Here’s a look at the major indices in Europe after the opening tussle:
- Eurostoxx -0.3%
- Germany DAX flat
- France CAC 40 -0.5%
- UK FTSE -0.1%
- Spain IBEX -1.0%
- Italy FTSE MIB -0.7%
And here’s how US futures are shaping up as we get things going on the session:
- S&P 500 futures -0.7%
- Nasdaq futures -1.0%
- Dow futures -0.5%
The big news so far today is Trump’s DOJ being reported to have opened a criminal investigation probe against Fed chair Powell. All this as part of a pretext to gain political influence over the central bank in order to lower interest rates. It’s an unprecedented move which renews concerns on Fed independence moving forward.
Trump has already attacked Fed policymaker Lisa Cook with a lawsuit and with this latest move on Powell, there are big question marks on how this is all going to play out for the Fed. And I’m not talking about now or with the cases to Cook and Powell. But what about Fed independence in the future?
If central bankers can be so easily hung for their views, is there really any one that would risk doing their job to their best abilities? Or more importantly, to really have an opinion that challenges the administration?
What’s worrying about all of this is the kind of precedence that Trump might set with regards to how the White House can control the Fed. It’s a dangerous game to be playing as it opens up a can of worms on the directional path that Fed independence will take next.
Markets are right to be worried. If Powell and Cook really do end up being unfairly indignified, there’s going to be very serious concerns about the kind of policy motivations that the Fed will be adopting in the next few years.
This article was written by Justin Low at investinglive.com.