And just like that, Europe is gripped by another political crisis (but… but… the euro is soaring) after French Prime Minister Francois Bayrou called a confidence vote that may topple France’s government as soon as September 8, prompting a selloff in French assets as investors hedged for more political uncertainty. 

The conservative National Rally party, the leftist France Unbowed and the Greens all said they would vote against the Sept. 8 motion while even the Socialists – so pretty much the entire political spectrum in France – said they wouldn’t back the government. If a majority of lawmakers vote against Bayrou, which now appears to be the case, he’ll be forced to submit his government’s resignation. This would be overdue for a government which should have been bounced long ago. 

The failure of another French government — the previous prime minister, Michel Barnier, lasted only 90 days — would underscore the tenuous position of President Emmanuel Macron, whose party and its allies lost any semblance of a parliamentary majority in 2024. Marine Le Pen’s National Rally, which became the largest party in the lower house in that vote, is calling for a new election

Here is a recap of all the latest developments: 

• French PM Bayrou has called for a Vote of Confidence (Article 49.1) to take place on Sep 8th 
• This vote requires a simple majority of votes cast, which is different to a Vote of No-Confidence (Article 49.3) which require an absolute majority in parliament 
• This makes it harder for the PM to win the vote, as abstentions do not help him – he will need MPs to explicitly vote for his government’s survival 
• If Bayrou loses the vote, Macron will have the option to dissolve parliament and trigger new parliamentary elections or to appoint a new PM 
• Speaking last week, Macron rejected the prospect of a second snap parliamentary election in as many years 
• Even if the PM wins the vote, there is still the issue of passing the budget which would likely trigger several votes of no confidence over October / November 

This has put French risk back into the spotlight and we are now likely to see continued headlines and volatility in the region over the coming months. Indeed, for the second day in a row, France’s CAC 40 has tumbled more than 1%, Europe’s worst performing index, and the 2nd biggest two day drop for the CAC since the Liberation Day plunge.

It’s not just stocks: French bonds are also getting hammered with 10Y OAT yields spiking since the announcement…

… which is to be expected: as these Goldman charts show, French domestic stocks have performed well in recent months despite a widening in sovereign spreads which may well have sensed that this showdown is coming.

While Goldman naturally sees French domestic stocks as the most sensitive slice of the market to French political risks, the bank shows in the chart below other European indices and their long-term correlation with sovereign spreads (French and Peripheral spreads). Southern European indices, Banks, CAC 40, Cyclicals and the EUR tend to be most sensitive, while Consumer Staples, Healthcare, Low vol stocks and FTSE 100 are most positive positively correlated (in terms of relative performance) when sovereign spreads widen.

So how to hedge a worst case outcome? Below we lay out some ideas from Goldman’s Thilo Deller, writes that implied vols have moved higher in the front-of the curve, albeit from low levels.  With the CAC vol term structure now slightly inverted here…

… Goldman prefers owning vol in Dec, where the likelihood of capturing a potential election is higher.  While the implied move for the 8th of September has moved higher (~1.1% in SX5E), the options market has started to price increased volatility in the months following the vote on the back of potential elections and budget uncertainties. 

Separately, for traders seeking broad French equity protection, these are the trades:

CAC Dec25 95%/85% Put Spread costs 1.35%   [20-delta | 7.4x pay-out] 

For more targeted French exposure Deller likes the bank’s French domestic basket.  This has >50% domestic exposure vs ~15% for CAC.  We can see that historically and on a day like today, it exhibits a high beta to French risk (today CAC -1.8% vs basket -3.8%).  

As a hedge :: 

• GSXEFRDO Dec25 95%/80% Put Spread costs 2.4%   [24-delta | 6.2x pay-out] 

For reversion :: 

• GSXEFRDO Oct25 105%/110% Call Spread costs 0.95%   [19-delta | 5.2x pay-out] 

Finally, here is an excerpt from a Goldman Q&A on the French Confidence Vote (full note available to pro subs)

Q1. What happened?

French Prime Minister Bayrou held a press conference yesterday (August 25) in which he announced that he would call a confidence vote on September 8.

The announcement was unexpected, as there had been no leaks or hints ahead of the press conference. The decision to call for a confidence vote is all the more surprising because the government does not have a majority in parliament, and because the upcoming budget vote was in any case likely to lead to several no-confidence votes.

Q2. How likely is the government to collapse?

The confidence vote will follow Art 49.1 of the Constitution, which requires a simple majority of votes cast (for or against, but excluding abstentions) against the government for it to collapse. This makes for a lower bar than a no-confidence vote under Art 49.3 of the Constitution, which requires an absolute majority of all votes (including abstentions) against the government.

