President Trump vs. Fed Chair Jerome Powell: Is it time for investors to sell America?

Core Viewpoint - The current market sentiment is influenced by tensions between President Trump and Fed Chair Jerome Powell, leading to speculation about a shift from US stocks to safe-haven assets like gold due to anticipated declines in corporate earnings growth and rising capital costs [1][2]. Group 1: Corporate Earnings and Economic Outlook - Corporate earnings growth is expected to decline significantly this year as the conflict over Fed independence raises capital costs for companies, particularly with soaring bond yields [1]. - Despite concerns, there are still positive indicators in the US economy, with earnings rising across various sectors, including small and large caps, and expectations for another quarter of double-digit year-on-year earnings growth as earnings season approaches [3]. Group 2: Federal Reserve and Political Tensions - The Justice Department has issued grand jury subpoenas to the Federal Reserve, raising questions about Powell's testimony regarding the renovation of the Fed's headquarters and potential misleading statements to Congress [3][4]. - Powell has characterized the investigation as "unprecedented" and has emphasized that he performs his duties without political influence, amidst ongoing public attacks from President Trump [4]. Group 3: Market Reactions - Following the issuance of subpoenas, the S&P 500 and Dow Jones Industrial Average reached record closing highs, indicating that investors may be dismissing the political tensions as a temporary threat [5]. - Stock futures showed little change, suggesting that market participants believe the situation will stabilize [6].