In his words: Trump's rhetoric about Zelenskyy and Putin has evolved
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Trump Says Bessent Isn't Leading Fed Candidate, But ‘Very Good'
President Donald Trump said Scott Bessent was an option to replace Jerome Powell as head of the Federal Reserve but suggested the Treasury secretary was not the leading candidate because of his success in his current role. 'He's an option and he's very good,' Trump told reporters on Tuesday when asked directly about Bessent being a potential successor.
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Trump's Brazil Tariffs Risk Undermining Lula's Pro-Business Rival
(Bloomberg) -- Donald Trump tried to settle a political score when he dragged Brazil to the center of his trade war. In doing so, he's thrust Brazilian conservatives into chaos as they seek to find an answer to the upheaval US tariffs will cause. The Dutch Intersection Is Coming to Save Your Life Advocates Fear US Agents Are Using 'Wellness Checks' on Children as a Prelude to Arrests LA Homelessness Drops for Second Year Manhattan, Chicago Murder Rates Drop in 2025, Officials Say Lea en español. On Tuesday, former President Jair Bolsonaro — who is banned from running and facing trial on charges that he attempted a coup — simultaneously tried to paint himself as Brazil's only hope to talk Trump down from the levies, while urging that the right 'cannot be divided.' It's a sign of how Trump's threats of 50% tariffs are exacerbating a conundrum among Brazil's opposition as it looks to beat leftist Luiz Inacio Lula da Silva in next year's election. Bolsonaro, who remains the party's most popular politician, sees Trump's measures as a means to pressure the government for his 'freedom.' But the business elites and regular citizens, who account for much of the right wing's support, stand to bear the brunt of the tariff pain. The dilemma is perhaps best encapsulated by Sao Paulo Governor Tarcisio de Freitas. His business-friendly policies have positioned him as a potential heir to Bolsonaro, but he's come under fire as he's tried to appease all sides in his response to Trump's threat. 'He is juggling too many plates, and it's getting hard to keep them all spinning,' said Isabela Kalil, an anthropologist at the Sao Paulo School of Sociology and Politics who has studied the rise of the extreme right. Freitas initially tried to blame the levies on Lula, even though Bolsonaro spent months lobbying Trump for help as his legal woes deepened. The US leader cited a supposed 'Witch Hunt' against his old ally as justification for the tariffs. In response, leaders from across the political spectrum slammed Freitas for siding with the US; business groups in Sao Paulo demanded respect for national sovereignty; and one of Brazil's largest dailies savaged him for recently donning a red MAGA cap. 'Wearing a Trump hat today means aligning yourself with a troglodyte who could cause immense damage to the Brazilian economy,' the editorial from O Estado de S. Paulo, a newspaper that has typically aligned with Brazil's business community, read. Freitas has since changed his tone. The day after Trump's threat, he drew attention to the damage facing Sao Paulo — home to major agribusinesses and tens of thousands of manufacturers, including airplane-maker Embraer SA — before meeting with the top US representative to Brazil. That may please industry groups, which estimate that nearly a third of all Brazil's US-bound exports come from the country's wealthiest state. Levies of the sort Trump has threatened would make trade untenable, many of them say. '50% is not just a tariff, it is an embargo,' said Jose Velloso, the head of the ABIMAQ, the national machinery and equipment industry association that represents 9,000 companies. Freitas, who has pushed back on the idea that he is considering a presidential bid, declined to comment via a spokesperson. Over the weekend, he argued that preventing economic damage was far more important than playing politics. 'We need to join hands now to resolve this, leave the political issue aside and try to resolve this issue,' he said Saturday. Discontent on the Right That, however, runs contrary to the message Bolsonaro and his allies have conveyed as they seek to use the tariffs as leverage against Brazil's Supreme Court, which they have accused of politically persecuting right-wing voices. Bolsonaro has suggested in social media posts that the only way to save Brazil's economy is legal amnesty for anyone convicted of crimes related to the Jan. 8, 2023 insurrection attempt in Brasilia, when supporters stormed major government buildings. On Tuesday, he painted himself as uniquely able to talk Brazil out of the spat during an interview with Poder360 website that was broadcast online, calling on the Supreme Court to return his passport — which police seized amid investigations into the alleged coup plot — so he could negotiate with Trump. 'I think I have the power to resolve this issue, but I have to be free to talk to Trump,' he said. 'Right now I don't even have a passport.' Eduardo Bolsonaro, a son of the former president who took leave from congress to lead his family's lobbying efforts in the US, had previously blasted Freitas's diplomatic efforts as 'disrespectful' in a Monday interview with Folha de newspaper. He ramped up the tensions in a subsequent social media post, calling on Freitas to join the family's campaign against the top court. 'But since, for you, servile subservience to the elites is synonymous with defending national interests, I don't expect you to understand,' Eduardo Bolsonaro, who has increasingly positioned himself as a potential successor to his father, said. The former president said he had worked to pacify the dispute between his son and Freitas, adding that the governor had an obligation to defend the interests of his state. 'Everything is settled,' he said, calling Freitas his younger brother. A Boost to Lula Bolsonaro on Tuesday reiterated that he intends to contend in the October 2026 election, despite his ban and the prospect of a conviction on the coup charges. That insistence had stymied election preparations for prospective right-wing candidates — including Freitas — even before Trump gave an apparent boost to Lula, the veteran leftist who had been struggling to reverse declines in popularity. In Trump's tariffs, the 79-year-old leftist now has a rallying call against US aggression and a potential scapegoat for his country's economic woes. He's appeared on television wearing a cap bearing the slogan 'Brazil belongs to Brazilians' and admonished rivals for seeking foreign intervention. His approval rose more than two points to nearly 50% in the wake of the tariff announcement, with Brazilians indicating that they back his confrontational approach to Trump, according to a survey conducted by AtlasIntel for Bloomberg News and published Tuesday. 