Core Viewpoint - The Trump administration is considering 11 candidates to succeed Jerome Powell as the next Federal Reserve Chair, with the selection process being influenced by Powell's recent dovish remarks at the central bank's annual meeting, affecting Wall Street sentiment [1][5]. Candidate Selection Process - U.S. Treasury Secretary Mnuchin will conduct interviews with the candidates starting September 5, with the process expected to continue into the following week [1][2]. - The candidates include notable figures such as Michelle Bowman, Chris Waller, Philip Jefferson, and others, with the final list to be submitted to the President after initial interviews [3]. Market Expectations and Interest Rate Outlook - Following Powell's dovish comments, major international banks have adjusted their expectations for the Fed's interest rate path, with a 89.8% probability of a rate cut in September according to the CME FedWatch tool [5]. - UBS forecasts that the Fed will initiate a series of four consecutive rate cuts starting in September, totaling 100 basis points, citing factors such as stable inflation and a weakening labor market [6][7].

Group 1 - The core viewpoint of the articles is that President Trump is considering a diverse list of candidates for the next Federal Reserve Chair, which may include individuals from top Wall Street asset management firms, indicating a shift in the selection process [1][2] - The list of candidates currently includes 11 individuals, such as David Zervos from Jefferies, Rick Rieder from BlackRock, and Larry Lindsey, among others, suggesting a broadening of options for the upcoming appointment [1] - The current Federal Reserve Chair Jerome Powell's term ends in May 2026, and Trump has stated he will not renew Powell's term, indicating a significant change in leadership is forthcoming [2] Group 2 - Treasury Secretary Scott Bessent will interview each candidate to refine the list before presenting it to President Trump, highlighting a structured approach to the selection process [2] - The expansion of the candidate list suggests that Trump's decision on the nomination is not urgent, allowing for a more deliberate selection process [2] - The concept of a "shadow Fed Chair," proposed by Bessent, aims to allow the next chair to influence policy discussions during Powell's remaining term, potentially diminishing Powell's authority [3]

Group 1 - U.S. Treasury Secretary Scott Bessent stated that current interest rates are "restrictively high" and suggested a reduction of 150-175 basis points [1] - Bessent predicts that the Federal Reserve may initiate a series of rate cuts in the coming months, with a 50 basis point cut likely in September [1] - The current target range for the Federal Reserve's benchmark interest rate is 4.25%-4.5% [1] Group 2 - Following lower-than-expected inflation data in July, market expectations for a September rate cut surged to 96% [2] - Bessent advocates for an aggressive 50 basis point cut, while analysts warn that rising core inflation at 3.1% and upcoming employment data may delay decisions [2] - Political pressure from the White House, particularly from President Trump, is influencing the Fed's decision-making process [2] Group 3 - Morgan Stanley's investment strategy head Elyse Ausenbaugh suggests that the Fed is more likely to act in the fourth quarter unless there is a significant deterioration in future data [3] - The upcoming employment data is expected to play a crucial role in determining the Fed's policy direction [3] - Bessent emphasized the need for reliable data in employment reports and supports the continuation of these reports [3]

Core Viewpoint - The Trump administration's ongoing criticism of Federal Reserve Chairman Jerome Powell reflects a lack of understanding and respect for the Federal Reserve's operations and independence [1][2]. Group 1: Criticism of the Federal Reserve - U.S. Treasury Secretary Bessent stated that the Federal Reserve needs a comprehensive review to assess its success, indicating dissatisfaction with its inflation management [1]. - Congressman Anna Paulina Luna has accused Powell of perjury, seeking criminal charges against him, amidst ongoing pressure from Trump and allies for Powell to resign [1][4]. - The Trump administration has repeatedly criticized the lavish nature of the Federal Reserve building renovation, suggesting it as a justification for Powell's potential dismissal [5]. Group 2: Potential Successors and Political Dynamics - Bessent is considered a leading candidate for the next Federal Reserve Chair, with 26% of fund managers in a recent survey believing he will be appointed [4]. - Other potential candidates include former Fed Governor Walsh (17%), Fed Governor Waller (14%), and NEC Director Hassett (7%) [4][8]. - Trump's strategy of establishing a "shadow Fed Chair" to influence Powell is viewed as naive and unlikely to change Powell's role before his term ends in 2026 [2][9]. Group 3: Challenges in Dismissing Powell - Dismissing Powell is legally complicated, and Trump may have been advised against it due to potential damage to the U.S. economic system [6]. - The Federal Open Market Committee (FOMC), which sets interest rates, is led by Powell, and changing the chair does not guarantee a shift in monetary policy direction [9][10]. Group 4: Implications of a New Chair - A new chair would still need to persuade the FOMC members to support any interest rate changes, as the committee consists of 12 voting members [10]. - If a new chair were to act as a mouthpiece for Trump, it could undermine their professional reputation and the independence of the Federal Reserve [10][11].

