After calling him “a golfer who can’t putt”, “Low IQ”, “stupid”, and threatening to fire him multiple times, President Donald Trump is officially making moves to thwart the influence of Fed Chair Jerome Powell.

Despite the fact that Powell has 11 months left in his term overseeing the central bank, Trump is considering naming his replacement as early as this summer, the Wall Street Journal reported. Usually, the new chair would be named three to four months before the previous term ends.

Trump’s picks to replace the bespectacled icon include Fed Governor Kevin Warsh, National Economic Council Director Kevin Hassett, and Treasury Secretary Scott Bessent.

The dollar sank to a three-year low yesterday on the news as traders speculated that interest rates may be slashed sooner than many expected.

All this drama over interest rates?

If Trump does name a successor early, it’s his first major step to assert his political will on the Federal Reserve—a prospect that is spooking analysts, economists, and investors alike.

After all, the Fed is supposed to be independent of politics for a reason: Sometimes, the central bank has to make tough, unpopular calls in service of keeping the economy stable. Last week, the Fed left rates unchanged once again as the effects of tariffs play out across the economy—a move the president didn’t care for, calling Powell “a Total and Complete Moron.”

While Powell’s replacement wouldn’t take his place until next May, the new Chair could use his or her position to influence markets and pressure the Fed’s monetary policy right now, pushing for the changes Trump wants to see—specifically, lower interest rates.

But it could also be a smart move by Trump to help forestall the market’s fears. Rolling out a new Fed chief as early as possible and communicating his or her monetary policies ASAP gives investors a chance to accept the new reality.

Remember, markets tumbled the first time Trump threatened to show Powell the door in April, with investors fretting about the Fed losing its independence. Selecting a replacement sooner rather than later may upset investors once again, but the market could have time to stabilize during the remaining months of Powell’s term before the new Chair takes the throne.

It’s not over yet: A Trump appointee in the current macroenvironment will almost certainly get their marching orders straight from the White House, but remember that it’s not just the Chair who steers monetary policy. The new Fed leader will have to convince the 11 other sitting members of the Federal Open Market Committee to cut rates, something that they may hesitate to do until tariffs sort themselves out.

In the meantime, the market believes there’s a rising chance that the Fed will cut rates up to three times this year regardless of Trump’s threats.—LB

🟢 What’s up

• Nvidia and Microsoft both set new record highs as the AI trade continues to revive. Nvidia rose 0.46%, while Microsoft climbed 1.05%.
• Core Scientific exploded 33.01% on reports from the Wall Street Journal that the bitcoin miner may be acquired by AI company CoreWeave.
• Serve Robotics gained 9.87% after the delivery robot maker launched its service on the streets of Atlanta today.
• McCormick is looking spicy: The consumer goods company rose 5.31% after earnings outpaced analyst forecasts.
• Penn Entertainment rose 4.94% after the gambling company was upgraded by analysts at Citizens, who think the stock’s underperformance is about to reverse.
• Solar stocks may be thrown a lifeline by the Senate, which is considering keeping some clean energy tax credits in the spending bill. Enphase Energy popped 12.83%, SunRun rose 6.46%, and SolarEdge Technologies climbed 5.11%.
• Copper miners popped as prices of the precious metal rose today. Freeport-McMoRan jumped 6.85%, Southern Copper Corp. climbed 7.79%, and Anglo American plc added 7.16%.

What’s down

• Micron Technology lost 0.98% despite the chipmaker reporting fiscal third quarter results that beat Wall Street’s expectations.
• Kratos Defense and Security Solutions sank 2.36% after the military tech company announced it will sell $500 million worth of stock to raise money for capital spending.
• Equinix crumbled another 9.56% after a terrible fiscal outlook pushed Raymond James and BMO analysts to downgrade the internet services company.

