Fed doesn't want to 'jump off diving board until it's sure water is in the pool': BNY's Reinhart
Vincent Reinhart, BNY Investments chief economist, and David Zervos, Jefferies chief market strategist, joins 'Closing Bell Overtime' to talk today's Fed decision.
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The Hill
2 hours ago
- The Hill
Fannie, Freddie oversight chief to Powell: Cut rates or resign
The head of the federal agency responsible for overseeing Fannie Mae and Freddie Mac called Wednesday for Federal Reserve Chair Jerome Powell to resign if the central bank did not cut rates that day. In a Wednesday post on social media, Federal Housing Finance Agency (FHFA) Director William Pulte accused Powell of refusing to do his job by not cutting interest rates at President Trump's request. Both the Fed and FHFA are independent federal agencies charged with overseeing critically important parts of the U.S. financial system. Congress designed those agencies to be immune from the political pressures exhibited by both Trump and Pulte. 'Because President Trump has crushed inflation, Fed Chairman Jerome Powell needs to lower interest rates today, and if not Chairman Powell needs to resign, immediately. Fannie Mae and Freddie Mac can help so many more Americans if Chair Powell will just do his job and lower rates,' Pulte wrote on social platform X, just half an hour before the Fed was expected to announce it would keep rates unchanged. The Fed, as anticipated, did not cut or raise rates. As FHFA director, Pulte is responsible for overseeing Fannie Mae and Freddie Mac — two companies under federal conservatorship that package U.S. mortgages into investment products. Both companies have been under control of the federal government since the collapse of the housing market during the 2007-08 financial crisis. By attacking Powell, Pulte has plunged himself and his agency into a political battle with severe financial implications. Trump has threatened to fire Powell frequently throughout his two presidential terms, even though federal law prohibits him from doing so in all but extreme circumstances. Attempting to fire the Fed chief could also cause a panic in financial markets, a risk the president has acknowledged when discussing his plans for the Fed. Even so, Trump suggested making a run at Powell as recently as last week, and mused Wednesday about nominating himself to the Fed. Powell reiterated Wednesday that the Fed prefers to keep rates steady given the high level of uncertainty created by Trump's trade policy and the relative strength of the economy despite those risks. The Fed is obligated under federal law to set interest rates in a way that preserves the proper balance in between unemployment and inflation. But Pulte claimed Wednesday that Powell and the Fed should be setting interest rates with the health of the housing market in mind. 'Funny thing is Jay Powell is talking right now about the housing market – he has no clue what he can do for the housing market. And he's not listening to the people who help lead the housing market. Too Late needs to RESIGN,' Pulte posted, referring to Powell with Trump's nickname for the Fed chair. Powell has dismissed the president's previous attacks and said he would not leave his position before the end of his term. With less than a year left into Powell's stint as Fed chair, Trump and his advisors are expected to nominate his replacement before the end of 2025.
Yahoo
2 hours ago
- Yahoo
Trip.com (TCOM) Drops as E-Commerce Giant Emerges as Potential Competitor
We recently published a list of 10 Stocks Take A Shocking Nosedive. Group Limited (NASDAQ:TCOM) is one of the worst-performing stocks on Thursday. Group saw its share prices drop by 6.81 percent on Wednesday to finish at $56.54 apiece following news that one of China's e-commerce giants is making foray into the travel sector with a hotel membership program. In an open letter to hoteliers, said that it would provide supply-chain services without any commission for three years in a bid to lower operational costs, enhance guest experience, and support consumer traffic to hoteliers. The announcement weighed in on investor sentiment for Group Limited (NASDAQ:TCOM), one of the leading multinational travel agencies globally. Group Limited's (NASDAQ:TCOM) drop followed the company's 'buy' recommendation from investment firm Jefferies, with a price target of $80. A customer in a travel agents office, highlighting the convenience of the companies corporate travel solutions. According to Jefferies, its analysis reflected its share repurchase agreement with MakeMyTrip, under which, Group Limited (NASDAQ:TCOM) will sell a portion of its Class B ordinary shares back to MakeMyTrip for cancellation. While we acknowledge the potential of TCOM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey.
