Market Stability in Uncertain Times: The Future of Jerome Powell and the Fed

Even as stocks hit record highs, investors still have lingering concerns, including the possibility that Trump could move to replace et Jerome Powell.

Well, big bank leaders are speaking out in support of Powell.

Now joining me officially to kick off the trading week this morning is Patrick.

Chairman and founder of Exchange Invest.

Patrick, happy Monday.

Thank you so much for joining me.

Well, Powell's term ends in May of next year, but there seems to be a growing possibility Trump could take this dire step.

So how do you think this will play out and how is it impacting the markets?

Clearly it's a concern for markets.

Good morning, Remy, because of course markets like stability, they're used to Powell, they think he's a reasonable guy.

The difficulty is politically the Magaba don't really trust the QE delivering kinds of people who run central banks who look rather hubristic.

You've got power with whatever it was, he spent $2.5 billion on refurbishing some property.

That's quite a makeover.

And obviously that's providing a lot of cause for concern because he's certainly not moving interest rates as fast as, for example, the Europeans and.

Watch this space, he may well ultimately decide to quit, but I think it's gonna be relatively difficult for Trump to lever him out of office without it causing the markets to be deeply concerned.

Well, Patrick Trump has cited the ECB in his argument that the Fed should be cutting, which the ECB has cut 8 times so far this year.

So what are your thoughts on the ECB's upcoming meetings?

Well, look, the ECB is in a totally different situation to the US economy.

I mean, the US economy has grown by what, 89% over the course of the last 50 years.

The European economy has grown by 9%, not even double digit figures.

So the ECB has to keep interest rates low because it's got to do anything it possibly can to manage to deliver sclerotic, better than sclerotic growth, which Has been the wiles of the European Union for over 20 years.

So therefore it's such a different position.

Trump obviously is impatient.

He sees the euro rate being lower.

He therefore wants to have those rates for the dollar zone, but it's a very different economy.

The US is dynamic.

The US is growing.

The US is entrepreneurial.

Europe is pretty hot in summer.

And Patrick Dutch chip manufacturer ASML dropped 8% last week after the company signaled rising uncertainty due to US tariff policies.

So is the global chip market dependent on relations with the US government and how so?

Look, of course it's dependent on the US government.

For one thing, the US has got such a huge military and therefore military expenditure that factors into everything else that happens in the economy.

The most, you know, vast numbers of jets despite Boeing are still built in the USA.

Most significantly, they're bought in the USA because the US is.

Huge economy. of the world's consumer economy.

So therefore you cannot afford to ignore the USA and therefore anybody in the rest of the world, whatever the product, no matter how exotic, they've got to be thinking about exporting it to the USA because the USA in Trump world, it is a Trump world and he is the primary person that we're all focusing on leading the global economy at this moment in time.

So therefore, all chip prices are going to be very dependent because of course they're extremely frothy.

And finally, Patrick, before I let you go, let's take a quick look at the FX market.

Initially, the yen rallied after Prime Minister Shigeri Shiba's ruling coalition lost its majority in the upper house, setting off fresh political uncertainty in the world's 4th largest economy.

Now Japan's Finance Minister Katsunobu Kato emphasizing the nation's concern regarding excessive FX volatility.

So tell us about this, and what is your take when it comes to the FX market?

Look, isn't it interesting, Remy?

We're 2 months and 1 day away from the 40th anniversary of the signing of the Plaza Accord.

What was that all about?

It was about deflating the dollar and making sure places like the yen, etc.

The Japanese couldn't export too much to the USA, and it was going to push the price of the yen up.

At that point in time, the yen was somewhere about I think 112 to $114 to the US dollar.

What we've got now is a very, very different worldview.

I mean, it almost seems like an afterthought what's been happening to the yen recently.

We've kind of forgotten it, and yet, as you say, it is the world's 4th largest economy.

Foreign exchange markets are volatile.

A lot of people are talking about how Trump has taken the edge off the dollar and the dollar is in freefall.

But you look at things, the dollar is still remarkably strong historically, despite or because.

Of Trump and because of what's happening in the world, and Japan just emphasized for us in one final point.

Look at what's going on with tariffs.

The Prime Minister is now going to have greater difficulty doing a tariff deal with Trump, which therefore helps the Trump agenda, which therefore makes it very, very difficult as we're fast approaching the opening bell here at the New York Stock Exchange.

So as always, Patrick, thank you so much for joining me.