Core Viewpoint - The risk of stagflation in the U.S. economy is re-emerging, with inflation expected to rise and economic growth to slow down in the second half of the year [1][2]. Group 1: Inflation Drivers - Tariff impacts are not fully realized yet, as U.S. companies imported heavily in Q1 to avoid high tariffs, leading to high inventories. Once these inventories are depleted, companies will have to resume imports, likely passing tariff costs onto consumers [2]. - Immigration policies have tightened, leading to labor shortages in key sectors such as construction, agriculture, and elder care, which may push up wage levels and contribute to inflationary pressures [2]. - Moderate fiscal policy expansion is anticipated to contribute 0.4 to 0.5 percentage points to GDP growth over the next 12 months, increasing inflation risks [2]. Group 2: Economic Growth Projections - U.S. GDP growth is projected to be below trend levels, with estimates of 1.3% for this year and 1.2% for next year [3]. Group 3: Long-term Fiscal Concerns - The rapid passage of the "Big and Beautiful" bill, which makes the temporary personal income tax cuts from 2017 permanent, is expected to increase the budget deficit by over $3 trillion over the next decade. This is unusual given the already low unemployment rate [5]. - The U.S. budget deficit is projected to remain above 6% of GDP in the coming years, with government debt reaching about 100% of GDP, and interest payments consuming 3% to 4% of GDP, which is unsustainable [5]. - Changes in the buyer structure of U.S. debt, with reduced purchases from foreign central banks and increased sensitivity from private investors, may lead to greater volatility in bond yields [5]. Group 4: Global Economic Outlook - Other regions are expected to experience slower growth but easing inflation, providing more room for central banks to cut rates. Asian exports are anticipated to decline further in the second half of the year, while Germany's fiscal and infrastructure spending may take time to support economic growth [6]. Group 5: Currency and Monetary Policy - The Nomura team holds a "soft dollar" stance due to stagflation pressures in the U.S., despite current interest rate differentials favoring the U.S. The dollar is considered significantly overvalued, and the persistent trade deficit may limit its performance [7]. - Concerns about the potential appointment of a "shadow Fed chair" by Trump could add uncertainty to monetary policy, as this individual might influence market expectations and complicate the current Fed chair's policy-making [8].

Core Viewpoint - The risk of stagflation in the U.S. economy is re-emerging, with inflation expected to rise and economic growth slowing down in the second half of the year. The Federal Reserve is likely to be cautious regarding interest rate cuts, which may occur later and be smaller than market expectations [2][3]. Group 1: Causes of Rising Inflation - The impact of tariffs is not fully realized yet, as U.S. companies imported significantly in the first quarter to avoid high tariffs, leading to high inventory levels. Once these inventories are depleted, companies will need to import again, potentially passing on tariff costs to consumers [4]. - Stricter immigration policies have led to labor shortages in key sectors such as construction, agriculture, and elder care, which may drive up wage levels and contribute to inflationary pressures [4]. - Moderate fiscal policies are expected to contribute 0.4 to 0.5 percentage points to GDP growth in the next 12 months, increasing inflation risks [4]. Group 2: Economic Growth Projections - U.S. GDP growth is projected to be below trend levels, with estimates of 1.3% for this year and 1.2% for next year [5]. Group 3: Long-term Fiscal Concerns - The rapid passage of the "Big and Beautiful" bill, which makes the 2017 temporary personal income tax cuts permanent, is expected to increase the budget deficit by over $3 trillion in the next decade. This level of fiscal stimulus is unusual given the already low unemployment rate [8]. - The U.S. government debt has reached about 100% of GDP, with interest payments consuming 3% to 4% of GDP, which is unsustainable. The buyer structure of U.S. debt has shifted, with foreign central banks reducing their purchases, leading to increased volatility in bond yields [8]. - Long-term solutions to the debt issue may require fiscal consolidation, which could involve spending cuts, tax increases, or new tax sources. Alternatively, forced purchases of more government bonds or quantitative easing by the Federal Reserve could lead to inflation [8]. Group 4: Global Economic Outlook - Outside the U.S., other regions are expected to experience slower growth but easing inflation, providing more room for central banks to cut rates. Asian exports are anticipated to decline further in the second half of the year, while Germany's fiscal and infrastructure spending may take time to support economic growth [9]. - The Nomura team holds a "soft dollar" stance due to stagflation pressures in the U.S., despite current interest rate differentials favoring the U.S. The dollar is considered significantly overvalued, and the persistent trade deficit will constrain its performance [9]. Group 5: Monetary Policy Uncertainty - The potential for the Federal Reserve to maintain low interest rates could lead to rising inflation, causing foreign investors to lose confidence in U.S. assets, which may result in higher long-term interest rates and a weaker dollar [11]. - The possibility of appointing a "shadow Federal Reserve Chair" by Trump could create additional uncertainty in monetary policy, complicating the current Fed Chair Powell's role and the FOMC's decision-making process [11].