Miami Herald
3 hours ago
- Miami Herald
The Federal Reserve has bigger problem on its hands than tariffs
To cut, or not to cut. That's the multi-trillion-dollar question. So far, the Federal Reserve has taken a conservative stance, holding interest rates steady while it awaits more clarity into the jobs market and inflation's path in the wake of newly enacted tariffs. Fed chair Powell's willingness to remain on the sidelines has drawn significant blowback from President Donald Trump, who regularly criticizes Powell for holding rates steady rather than cutting them. Related: Fed interest rate cut decision resets forecasts for the rest of this year However, many believe that Powell's patience is the right policy, given massive uncertainty surrounding how tariffs may impact prices on everything from clothing to cars later this year. The decision to raise or cut rates may not be as simple as figuring out how tariffs play out, though. Inflation may or may not spike because of them (that remains unclear), but a recent development could force the Fed's hands, forcing it to make a decision on interest rates sooner than it wants. Bloomberg/Getty Images President Trump's disdain for Fed Chair Powell is pretty clear. So far, he's referred to the pragmatic Powell as "Mr Too-Late," a shot at Powell's mistaken hesitancy to raise rates in 2021 and early 2022 to quell inflation, and a "numbskull" for not cutting interest rates yet this year. Many expected that the Fed would be far friendlier to borrowers in 2025, given it reduced interest rates three times late last year, lowering the Fed Funds Rate by 1%. Related: Billionaire fund manager sends strong message on Fed Chair Powell's future The moves last year provided some relief to borrowers, particularly home buyers reeling from high mortgage rates. Many thought that ongoing cracks in employment, including rising layoffs, would mean more cuts this year. That optimism was quickly dashed after Trump took office in January, promising to spark a return to US manufacturing by increasing tariffs. And increase them, he did. In February, he slapped 25% tariffs on Canada and Mexico and 20% tariffs on China. Then, he upped the ante with a 10% baseline tariff on imports in April, plus 25% tariffs on autos, and, after a tariff tit-for-tat, 30% tariffs on China. The news has sent shockwaves through markets and retailers, many of which pulled forward imports to get in front of tariffs, are warning that prices will increase once that inventory has been sold. The risk of higher prices has trapped the Fed. Its dual mandate is to lower prices and unemployment. Unfortunately, that's easier said than done. Raising rates lowers inflation but increases unemployment. The opposite is true when you cut rates. Uncertain over what tent pole it should concentrate on, the Fed has chosen a wait-and-see approach even as layoffs climb. Over 696,000 workers have been laid off this year through May, according to Challenger, Gray, & Christmas, up 80% year over year. While tariffs' impact on inflation receives most of the attention, the recent war in the Middle East may determine the Fed's next move. Related: Bank of America unveils surprising Fed interest rate forecast for 2026 Israel's attack and Iran's response have raised significant concerns that global oil markets could suffer a shock if the conflict spills over, impacting oil tankers traveling through the Strait of Hormuz. The Strait of Hormuz sees traffic of 18 million to 19 million barrels of oil daily, representing 20% of global oil consumption, including crude, condensates, and fuel. Its location off Iran means it could be a critical oil chokepoint if Iran decides to block it. It appears that possibility isn't off the table, despite the fact that it would significantly hurt Iran's oil exports, which are solely sea-borne. Closing the Strait is "under serious consideration," said Esmail Kosari, an Iranian parliament member and IRGC general, on June 15. The risk that the oil spigot through the Strait of Hormuz gets shut off has already caused a massive rally in crude oil prices. Brent crude and West Texas Intermediate crude oil have seen prices jump 22% and 26% this month, including an 11% increase each over the past five days amid new tensions with the United States. President Trump seemingly appeared to want to distance the US involvement in Israel's attacks on Iran early on, favoring negotiations. However, his stance seems to have pivoted, given he's called for Iran's unconditional surrender and left US involvement in destroying Iran's nuclear facilities as a possibility. More Federal Reserve: Fed interest rate cut decision resets forecasts for the rest of this yearFederal Reserve prepares strong message on long-term interest ratesFed official revamps interest-rate cut forecast for this year The full impact on gasoline prices in the US won't be immediately felt, but we are already seeing increases. According to the EIA, weekly gasoline prices were $3.14 per gallon nationwide on June 16, up from $3.11 on June 9. "National average price of gasoline has shot up to $3.19/gal this morning according to GasBuddy data, 7.2c higher than a week ago," wrote GasBuddy's Patrick DeHaan on X. "We'll likely climb to $3.25-$3.40/gal, wiping out a good portion of the [year over year] YoY drop." Energy, including fuels, services, and things like electricity, represents about 9.5% of the Consumer Price Index (CPI) inflation measure. Gasoline accounts for 3%, which may not sound like much, but can move the needle (which is why economists often consider inflation ex-fuel a better gauge because of oil price volatility). Over the past year, a drop in gasoline prices has helped keep inflation in check, with the BLS writing in its latest CPI report, "The energy index decreased 3.5 percent over the past 12 months. The gasoline index fell 12.0 percent over this 12-month span, and the fuel oil index fell 8.6 percent over the same period." If oil prices remain elevated (they normally rise in summer because of travel demand and the switchover to pricier summer grade gasoline, which contains less cheap butane because of smog restrictions), it could crimp retail spending and increase energy costs for manufacturers and shippers. That would pressure the $30.5 trillion US economy, potentially causing stagflation or recession. In those scenarios, the Fed may have little option but to cut rates to prevent a spike in unemployment. Related: Veteran fund manager who predicted April rally updates S&P 500 forecast The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
