Good morning, traders,
Earlier this week, Trump didn’t just throw shade at Fed Chair Jerome Powell — he straight-up asked Republican lawmakers if he should fire the guy. And from what’s been reported, a lot of them gave the green light.
That wasn’t just Trump being theatrical.
For a moment, it looked like he was serious about pulling the trigger. Then he backpedaled a bit, saying Powell would have to be guilty of “fraud” to get the boot.
But let’s be honest — that doesn’t mean Trump’s letting it go.
He wants Powell gone. Not next year.
Now.
Why? Because Powell’s not playing ball.
He’s refusing to slash rates just because an election’s coming. He’s sticking to the data, and unless inflation and job numbers give him the green light, he’s doing nothing.
Trump knows it. And he hates it.
The thing is, Powell still has 10 months left in his term. So, unless Trump finds a way to force him out, Powell’s not going anywhere.
But whether Powell stays or goes, traders need to be wide awake.
This kind of political pressure can shake markets.
I don’t know exactly how this plays out. Nobody does.
But I do know this: Traders who keep their heads on straight through this chaos will have plenty of ways to get paid.
Completely Unavoidable
This isn’t some background drama in Washington.
Jerome Powell is the guy who controls the price of money in the largest economy on Earth. And right now, Trump’s making it loud and clear: He wants that price a lot lower.
And let’s be real — Trump doesn’t just dislike Powell.
He sees him as a roadblock.
A holdover from the “bad economy” era that Trump loves to pin on the previous administration.
So what does this mean for you as a trader?
The following are two big scenarios and how they could shape the markets in very different ways.
Scenario One: Powell Finishes His Term
If Powell survives the next 10 months, it means two things:
- The Fed keeps operating the way it has been — methodically, data-dependent, and pretty cautious on rate cuts.
- The market has a known quantity to work with.
That kind of stability is boring.
And boring is good for bonds, for equities, and for options traders who want cleaner setups and fewer black swan headlines.
The Fed has already signaled that cuts are on the table later this year, if inflation continues trending down.
Powell isn’t trying to juice the market. He’s just trying not to break anything on the way down.
So under Powell, rates will likely come down, but it’ll be slow and surgical.
That said, markets will still have to deal with the ongoing threat of political interference.
Trump has no intention of letting Powell off easy, and every time he tweets or speaks about replacing him, traders have to be ready for volatility, especially in rates, gold, the dollar, and growth stocks.
If you’re trading options in this climate, it’s all about keeping your ears to the ground.
Premiums might start to creep up as implied volatility prices in the political chaos.
Scenario Two: Trump Forces Powell Out Early
Now we’re talking fireworks.
Let’s say Trump somehow finds a legal or political off-ramp to push Powell out before his term ends.
Whether it’s a court case, resignation under pressure, or some arcane clause about conduct unbecoming of a Fed chair — doesn’t matter.
If it happens, the market will see it for what it is: the end of central bank independence as we know it.
Expect an immediate spike in yields and in volatility.
Bond traders will worry that the Fed is becoming politicized. Equity traders might love the idea of a more dovish chair — at first — but the bigger worry will be credibility.
If rate cuts are done just to juice the stock market or help a reelection narrative, then the whole “fight inflation” storyline goes out the window.
That’s bad for the dollar, bad for long-duration bonds, and confusing as hell for stocks.
The shortlist of potential replacements — Kevin Hassett, Kevin Warsh, Christopher Waller, and Scott Bessent — offers a wide range of signals.
- Hassett is pure Trump team. A rate-cutter through and through.
- Warsh has hawkish roots but might change his tone under Trump.
- Waller is already on the board and might offer continuity — he’s talked about rate cuts being warranted soon.
- Bessent is an unknown quantity in central banking but close to Trump, which says a lot.
No matter who it is, the new chair will be seen as “Trump’s pick.”
And that means whatever they say, markets will wonder if it’s independent policy or political marching orders.
Bottom Line for Traders
The best traders will stay emotionally neutral and opportunistic.
If Powell stays, lean into the slow-cut narrative and sell premium when the Trump noise inflates volatility.
If Trump pulls the trigger and forces Powell out, prepare for a messy, reaction-driven market where breakouts (up or down) could have real teeth.
Either way, the Fed has gone from background noise to front-page material.
Ignore it at your own risk.
Stay street smart,
Jeff Zananiri
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