Core Viewpoint - U.S. Treasury Secretary Becerra suggests that Federal Reserve Chairman Powell should resign from the Board of Governors when his term as chairman ends in May 2026 to avoid market confusion [1] Group 1: Federal Reserve Leadership - Becerra emphasizes that traditionally, the Fed chair resigns from the Board upon leaving the chair position, indicating that Powell's potential continued presence could lead to market chaos [1] - Powell's current term as a Fed governor extends until January 2028, which raises questions about his future role after his chairmanship ends [1] - The process for nominating the next Fed chair has already begun, with many strong candidates both inside and outside the Fed [1]

Core Viewpoint - The U.S. Treasury Secretary, Janet Yellen, addressed rumors regarding the "shadow Federal Reserve Chair," indicating that such speculation could lead to confusion in the financial markets [1] Group 1 - The term "shadow Federal Reserve Chair" has been circulating, which may create misunderstandings about the Federal Reserve's leadership and decision-making processes [1] - Yellen emphasized the importance of clear communication from the Federal Reserve to avoid misinterpretations that could affect market stability [1]

Core Viewpoint - President Trump is pressuring the Federal Reserve to lower interest rates and has called for an investigation into Chairman Powell, suggesting he should resign due to alleged misleading testimony [1][3][4]. Group 1: Pressure on the Federal Reserve - Trump has repeatedly criticized Powell for not lowering interest rates, claiming that the government is incurring high interest costs due to the Fed's inaction [4][6]. - The Federal Reserve has maintained its benchmark interest rate since December, despite Trump's pressure, with Powell stating that future rate cuts depend on upcoming economic data [6][8]. Group 2: Allegations Against Powell - The Director of the Federal Housing Finance Agency, Bill Pulte, has called for Congress to investigate Powell, accusing him of providing deceptive testimony regarding the Fed's headquarters renovation costs [3][4]. - Powell has defended himself against these allegations, stating that the reports about the renovation were misleading and inaccurate [3][6]. Group 3: Potential Successors for Powell - Trump has mentioned having "two or three candidates" in mind to replace Powell as Fed Chairman, although he has not disclosed their identities [9][10]. - Speculation includes former Fed Governor Kevin Walsh and current White House officials, but the White House has not confirmed any names [10][11]. Group 4: Impact on Market and Dollar - The potential for a "shadow Fed Chair" could undermine the independence of the Federal Reserve and create market instability due to conflicting policy signals [13][15]. - Concerns over the U.S. economic slowdown and rising debt interest costs have led to a significant depreciation of the dollar, which has fallen over 12% against a basket of currencies since January [19].

Core Points - The article discusses the abrupt termination of trade negotiations between the U.S. and Canada by Trump, coinciding with his call for Fed Chair Powell to resign, highlighting escalating trade tensions and political interference in economic matters [1][21][34] Trade Relations - Canada plans to implement a 3% digital services tax on U.S. tech companies, expected to generate approximately CAD 2 billion annually, which Trump perceives as a direct attack on the U.S. [3][6] - Trump's reaction included a complete halt to trade negotiations and a threat to impose tariffs on Canadian goods within a week, leading to a significant drop in the Canadian dollar [5][6] - Canada has previously responded to U.S. tariffs by imposing a 25% tariff on U.S. automobiles not compliant with the USMCA and has also levied tariffs on U.S. goods worth about $43 billion [11][13] Economic Impact - The breakdown of U.S.-Canada trade talks is expected to negatively impact the Canadian economy, particularly the labor market, as indicated by Barclays forex strategist Skylar Montgomery Koning [7] - The Canadian trucking industry, which relies on cross-border trade for about 70% of its cargo, is experiencing a decline in orders, leading to layoffs [19] Federal Reserve Dynamics - Trump has expressed dissatisfaction with Powell's leadership, labeling him as "stupid" and "stubborn," and indicated a preference for a successor who is more inclined to lower interest rates [21][23] - Powell's term has 11 months remaining, but Trump may announce a replacement sooner, which could undermine the Fed's independence and create uncertainty in U.S. monetary policy [25][36] Global Economic Uncertainty - The escalation of the U.S.-Canada trade conflict could disrupt global supply chains, leading to shortages and price increases, affecting U.S. exports and employment [34][36] - Other countries, including the EU and Mexico, may respond with their own tariffs, further intensifying global trade tensions [36][38]