Our next guest sounding the alarm. This is now months ago on the dangers of the Trump administration attacks on the Fed. Joining us right now is Facebook co-founder Chris Hughes.He is co-chair of the Economic Security Project and author of the book Market Crafters. It was published in April, which covers how the Fed has shaped markets over the last century. His April New York Times oped warned that the president's attack on the central bank undermined Fed independence.And we want to get into all of it. Uh C ...

Streetwise: Anyone concerned about Trump undermining Fed independence was surely already concerned, writes James Mackintosh https://t.co/AeuGMh67ul ...

Fed Independence & Monetary Policy - The markets are currently focused on the short run, particularly the upcoming Fed meeting in September, while the long-run economic effects of current events, such as potential higher inflation and long-term bond yields, are being overlooked [2][3][4] - Maintaining an independent monetary policy is crucial because monetary policy affects the economy in the long run, and an independent central bank focuses on long-term price stability and maximum employment goals [4][5] - Concerns exist that the government is pressuring Fed members, escalating from earlier instances like considering firing the chair, potentially undermining Fed independence [5][6] - The public nature and vitriol of the attacks, based on allegations and innuendo without due process, are unprecedented and could lead to the removal of officials based on arbitrary reasons, jeopardizing Fed independence [7][8] - Undermining Fed independence could negatively affect the American economy, households, and businesses, even if policymakers remain unbiased, as the mere perception of political influence can impact markets [9] Political Influence & Board Composition - There is concern about the possibility of a political majority on the Fed board influencing the reappointment of the 12 Federal Reserve presidents, potentially leading to a significant shift in the Fed's composition [10][11][12] - The reappointment process involves an objective performance evaluation by the boards of directors of each reserve bank, but concerns exist that political considerations could override this process [13][14] - In a normal case, Fed governors would not refuse to reappoint someone based on a whim or policy views; there would have to be a substantive issue [15] Lisa Cook & Due Process - Lisa Cook is listening to her legal counsel, and it may not be the right time for her to publicly defend herself [19] - The situation has moved beyond a normal internal investigation process and has become a legal case, circumventing standard procedures [20][21] - If a president can remove someone based on allegations without facts, Fed independence is lost, highlighting the damaging nature of the situation [22]

Our next guest is a former Fed vice chair. He's now a CNBC contributor. Roger Ferguson joins us now.It's good to see you. Welcome to our show. Thank you.Nice to be here. What do you make of this whole Lisa Cook story. Well, look, I think you put in the right context.This is really a story about trying to undo what has been 90 years of Fed independence. What most people don't know is 90 years ago in 1935 the Congress restructured uh the Fed. It removed uh executive authority, executive branch authority by ta ...

If you look at the Federal Reserve Act, it does say by, you know, for cause and it looks like those forms are not filled out accurately, that they were they were filled out improperly. And this is why Secretary Besson highlighted why he believes the Fed should do an internal probe. The law may not be clear where it dots everything out, where there has to be a specific process, it says for cause.The president believes he has cause. Certainly you have to take these things very seriously, given the fact the Fe ...

AI Investment Opportunities - The market favors stocks with proven AI applications, particularly those benefiting from AI in areas like ad targeting [1][2] - Custom silicon and foundries like Taiwan Semiconductor are key areas for investment in AI infrastructure [2][3] - Semicap equipment companies also present opportunities in the AI space [3] - Betting on the 5% of AI projects that generate returns is crucial for profitability [4] Company Specific Analysis - Meta is benefiting significantly from AI in ad targeting and content delivery [2] - Broadcom is a way to play custom silicon solutions [2] - Accenture is viewed contrarily as an AI beneficiary, expected to see increased demand for AI implementation services, despite market skepticism [6][7] - ASML, specializing in lithography for advanced chips, is expected to benefit from the increasing need for power efficiency in AI chips [7][8] Macroeconomic Concerns - Concerns exist regarding the macro environment and the Federal Reserve's actions [11] - The market prioritizes short-term low interest rates over long-term Fed independence [12]

