Fed's long-term independence may be enhanced if Powell steps down, says Wharton's Jeremy Siegel
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Yahoo
23 minutes ago
- Yahoo
Goldman's Trading Desk Touts Cheap Hedges Against S&P 500 Slide
(Bloomberg) -- Trading desks at firms including Goldman Sachs Group Inc. and Citadel Securities are telling clients to buy cheap hedges against potential losses in US stocks as a slew of risks loom over the market's record advance. Trump Awards $1.26 Billion Contract to Build Biggest Immigrant Detention Center in US Why the Federal Reserve's Building Renovation Costs $2.5 Billion The High Costs of Trump's 'Big Beautiful' New Car Loan Deduction Salt Lake City Turns Winter Olympic Bid Into Statewide Bond Boom Right now, major indexes are soaring as the US inks trade deals amid a solid earnings season. Wall Street's so-called fear gauge hasn't been this low since February, and the S&P 500 Index has rallied 28% since April 8. That backdrop is making it cheap to hedge against a market slump. The cost of protection against a 10% decline over the next month in an exchange-traded fund that tracks the S&P 500 versus a 10% gain is at the lowest level since January. 'If you are nervous, the market is making it very easy to rent hedges,' Goldman's trading desk wrote in a note to clients on Monday. The advice comes before a number of events that risk raining on the market's parade. The Federal Reserve releases its next interest-rate decision on July 30, two days before President Donald Trump's tariff deadline. The US has yet to reach trade deals with key partners like Mexico and Canada. An impasse in talks that reignites trade tensions could dent investor sentiment and spoil the risk-on mood. The July jobs report is also due at the end of the week, with huge implications for Fed policy in the coming months. Plus, consequential earnings results from Big Tech companies including Nvidia Corp. still lie ahead. 'It's time to buy volatility,' BofA Securities Inc.'s John Tully wrote to clients on Monday, noting that the VIX Index historically tends to hit the lowest level of the year in July. He recommends clients buy S&P 500 put options expiring on Aug. 22, which would capture much of the reaction to the Fed's annual economic symposium in Jackson Hole. To be sure, there are reasons to believe the current rally will continue. Scott Rubner, head of equity and equity derivatives strategy at Citadel Securities, told clients that retail traders are one group that could offer support. Also, if the Fed finds that tariffs aren't driving inflation or impeding economic growth, a rate cut in September could drive further gains, according to Tully. Ilan Benhamou, a member of JPMorgan Chase & Co.'s equity derivatives sales team, suggested that clients buy put options that expire Aug. 1 to protect against a slump in stocks in response to the tariff deadline and the July non-farm payrolls report the same day. As stocks extend their advance, long exposure is approaching elevated levels across institutional investors such as systematic funds, according to Rubner. Soon, he said, they will 'take their foot off the pedal.' Rubner urged investors to move into hedges expiring in September to protect against macro events. There's also historical precedent: data going back to 1928 shows that September is the worst-performing month of the year for US equities, he said. Burning Man Is Burning Through Cash Elon Musk's Empire Is Creaking Under the Strain of Elon Musk It's Not Just Tokyo and Kyoto: Tourists Descend on Rural Japan A Rebel Army Is Building a Rare-Earth Empire on China's Border What the Tough Job Market for New College Grads Says About the Economy ©2025 Bloomberg L.P. 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
CBS News
26 minutes ago
- CBS News
Trump set to head to Federal Reserve, keeping heat on chair Jerome Powell
Washington — President Trump is visiting the Federal Reserve headquarters in Washington Thursday, a week after indicating that Fed chair Jerome Powell's handling of an extensive renovation project on two Fed buildings could be grounds for firing. Mr. Trump has criticized Powell for months because the Fed has kept the short-term interest rate the Fed controls at 4.3% this year after cutting it three times last year. Powell says the Fed wants to see how the economy responds to Mr. Trump's sweeping tariffs, which Powell says could push up inflation. Powell's caution has infuriated the president, who has demanded the Fed cut borrowing costs to spur the economy and reduce the interest rates the federal government pays on its debt. The Fed has been renovating its Washington headquarters and a neighboring building. With some of the construction occurring underground and as building materials have soared in price after inflation spiked in 2021 and 2022, the estimated cost has ballooned to about $2.5 billion from $1.9 billion. When asked last week if the costly rebuilding could be grounds to fire Powell, Mr. Trump said, "I think it is." "When you spend $2.5 billion on, really, a renovation, I think it's really disgraceful," the president said. Firing Powell would threaten the Fed's independence, which has long been supported by most economists and Wall Street investors, and would almost certainly rattle financial markets. Mr. Trump has at various times referred to his handpicked Fed chair as a "numbskull," a "Trump Hater" and a "stubborn mule." The president asked a group of House Republicans in an Oval Office meeting last week if he should fire Powell, sources told CBS News. Mr. Trump told reporters a day later it's "highly unlikely" he would, though he confirmed he spoke to lawmakers about "the concept of firing him," and "almost all of them said I should." Joe Walsh contributed to this report.
Wall Street Journal
26 minutes ago
- Wall Street Journal
Trump to Tour Federal Reserve, Ramping Up Pressure Campaign on Powell
The White House said President Trump would visit the Federal Reserve on Thursday afternoon. He is set to join a previously arranged tour for several White House advisers of the construction site where the Fed is renovating its headquarters, a White House official said. Presidential visits to the central bank are rare—but so is the kind of sustained pressure campaign Trump and his advisers have dialed up in recent weeks to demand Fed Chair Jerome Powell and his colleagues lower interest rates.
