What could happen to the stock market if Trump fires Jerome Powell

The President has gone back and forth about whether he plans to keep Powell as Fed Chair.

Transcript

00:00If President Trump were to fire Fed Chair Powell because he's not doing what he wants him to do,

00:07what do you think the stock market fallout would look like if the independence of the Fed is in

00:11jeopardy? Yeah, I mean, that is a problem. It is a sure, true problem. A lot of Americans have the

00:16misperception that the Federal Reserve is a federal division of the federal government.

00:21It is not. It is a private corporation, but it was charted by Congress. So it was a created

00:27entity by Congress. And but but and and the president does appoint the head. And then

00:35obviously all of the Fed presidents and all the Fed governors, all those things. So there is that

00:40sense of independence and autonomy. And should that for any reason, really, if he could somehow

00:45successfully fire Powell, I do think that that would be very disruptive for the markets, because

00:49then you can have on a whim, you know, it's a 10 year term for a reason it's supposed to outlast

00:54a president. And if you started to really jeopardize that independence, that would be a

00:58problem for the markets, because then you have the executive agency that, of course,

01:02every president wants the stock market to go up under there. But and we can make the stock market

01:05go up in a lot of nefarious ways, constantly printing stimulus, constantly keeping the cost

01:10of capital way below what it should be naturally organically. And so you have to have that

01:14independence. And that is maintained. What would that disruption look like? How much would

01:18the market fall? I think that you'd see a pullback in the markets, but then you would also it would

01:24be depending on what was happening, right? Because if you were replacing Powell with someone who was

01:28more ready to stimulate and cut interest rates and do back good quantitative easing again, that would

01:34actually help capital markets because then they would think, OK, we're going to have low cost of

01:37capital. We're going to be able to do research and development. We're going to be able to expand

01:40our infrastructure into AI and all of these things that were on the fourth industrial

01:44revolution cup. So it would actually possibly in this case might be helpful because Palestine is

01:49kind of being restrictive, whereas he's been accommodative, but now he's being restrictive.

01:53And so I think in this case, it might be helpful short term, but a long term, the long term

01:58perspective of do we don't have independent central bank policy is problematic.