'Whatever happens, this is a boon for Lula's popularity at a time when he appeared to be in huge trouble,' said Andrei Roman, head of AtlasIntel. That, too, will only pile pressure on Freitas, who will likely have to choose between his state's businesses and citizens or risking it all to stay close to Bolsonaro, said Kalil, the anthropologist. 'I believe money will speak louder,' she said. --With assistance from Daniel Carvalho and Beatriz Amat. (Recasts top with details on state of Brazil's right wing.) Forget DOGE. Musk Is Suddenly All In on AI Thailand's Changing Cannabis Rules Leave Farmers in a Tough Spot The New Third Rail in Silicon Valley: Investing in Chinese AI How Hims Became the King of Knockoff Weight-Loss Drugs 'The Turbulence Is Brutal': Four Shark Tank Businesses on Tariffs ©2025 Bloomberg L.P. Sign in to access your portfolio
Yahoo
35 minutes ago
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If Trump fires the Fed's Powell, ‘both the currency and the bond market can collapse,' according to Deutsche Bank
If President Trump gets his way and removes Jerome Powell as chairman of the U.S. Federal Reserve, the market reaction would be swift and brutal, Deutsche Bank's George Saravelos argues. It could collapse the currency and bond markets, he says in a note seen by Fortune. Polymarket puts the chances of a Powell ouster at 19%. 'We consider the removal of Chair Powell as one of the largest underpriced event risks,' Saravelos says. Deutsche Bank published an explosive research note over the weekend titled simply, 'What if ?' (And yes, it includes that idiosyncratic use of extra spaces in front of the question mark.) Written by global head of FX research George Saravelos, it explores what might happen if President Trump gets his way and forces Jerome Powell out of the chairmanship of the U.S. Federal Reserve in order to replace him with someone who agrees with Trump that interest rates should be lower. 'We believe the market reaction would be large,' the note says. 'The empirical and academic evidence on the impact of a loss of central bank independence is fairly clear: In extreme cases, both the currency and the bond market can collapse as inflation expectations move higher, real yields drop and broader risk premia increase on the back of institutional erosion.' Saravelos declined further comment when reached by Fortune. The note is important because while most investors do not believe it is likely that Trump can actually replace Powell before his term is up next May, they do not believe it is impossible. Bettors on Polymarket, the crypto predictions exchange, currently put the chance of Powell's removal at 19%. Until recently, Trump's hatred of Powell was expressed mostly through angry social media posts. He has given Powell a nickname, 'Too Late,' and said he has been 'whining like a baby about non-existent Inflation for months, and refusing to do the right thing.' But last week, the threat against Powell became more real when Russ Vought, director of the Office of Management and Budget, sent Powell a letter demanding that he answer a series of questions about the renovation of the Fed's HQ. He gave Powell seven business days to reply—a deadline that expires on July 21. Vought alleges that Powell misled Congress when he testified recently that the renovation did not include luxurious touches such as a roof garden with a set of beehives. 'There are no new water features. There's no beehives and there's no roof terrace garden,' Powell said. Vought says that those elements were in the plan approved by the National Capital Planning Commission, and if Powell has changed the construction plans, then that's a violation of the National Capital Planning Act because the renovation is not following the approved plan. Powell has asked the inspector general's office to review the renovations. This spat over construction plans could have punishing effects on the asset markets if the end result is Powell's exit, Saravelos said in his note. 'It is stating the obvious that investors would likely interpret such an event as a direct affront to Fed independence, putting the central bank under extreme institutional duress. With the Fed sitting at the pinnacle of the global dollar monetary system, it is also stating the obvious that the consequences would reverberate far beyond U.S. borders,' he wrote. Saravelos said a removal of Powell would be far worse than President Nixon's imposition of Arthur Burns on the Fed in the 1970s. Nixon and Burns, like Trump, were fixated on lowering interest rates—and thus fueled the stagflation of that decade. Today, 'the U.S. is running a much larger twin deficit and negative foreign asset position, capital markets are far more open and disproportionately skewed towards U.S. asset allocation, and the global exchange rate system is free-floating as opposed to fixed. All these ingredients argue for significantly greater global disruption than in the 1970s,' Saravelos warned. The first warning sign would be a sharp fall in the value of the U.S. dollar. The greenback has already fallen 9.75% this year, its worst first-half performance in years. 'It is hard to quantify the impact on FX and rates, but on the first 24 hours of an announcement of a Powell removal, we would expect a drop in the trade-weighted dollar of at least 3%-4% accompanied by a 30-40bps sell-off in U.S. fixed income led by the back-end. Similar to the experience in April, we would expect the correlation between the bond market and the dollar to turn sharply positive (both down),' Saravelos said. The situation would be similar to what happened in Türkiye, where President Recep Tayyip Erdoğan maintains political control of the Central Bank of the Republic of Türkiye. Like Trump, Erdoğan has a strong dislike for high interest rates and, as a result, the inflation rate in Türkiye is currently 35%. 'In sum, we consider the removal of Chair Powell as one of the largest underpriced event risks over the coming months,' Saravelos concluded. This story was originally featured on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
