investors to hedge against US assets.

According to an analysis by Morgan Stanley Research, the US dollar ended the first half of 2025 with its biggest loss since 1973, and pressure against the greenback is likely to continue. As a protection against inflation and devaluing currency, gold makes sense.

You can see where the gains have come from on the opposite end of the ledger. The US dollar index (DX.Y.NYB) has declined nearly 10% year to date, while the long-dated Treasury yields have stayed high — even with the next rate cut coming into view. The world is having trust issues with US dollars and debt and turning to other, shinier things.

Policymakers around the world are playing a role too, as they have amped up their purchases of gold. In fact, foreign central bank holdings of gold have topped US Treasurys for the first time since 1996, according to Bloomberg data compiled by Crescat Capital macro strategist Tavi Costa.

The White House's pressure campaign against the Federal Reserve has also added to gold's luster as those trust issues evolve. In a recent note, Goldman Sachs analysts said that gold could surge to $5,000 an ounce by 2026 if the Fed's independence is threatened and investors shift even a small amount of their holdings from government bonds to gold.

But the foundation of gold's bullishness is defensiveness, not a world-changing technology or financial innovation, which leads to the obvious question of when the wind blows the other way.

No one is getting instantly rich off the idea of a gold treasury company. This isn't the perpetual motion machine of bitcoin and its lesser peers. Gold is inert. But that’s also its ultimate selling point: The precious metal has the benefit of not pretending to be anything else.