At the time of writing, a majority of opposition parties in Parliament have announced they would vote against the government. These include RN (far-right), LFI (far-left), as well as the socialist, green, and communist parties (left), totalling close to 330 seats in Parliament. In comparison, the government is supported by the parties allied to President Macron and LR (centre-right), amounting to around 210 seats.

The government could survive the confidence vote if some of the opposition parties flip their vote in support or end up abstaining in large enough numbers. It could also be that turnout on the day of the vote is surprisingly favourable to the government, as only the votes cast for or against the government will count towards the tally.

But the most likely outcome at this point is that the government loses the confidence vote and is forced to resign. Prediction markets accordingly assign more than an 80% chance of PM Bayrou leaving office by September 30.

Q3. What would be the next steps?

If the government were to collapse, President Macron would have the choice between appointing a new government under the current Parliament or calling for new parliamentary elections.

The current Parliament makes for limited government options, because coalitions that include LFI (far-left) and RN (far-right) are unlikely to reach a majority. We think the most viable option remains the broad centrist majority spanning President Macron’s allies (centre), LR (centre-right), and the socialists (centre-left). President Macron could therefore re-appoint a centrist or centre-right PM (similar to current PM Bayrou or former PM Barnier), appoint a centre-left PM, or appoint a more technocratic PM. In that case, the change in government could be relatively swift, such as when Bayrou took office 9 days after Barnier was forced to resign.

The key difference to when the government collapsed last December is that early parliamentary elections are now possible again. President Macron has until now expressed a preference not to call early elections. But he might have to if a majority of parties in Parliament call on him to do so (in practice, by pledging to veto any government until elections take place).

Opinion polls have not changed significantly since last year and continue to show voters split roughly three ways between the far- and centre-left, President Macron’s allies and the centre-right, and the far-right. But three important differences are that the alliance between the far- and centre-left has collapsed again, that far-right leader Marine Le Pen is now banned from running for office, and that local elections are scheduled for March 2026.

Q4. What would be the implications for the budget?

The potential collapse of the government underscores that the targeted deficit reduction (from 5.4% of GDP this year to 4.6% next year) looks too ambitious. We had already assumed that the government would make concessions to opposition parties and eventually raise the deficit target for next year to 5%.

If President Macron were to appoint a new government under the current Parliament, political parties could still have time to find a compromise and pass a budget before year-end. But the initial budget proposal would probably be less ambitious and still require concessions during parliamentary debates. In that case, we would look for a deficit of 5.2% of GDP next year and we are raising our baseline forecast accordingly. We expect the government debt-to-GDP ratio to increase from 116% this year to 122% by 2030.

If President Macron were to call for new parliamentary elections, the content of the budget would depend on the composition of the new Parliament. Given that current polls still point to a political deadlock, the most likely budgetary outcome might not look very different from that under the current Parliament. But there would be two important differences. First, the range of possible budgetary outcomes would become wider, because one of the three main political groups might secure a majority. Second, the change in government would likely take longer, and might lead to renewed concerns regarding slippage on this year’s budget. In that case, we would look for a slightly larger deficit this year and next, compared with our new baseline forecast of 5.4% in 2025 and 5.2% in 2026. As a result, the government debt would increase further than in our baseline forecast.

A collapse of government and corresponding increase in deficit expectations would also make further rating downgrades more likely. Fitch (AA-, negative outlook) will report on September 12, Moody’s (Aa3, stable outlook) on October 24, and S&P (AA-, negative outlook) on November 28.

Q5. What would be the implications for growth?

The implications for growth would be ambiguous. On the one hand, a smaller deficit reduction into next year would imply a smaller fiscal drag and be positive for growth, all else equal. On the other hand, the tightening in financial conditions and increase in policy uncertainty would likely be negative for growth. Taken together, growth would likely continue to run below trend (which we estimate at 1% in France). We are therefore leaving our growth forecast at 0.6% in 2025 and 0.9% in 2026.

More in the full notes from Goldman research (here and here) and trading (here) both available to pro subs.

Authored by Jonathan Turley,

Axios has a story out this week that disclosed that the Democratic National Committee (DNC) continued to pay off the debts from former Vice President Kamala Harris’s presidential campaign. Over $15 million has already been paid out by the DNC, which is reportedly struggling to raise money in the aftermath of a failed campaign.

Axios described it as a “private agreement” that was not disclosed to donors, who unknowingly contributed to the Harris campaign rather than the campaigns to retake the House and Senate.

