Good morning. Andrew here. What would happen if President Trump actually tried to fire Jay Powell, the Fed chair? Trump has been publicly toying with the idea — and then denying he will do it. Investors and analysts have been gaming out what would happen to bonds, the dollar and stock prices. Despite vocal calls about the importance of an independent Fed, the prevailing wisdom appears to be that the immediate impact of firing Powell might not be a shock to the system but more of a gradual shift in how global investors think about the U.S. Let me know what you think might happen in practice. (Was this newsletter forwarded to you? Sign up here.)
Trump and “the concept of firing” PowellStock futures and the dollar are looking relatively stable this morning despite the latest — and perhaps most ominous — threat yet by President Trump against Jay Powell, the Fed chair. Investors may be playing down the chances that the president will actually try to remove Powell, a task that experts still say would be legally knotty. And it’s certainly possible that Trump is just venting that the Fed isn’t lowering rates fast enough or can continue to be dissuaded from acting. But at some point, will investors take the president’s threats seriously? What Trump did: While Trump denied brandishing a draft letter firing Powell as Fed chair at a meeting with House Republicans on Tuesday, The Times reports that he had, with the draft provided by William Pulte, the director of the Federal Housing Finance Agency. The president said he “talked about the concept of firing” Powell, and that almost everyone at the meeting said he should. (He said yesterday that he was considering choosing Kevin Hassett, a close economic adviser, to be the Fed’s next chair.) But Trump said he had no imminent plans to fire Powell — “unless he has to leave for fraud,” citing a multibillion-dollar renovation of the central bank’s headquarters that has become a focus of conservative criticism. Markets only briefly freaked out at news of Trump’s latest threat. The dollar fell 1.2 percent against a basket of other currencies yesterday, while the S&P 500 also tumbled. But both recovered shortly afterward upon the president’s denial. (The Times notes that he often reflexively denies reports about his actions.) Markets so far have assumed that Trump is “playing chicken,” Tara Sinclair, an economist at George Washington University, told The Times. That said, The Financial Times notes that the yield on 30-year Treasury bonds rose above 5 percent this week, while the additional interest rate on the long-term debt compared with shorter-dated ones is near a multiyear high. It’s “the reaction you’d expect to see if the market was fretting over central bank independence,” Mike Riddell, a fund manager at Fidelity International, told The FT. Others are sounding the alarm. Among them are major bank C.E.O.s, who joined Jamie Dimon of JPMorgan Chase in defending the Fed’s independence. “I think central bank independence, Fed independence, is very important and it’s something we should fight to preserve,” David Solomon of Goldman Sachs said yesterday. Michael Feroli, JPMorgan’s chief U.S. economist, wrote in a note to investors yesterday that “the immediate crisis may have passed, though we doubt we are entirely done with this saga.”
Producer prices held steady in June, but reflected some impact from tariffs. The latest Labor Department Producer Price Index, released yesterday, showed that President Trump’s levies drove up the wholesale cost of goods, an increase offset by a drop in the cost of travel-related services. It’s the latest sign that tariffs are starting to affect the broader economy, keeping the Fed in a wait-and-see mode when it comes to interest-rate cuts. A Canadian retailer calls off its takeover bid for 7-Eleven’s Japanese parent company. Alimentation Couche-Tard, which had sought to buy Seven & i for a year for $47 billion, accused its counterpart of a “calculated campaign of obfuscation and delay” and a lack of “sincere or constructive engagement.” The move ends speculation about a high-priced takeover drama that also drew in the son of Seven & i’s founder, who made his own acquisition bid. Trump administration officials are said to be delaying Nvidia’s big Emirati deal. Some federal officials are concerned that the plan — in which Nvidia would sell billions of dollars’ worth of high-end artificial intelligence processors to the United Arab Emirates — could open the door to China obtaining some of the chips, The Wall Street Journal reports. The U.A.E. is under pressure to agree to changes in the plan, including not allowing G42, a major Emirati A.I. company, to have any chips. An online firearms retailer backed by Donald Trump Jr. falls in its trading debut. Shares in GrabAGun, a marketplace for guns and ammunition, slid nearly 24 percent yesterday after the company went public via a merger with a blank-check company. GrabAGun’s investors include 1789 Capital, an investment firm whose partners include Trump Jr.; it focuses on companies with appeal to conservatives. Tech offers Mamdani a warmer receptionFor the second day in a row, Zohran Mamdani met with business executives to talk policy — and try to persuade skeptics that a democratic socialist could effectively run the capital of capitalism. Yesterday’s crowd of technology leaders and investors appeared to give the Democratic candidate for New York City mayor a warmer welcome than he received at Tuesday’s gathering. A recap: Yesterday’s 90-minute meeting was hosted by the Partnership for New York City (which also arranged Tuesday’s gathering), the advocacy group Tech:NYC and the venture capital firm AlleyCorp. About 150 people attended. Mamdani addressed many of the same topics raised on Tuesday, including taxes, housing and his views on Israel and the war in Gaza. He also spoke about how to make New York’s government more efficient and the importance of tech to the city’s economy. The crowd may have been more predisposed to be receptive to Mamdani, some attendees of yesterday’s event told Lauren Hirsch. Among the reasons is that Mamdani is a digital native whose rise was powered by skillful use of social media: “He speaks a language that a lot of people in that room, younger start-up founders, also speak,” Julie Samuels of Tech:NYC said. Still, Mamdani has drawn plenty of criticism from conservative tech figures, including the venture capitalist Shaun Maguire of Sequoia. And while tech companies may be less likely to actually leave New York, as many financiers have threatened to do, they still care about public policy issues like safety and housing affordability as keys to drawing and retaining talented workers. (Some executives have cited San Francisco’s struggles in recent years as being a boon for New York’s tech scene.) The verdict:
“For something as consequential as your child, I don’t think people want to roll the dice.”— Noor Siddiqui, the founder of Orchid, a start-up that says it can sequence an embryo’s genetic information and provide scores measuring the likelihood of a child developing ailments like Alzheimer’s. Orchid has found favor in Silicon Valley circles — Shivon Zilis, the mother of four of Elon Musk’s children, is reportedly a client — but critics say its technology is flawed and could lead people to discard perfectly good embryos. A deep dive into the housing shortageEconomists and analysts have pointed out that much of the U.S. is grappling with a housing supply crunch. But a new report from Moody’s Analytics points to a part of the market that policymakers should pay more attention to: middle-income rental housing, Danielle Kaye writes. Here are some key takeaways. The housing shortage is a hyper-local issue. Supply constraints vary widely even within cities themselves, from neighborhood to neighborhood. Take Philadelphia: Despite not having a “meaningful” shortage in overall rental supply, a census tract-level analysis shows substantial shortages in middle-income areas in the northeast of the city and in lower-income areas in the north-central, west and southwest. “The imbalance between the nation’s housing demand and supply is much more localized than the national numbers and public dialogue suggest,” the report’s authors write. Where the deepest shortfalls are: There is some support for creating affordable housing in low-income communities, while there tends to be adequate supply for upper-income ones. But those in the middle end up falling through the cracks, according to the report. And while many markets around the country face an undersupply of homes for sale, especially entry-level ones, the majority of the shortfalls are in rental markets, the authors add. A few datapoints:
“This research would suggest we’ve been focused on the wrong thing,” Mark Zandi, chief economist at Moody’s, told DealBook. “If we’re going to try to address the housing shortage in a more timely way, it’s probably better to focus on work force rental housing.” He added, “It just illustrates the need to be really focused on localities, and not get lost in the national or even the state or metro area.” We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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