Market Reaction & Fed Independence - The market reaction to attacks on Fed independence has been muted, with a steepening yield curve [1][2] - The market has decoupled sovereign issues (tariffs, Fed independence, fiscal policy) from corporate performance, focusing on productivity enhancements [4][5] - The "buy the dip" mentality, conditioned over time, contributes to market resilience [7][8][9] Economic Outlook - The US economy is slowing, but not dramatically [10][12] - The bond market's shift to absolute space (demanding higher compensation) and tariffs posing a bigger threat to global growth are major risks [11] - The industry anticipates the Fed will cut rates and inflation will remain persistently above 2% [12] - Companies are prioritizing resilience over efficiency, contributing to inflationary pressures [13] Policy & Global Trade - The market is taking a slower ramp-up approach to policy changes, like tariffs, compared to immediate announcements [7] - Secondary sanctions on countries trading with Russia (e.g., India at 50% tariffs) raise questions about potential implications for China [8] - The industry believes the Fed is unlikely to change its 2% inflation target, despite potentially living with higher inflation [13][14]

Fed Independence & Political Influence - The speaker views the current situation as the single biggest attack on the independence of the Fed in American history [1] - Undermining the independence of the Fed and politicizing it undercuts the economy and confidence in the economy, not just domestically but worldwide [1] - Concerns exist that any Fed nominees under the current administration may not be perceived as truly independent [1] - The speaker expresses concern about potential political influence on the Fed, drawing parallels to countries where central bank independence is compromised, leading to negative economic consequences like high inflation (e g, Turkey with 80% inflation) [1] Allegations Against Fed Governor Cook - Allegations of mortgage fraud against Fed Governor Cook are viewed with skepticism, questioning the source and motives behind them [2] - The focus should be on following the law regarding "firing for cause," which traditionally means job-related issues like inefficiency or corruption [2] Economic Policy & Political Motivations - The speaker suggests the administration's attempts to influence the Fed are driven by a need to shift blame for rising costs for American families [3] - The speaker claims that the Fed delayed lowering interest rates due to economic chaos created by the administration's tariff policies, resulting in higher costs for consumers [3] CHIPS Act & Corporate Agreements - Concerns are raised about the administration potentially weakening restrictions on companies receiving CHIPS Act funding, such as investment requirements and job creation [3][5] - The speaker accuses the administration of engaging in "shakedowns" by potentially waiving restrictions on companies receiving taxpayer money in exchange for a cut of the profits [6]

Let's get the latest on President Trump's efforts to remove Lisa Cook from the Federal Reserve Board. CNBC senior economics reporter Steve Leeman talked about it all day with us. Going to probably talk about it all day today, maybe the the rest of the week as well. We have some news, Leslie. Sources telling CNBC that Fed Governor Lisa Cook could file her lawsuit to overturn her firing by the president as soon as today in DC federal court. But the president saying yesterday he's already counting on having a ...

Fed Independence & Politicization - The industry faces the most severe challenge to Fed independence in the last two generations, potentially marking the beginning of the Fed's politicization [2] - Politicization of monetary policy, reminiscent of the Nixon era, raises expectations of higher inflation, potentially leading to a self-fulfilling prophecy [3] - Independent central banking is crucial, as politicization can lead to market instability, resembling an emerging market scenario [4][6] - The administration's disregard for established norms poses substantial risks to the national economy [15] Market Response & Economic Impact - Short-term interest rates decreased due to expectations of Fed rate cuts, while long-term interest rates increased due to inflation concerns [5] - The dollar's value may decline due to anticipated money printing by a political Fed [5] - Loss of credibility can happen quickly, similar to how a forest can be burned down in an hour after decades of growth [6] Policy & Legal Considerations - The president's proposals for monetary policy, such as cutting interest rates to around 1%, are considered outside the reasonable range of debate [8] - The Fed's independence is rooted in law and tradition, reporting to Congress and not being part of the executive branch [13][14] - Public debate between the administration and the Fed can lead to loss of credibility and rising long-term interest rates [14]