The question is whether such private agreements are lawful if not disclosed to donors.

Harris shocked many in burning through over $1.5 billion in her brief 15-week campaign. Donors were irate over wasteful and excessive spending by Harris and her campaign. That has contributed to the poor fundraising figures reported from the DNC.

The article is likely to increase the anger of donors who have been reluctant to contribute after the wild spending of the Harris campaign. The notion of a bait-and-switch is even greater after the Harris campaign denied it had lingering debts that would have to be paid off by the DNC.

What is particularly shocking is that the Axios report said that in the “first six months of 2025,” the DNC has spent over $15 million on Harris’s debts.

Politico is reporting that the DNC only raised $15 million as of the end of June in comparison to the Republican National Committee (RNC) having $80 million “on hand.”

The amount reported by Axios may be slow.

The New York Times reported that the DNC “covered” roughly $20.5 million in “post-election bills” for Harris’s campaign.

My assumption is that, absent a pledge to spend on future campaigns, the use of donations for debts (even of past candidates) is lawful. It is not without legitimate questions when the DNC is raising money on the pledge to retake Congress in 2026. The DNC can argue that money is fungible and paying off debts is part of its operating budget. However, at a minimum, there is a concerning lack of transparency and disclosure in the “private agreement” with Harris.

In the meantime, Harris is starting a book tour for her book “107 Days,” which promises that Harris will “tell the story of one of the wildest and most consequential presidential campaigns in American history.”

It likely does not include a chapter on burning through a record $1.5 billion, which was insufficient even with supportive media, to secure the White House.

Home prices in America’s 20 largest cities fell for the 4th straight month in June (the latest data available from S&P CoreLogic’s Case-Shiller data released this morning).

The 0.25% MoM drop was larger than expected and dragged the YoY price growth down to +2.15% – the weakest since July 2023…

Source: Bloomberg

“June’s results mark the continuation of a decisive shift in the housing market, with national home prices rising just 1.9% year-over-year—the slowest pace since the summer of 2023,” according to Nicholas Godec, S&P Dow Jones Indices.

“Looking ahead, this housing cycle’s maturation appears to be settling around inflation-parity growth rather than the wealth-building engine of recent years”

San Francisco, LA, and DC contributed the most to the MoM decline in prices while New York and Chicago contributed to the upside.

On the bright side, given the shift lower in mortgage rates in recent weeks, we may see price pressure relieved…

Source: Bloomberg

Additionally, home price appreciation does seem to track very closely with bank reserves at The Fed (6mo lag), which implies prices could re-acclerate once again...

Source: Bloomberg

Declining home prices (and the follow through into PCE/CPI calculations for Shelter costs) could more than offset any tariff-driven anxiety over the next few months.

The question remains, that after slashing rates by 100bps, home prices have started to decline (with significant lag)… is that what The Fed wants?

Authored by Aldgra Fredly via The Epoch Times,

President Donald Trump on Aug. 25 threatened to restrict the export of U.S. advanced technologies like chips and impose additional tariffs on countries that refuse to eliminate digital regulations discriminating against U.S. tech companies.

In a Truth Social post, Trump opposed other nation’s digital taxes and regulations imposed on American companies that he said were intended “to harm, or discriminate against, American Technology.”

“They also, outrageously, give a complete pass to China’s largest Tech Companies. This must end, and end NOW,” Trump said of the lopsided treatment of the United States.

Trump warned that his administration would impose “substantial additional tariffs” on imports from those countries and restrict U.S. protected technology and chip exports, unless they withdraw their “discriminatory” digital taxes and regulations.

“America, and American Technology Companies, are neither the ‘piggy bank’ nor the ‘doormat’ of the World any longer,” Trump said.

“Show respect to America and our amazing Tech Companies or, consider the consequences.”

The president did not specify what the tariff rates might be.

Many countries, particularly in Europe, have levied taxes on the sales revenue of digital service providers, including Alphabet’s Google, Meta’s Facebook, Apple, and Amazon. The issue has been a longstanding trade irritant for multiple U.S. administrations.

The United States and the European Union issued a joint statement on Aug. 21 outlining a framework for a “reciprocal, fair and balanced trade” agreement as part of efforts to resolve their trade imbalances.

In the statement, both sides pledged to address “unjustified digital trade barriers” and agreed not to levy customs duties on electronic transmissions. The EU also agreed not to adopt network usage fees.

Washington and the 27-member bloc also pledged to “continue to support the multilateral moratorium on customs duties on electronic transmissions at the World Trade Organization and seek the adoption of a permanent multilateral commitment,” according to the statement.

