Trump Makes a Demand for Say Over the Fed

Trump wants to ‘say’ over the Fed

Donald Trump has repeatedly questioned the principle of the Fed’s political independence and criticized Jay Powell, the central bank’s chair. (Remember when he called Powell a “bigger enemy” than President Xi Jinping of China?)

That has made the future of the Fed in a second Trump presidency a hot topic — speculation that is escalating on Friday after the former president made his most direct assertions yet that the Fed should not have full control in setting monetary policy. Such a view could jeopardize the very power structure that’s governed the institution for decades and made it a North Star for investors.

“I feel that the president should have at least say in there,” Trump said at a news conference at Mar-a-Lago. “Yeah, I feel that strongly.” He gave little detail about his full vision for how the Fed should operate — although he generally favors low interest rates and a weak dollar — but focused on a longstanding perspective: how the institution sets interest rates. He said his decisions are too often driven by “gut feeling,” and that Fed policymakers get “it wrong a lot.”

“I think I have a better instinct than, in many cases, people that would be on the Federal Reserve, or the chairman,” Trump said, adding that “I made a lot of money.”

As president, Trump often griped about Powellincluding when the Fed kept borrowing costs higher than he would have preferred. And he’s expressed concern that a rate cut before Election Day, as investors are anticipating, would benefit Kamala Harris and other Democrats.

Thursday’s comments came after Trump told Bloomberg Businessweek that Powell could keep his job “if I thought he was doing the right thing,” and The Wall Street Journal reported in April that Trump’s allies were seeking to water down Fed independence.

As The Times’s Jeanna Smialek wrote in DealBook last month, it is not clear that Trump could legally dismiss or demote a sitting Fed chair. It should be noted that Trump isn’t alone in seeking more sway over the central bank; Richard Nixon and Ronald Reagan had both sought to push around their Fed chiefs.

Investors shook off Trump’s comments. The S&P 500 continued to rally while Trump spoke, closing 2.3 percent higher, and US futures were on Friday. But a Treasury Department auction was met with weak demand for a second straight day.

Wei Li, BlackRock’s global chief investment manager, told Bloomberg TV on Friday that any questions about the Fed’s independence could give investors pause about the Treasury market.

Messing with the Fed could have big market ramifications. “Without some independence, we would have seen a cut in July, if not earlier,” Kathryn Judge, a law professor at Columbia, wrote on X last night. Earlier this week, Jay Clayton, the SEC chair during the Trump administration, said, “Thank goodness we have an independent Fed,” noting it can have a calming effect on markets during periods of volatility.

It’s worth noting that the Fed does more than set rates: It also regulates the nation’s banks, and is the lender of last resort for that system. The central bank is also a huge market participant during crises, buying securities and other financial assets to maintain liquidity.

HERE’S WHAT’S HAPPENING

FTX Trading and an affiliated firm are ordered to pay $12.7 billion to fraud victims. The punishment arose out of a settlement between FTX and Alameda Research and the Commodity Futures Trading Commission, which also agreed to prioritize victims’ restitution claims over their own.

Paramount cuts 15 percent of its US work force. The beleaguered media company said it plans to lay off about 2,000 workers, largely from back-end functions including communications and finance, as part of a $500 million cost-reduction plan ahead of its merger with Skydance Media. Paramount also announced that its streaming arm had turned a profit in the second quarter, surprising investors, although overall revenue missed expectations.

Wall Street bonuses may rise sharply this year, a report predicts. A jump in financial transaction activity, and therefore fees for banks, could lead to payouts climbing as much as 35 percent over last year, according to the compensation research provider Johnson Associates. The biggest beneficiaries are likely to be bankers who arrange debt sales, followed by those who put together IPOs

Three Columbia deans resign after sending insulting texts. The university officials had been suspended in June after administrators discovered that they had sent disparaging messages that “disturbingly touched on ancient antisemitic tropes.” Columbia and other schools remain under scrutiny over how they handle claims of anti-Semitic and anti-Islamic behavior amid ongoing protests over the war in Gaza.

Musk claims a victory over advertisers

Elon Musk scored a win on Thursday when a nonprofit coalition of advertisers that he had accused of orchestrating a boycott against X said it was shutting down.

It’s an instance of an oft-employed strategy by Musk — using lawsuits as a cudgel — paying off. Whether it will have longer-term consequences for X, whose business is dependent on advertisers, remains to be seen.

The context: X this week sued the Global Alliance for Responsible Media, a group led by the World Federation of Advertisers, alleging that it had violated antitrust laws by coordinating with brands including CVS Health, Mars and Unilever to arrange an ad boycott.

“We tried peace for 2 years, now it is war,” Musk wrote on X when the lawsuit was announced.

“This decision was not made lightly, but GARM is a not-for-profit organization, and its resources are limited,” Stephan Loerke, the World Federation of Advertisers’ CEO, wrote to GARM’s members, according to The Times. Loerke denied that the coalition’s effort violated antitrust laws, but said that it didn’t have the money to fight a sustained legal battle.

X and its allies celebrated: “No small group should be able to monopolize what gets monetized,” Linda Yaccarino, X’s CEO, wrote in a post. And a spokesperson for the Republican-led House Judiciary Committee, which had accused GARM of “starving disfavored content, or even across platforms, of advertising dollars,” said the move was “a big win for the First Amendment.”

Musk has gotten results by suing opponents before. After X sued Media Matters, which had published research showing that ads on X had run alongside anti-Semitic content, several employees of the advocacy group said the legal pressure led to layoffs, The Times reports.

But X’s victory won’t necessarily endear the platform to advertisers, many of whom have continued to stay away over a rise in divisive content — including from Musk himself. “They don’t want to interact with Elon Musk, period,” Claire Atkin, a co-founder of Check My Ads, a digital advertising watchdog, told The Times.

That could end up further hurting X, which had sought to make nice with the ad industry this summer. While Musk has sought to bulk up other sources of revenue, including subscriptions, advertising still provides the bulk of the company’s top line.

And with X still laboring under billions of dollars in debt that it took on as part of Musk’s purchase of the social network, as well as investments in technology including AI, any sustained hit to revenues will hurt.

“We will implement a national strategy for cultivating top talents.”

—Huai Jinpeng, the Chinese minister of education. China has oustripped the US and other countries in innovations for electric-vehicle technologies like batteries in part by stressing science classes and research in classrooms.

The AI ​​non-takeover deals

Big Tech companies are racing to beef up their artificial intelligence capabilities, without adding to the intense antitrust scrutiny that they’re already facing. So instead of buying startups outright, they’re striking nontraditional deals that give them access to AI talent and technologies, but stop short of ownership, The Times’s Erin Griffith and Cade Metz report.

Some recent examples:

Regulators are watching. The FTC said in January that it plans to study how AI investments by Microsoft, Amazon and Google affect the competitive landscape. And Britain’s antitrust regulator said on Thursday that it is investigating a deal that Amazon made with the AI ​​company Anthropic.

“These deals do indeed start to look a lot like regular acquisitions,” Justin Johnson, a business economist who focuses on antitrust at Cornell University, told The Times.

Not everyone is thrilled by these deals. Employees who aren’t picked up by the Big Tech buyers don’t get to share in the financial rewards. “If you build a company and you take on money from investors, every person involved deserves to be rewarded,” Sebastian Thrun, an AI researcher who co-founded Google’s self-driving car project, said.

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