Good morning investors. Investors and the White House just got a brief but clear taste of how markets would react to President Trump giving Jerome Powell the boot. That’s today’s big story — then we’re getting into inflation data, Fed succession, and more.

No Fed firing yet

The stock market does not want Donald Trump to fire Jerome Powell.

That much became clear from the S&P 500’s reaction Wednesday, after multiple reports surfaced that the president was preparing to relieve the Fed Chair of his duties. President Trump had met with lawmakers to discuss ousting Powell, and he even had a letter drafted to do so, according to the New York Times. 

The stock market immediately fell 0.74% on the headlines, while the 30-year Treasury yield surged 10 basis points to 5.07%. 

Minutes later, however, Trump denied those reports, saying he’s “not planning on doing anything” to remove Powell, and that firing him was “highly unlikely.” 

Immediately after those comments, the S&P 500 responded with a sharp 0.6% rally, and the 30-year yield slipped back to 5.0%. 

For months, Trump has criticized Powell’s reluctance to cut interest rates, coining him the nickname “Too Late.”

He has called on him to cut rates by as much as 3 percentage points — something the Fed has never done in one go.

But to the president’s point, Powell has a track record of delayed policy responses dating back to the pandemic.

Not only that, but inflation has indeed come in cooler-than-expected every month of 2025 so far, with both core CPI and headline PPI surprising to the downside this week.

Yet Powell — as well as many economists, journalists, and academics — maintain that tariffs will still drive an inflation rebound. 

Currently, the US average effective tariff rate hovers at multi-decade highs.

In any case, to illustrate the gap between the forecasters and data, the producer prices inflation report out Wednesday came in cooler than the estimates of all 50 economists surveyed by Bloomberg. 

“Why did God create economists? To make weathermen look good,” wrote Ryan Detrick, chief market strategist for Carson Group, after Wednesday’s inflation report came out.

Corporate America, for its part, does not seem concerned about price growth.

The latest batch of earnings transcripts from S&P 500 companies revealed mentions of “inflation” dropped to the lowest mark since January 2021, according to data cited by Liz Ann Sonders, Charles Schwab’s chief investment strategist.

That said, none of this suggests it would be in markets’ best interest for Trump to actually fire Powell. 

The move — warranted or not — would cast serious doubt on the independence of the Federal Reserve and trigger extreme volatility across stock and bond markets. 

As much as markets may want lower rates — a view Opening Bell Daily agrees with — achieving them at the expense of Fed credibility is a slippery gambit. 

However flawed Powell may be in Trump’s eyes, firing him would not only turn the Fed Chair into a martyr for central bank independence, but also rattle investors’ faith in a long-standing system that underpins the global financial order.

Traders on the prediction platform Kalshi see 24% odds Powell is out as Fed Chair before 2026, up from 9% a month ago.

Market snapshot

Elsewhere

🏦 Kevin Hassett is the frontrunner to replace Powell. He’s one of Trump’s longest-serving economic aides, and sources close to the matter say he’s the current favorite for the Fed’s top job. Kevin Warsh is a close second. (Bloomberg)

📈 Goldman Sachs profit surged in the latest quarter. The bank benefitted from the broad uptick in trading revenue across Wall Street, fueled by market volatility. CEO David Solomon sounded upbeat: “At this time, the economy and markets are generally responding positively to the evolving policy environment.” (WSJ)

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Rapid-fire

• Citi hired senior JPMorgan bankers to expand its financing business (Reuters)

• Removing the Fed Chair on grounds of pricey building renovations may not work (Barron’s)

• Regulators fined Barclays $56 million for failing to detect money-laundering risks (WSJ)

• Inflation in the UK unexpectedly climbed to an 18-month high of 3.6% (CNBC)

• Shares of Bitmine Immersion Technologies surged 22% Wednesday after Peter Thiel disclosed a 9% stake (CNBC)

• Scale AI let go 14% of its workforce after Meta invested billions in the startup (The Verge)

Last thing

About me

📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day — unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else.

Feedback? Reply to this email, ping me on X @philrosenn, or write me directly at [email protected].

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