We got a boatload of economic data today, and it can be tough to find the signal in all that noise. So, we decided to help you out by highlighting the story below the surface that really matters. Take a look:

• Weekly jobless claims fell by 10,000 to 236,000
  • Fewer people applying for unemployment insurance week by week is undoubtedly good news for the US economy. But what you should be worried about are continuing claims, or the number of people who remain unemployed, which rose by 37,000 to 1.97 million, its highest point since November 2021.
• The trade deficit in goods surged 11.1% in May to $96.6 billion
  • The deficit decreased dramatically in April thanks to the largest single-month decline in imports ever as companies braced for the impact of tariffs. The weird part is that imports stayed put this month, while exports dropped 5.2%, the biggest decrease since 2020.
• First-quarter GDP was revised lower from a 0.2% contraction to 0.5%
  • Turns out Americans spent less than we thought: Consumer spending rose only 0.5% last quarter instead of the previously reported 1.2%. The Q1 GDP decline marked the first instance in three years that GDP fell (it rose 2.4% in Q4 2024), and unless consumers start spending more, it won’t be the last.
• Durable-goods orders posted their biggest gain in 11 years, jumping 16.4%
  • That’s great news for the economy, particularly after orders for long-lasting goods fell 6.6% in April. But the pop was all thanks to a big order for Boeing planes: The company signed deals to sell 303 aircraft in May, far better than the measly eight orders in April.

Christmas is coming in July for big banks.

The Federal Reserve’s board voted yesterday to greenlight a proposal that would lower the enhanced supplementary ratio. While that may sound like a term for something you could achieve in Fortnite, it’s actually a measure of how much capital a bank must hold against its other assets.

Right now, all banks have to hold at least 3% of capital against their assets, while big banks like JPMorgan and Citi have to hold 5%. By dropping the ratio, banks could utilize some of that capital for dealmaking, or to allow global banks to buy more Treasury assets.

Loosening these financial regulations would be a boon to the financial services industry, and the mere thought of it drove bank stocks higher today.

We’ve seen this film before

All this talk about removing rules reminds us of a big kerfuffle over a decade ago that some of you may recall: the global financial crisis. The supplementary leverage ratio was put in place to provide a capital backstop in order to prevent another series of bank failures after the 2008 implosion.

Five Fed officials voted in favor of the proposal to loosen regulations, while two voted against it. Michael Barr, one of the two who voted against, argued that lowering the ratio “would significantly increase the risk” of a bank failure.

Yet others argued that the ratio prevents banks from investing in less risky assets such as Treasuries. Fed Chair Jerome Powell is another ally of the proposal, arguing that it’s no longer necessary since it was first put in place a decade ago.

This move is just the latest push from the Trump administration to eliminate long-standing regulations on Wall Street, including ending annual stress tests and changing the rating system for banks.

Maybe President Trump is just hoping he can get a part in The Big Short sequel.—LB

• Fannie Mae and Freddie Mac will consider your cryptocurrency holdings as assets when you try to buy a mortgage.
• The Big 10 and Big 12 conferences can now pay their student athletes via PayPal.
• Spirit Airlines is trying its hardest to stop a partnership between rivals JetBlue Airways and United Airlines.
• Markets may be heading for record highs, but below the surface things are not what they seem.
• Crypto exchange Kraken has rolled out a new peer-to-peer payment app that continues the growing movement to circumvent classic payment processors.
• Countries negotiating in good faith could get a tariff extension as the 90-day pause nears its conclusion.

A short week lies dead ahead, but first you must pass one final challenge: PCE, the Fed’s favorite inflation barometer.

The personal consumption expenditures price index hasn’t soared the way many feared after Liberation Day, with April PCE up just 2.1% year over year, below estimates and under the March 2.3% increase. Core PCE, which excludes volatile food and energy costs and is the Fed’s preferred method to measure inflation, rose 2.5% in April, down from a 2.7% increase in March.

Economists are anticipating another month of minor price pops, calling for a 2.3% increase in annual headline inflation and a 2.6% climb for core PCE. If inflation comes in lower than that, expect the market to jump—and expect President Trump to jump online and call for rate cuts.

Headline of the day: You know who else wants you back in the office? Catering companies.

No, wait, it’s this one: We are the new gremlins in the AI machine.

Three top fund managers predict the future of the Magnificent Seven. Spoiler alert: They love Amazon and Microsoft.

🪙 The big loser from the Genius Act is $156 billion crypto giant Tether.

Joanne Hsu is in charge of the University of Michigan’s all-important consumer sentiment index, but nobody is listening to her.