Trump in June vowed to terminate trade negotiations with Canada due to the nation’s Digital Services Tax (DST) affecting U.S. tech companies such as Amazon, Google, and Netflix. The Canadian government later responded by saying it would rescind its DST legislation.

The U.S. Trade Representative’s office stated in its latest report that most of Canada’s DSTs “have been designed in ways that discriminate against U.S. companies, as they single out U.S. firms for taxation while effectively excluding national firms engaged in similar lines of business.”

Canada’s DST also imposes “significant retroactive tax liabilities” with immediate effects on U.S. companies, according to the report published in March.

“Through bilateral and multilateral engagement, the United States continued to raise serious concerns regarding Canada’s DST and to encourage Canada to withdraw or repeal the DST,” the report stated.

Earlier this year, Trump issued a memo directing his administration to look at which countries are imposing taxes that “may discriminate against” U.S. companies. Among the fines and fees that Trump’s memorandum looked to address were digital taxes.

A fact sheet provided by the White House states that foreign governments have used these digital taxes against U.S. businesses when they shouldn’t otherwise be subject to foreign jurisdiction.

Amid chaotic swings MoM driven by the variability of Boeing plane orders, analysts expected preliminary July data to show a 3.8% MoM decline (following June’s big plunge, following May’s big surge). The good news is that the actualk print was better than expected (-2.8% MoM) but still in the red for headline orders. This dragged down the YoY headline growth to 3.5% as the front-running of tariffs fades and earlier this month, Boeing Co. reported a fewer orders in July than in June.

Source: Bloomberg

Under the hood, ex-Transports, durable goods orders rose over 1.0% MoM (the fourth straight month of gains), lifting core orders 3.8% YoY – its strrongest growth since Nov 2022…

Source: Bloomberg

Once again, non-defense aircraft orders plunged (while defense aircraft orders rose)…

Source: Bloomberg

Capital Goods Orders, non-defense ex-aircraft rose 1.1% MoM (better than expected).

Non-defense capital goods shipments including aircraft, which feed directly into the equipment investment portion of the gross domestic product report, rose 0.7% after an upwardly revised gain a month earlier. Rather than orders, which can be canceled, the government uses data on shipments as an input to GDP.

The import/export tariffs – and the frontrunning of such – has clearly sparked chaos in the data.

US equity futures are a tad lower as the yield curve twists steeper with 5Y yields flat, after Trump moves to fire the Fed’s Cook, sending the USD is weaker. A showdown looms with Cook saying that Trump has no authority to oust her and that she will not quit (previously the SCOTUS indicated that the Fed Governors could not be fired at-will but if it does decide that Trump fired her for cause, Powell would be responsible if he keeps her on after Trump has sacked her). As of 8:15am, S&P and Nasdaq futures are down 0.2% even with Nvidia rising 0.5% ahead of its results on Wednesday. In premarket trading, semis are higher with Defensive sectors outperforming Cyclicals; large-cap Industrials are in the green. In Europe, major markets are all lower with France the biggest laggard on fears of gov’t stability; Germany and UK the relative areas of safety. Commodities are weaker, dragged by Energy. Key events today include the August Philadelphia Fed non-manufacturing index and July preliminary durable goods orders (8:30 a.m.), June FHFA house price index and S&P CoreLogic home price indexes (9 a.m.), August Richmond Fed manufacturing and business conditions indexes and Conference Board consumer confidence (10 a.m.). All eyes on Nvidia earnings tomorrow.

In premarket trading, Mag 7 stocks are mostly lower (Nvidia +0.4%, Microsoft -0.1%, Apple -0.1%, Amazon -0.2%, Meta Platforms -0.08%, Alphabet -0.2%, Tesla -0.4%). AMD (AMD) gains 2% after the company and IBM announced a quantum-centric supercomputing partnership. Here are some other notable movers:

• EchoStar (SATS) soars 58% after AT&T announced an agreement to buy spectrum licenses from the satellite broadband communication company for about $23 billion, adding an average of about 50 MHz of low-band and mid-band spectrum to AT&T’s holdings. AT&T (T) shares are up 0.6%.
• Eli Lilly & Co. (LLY) rises 1.8% after its experimental obesity pill helped patients lose 9.6% of their body weight in a trial that moves the company one step closer to a potential approval.
• Interactive Brokers (IBKR) climbs 3% after the S&P Dow Jones Indices announced that the automated-electronic broker will join the S&P 500 Index before trading opens Aug. 28, replacing Walgreens Boots Alliance Inc.
• Olaplex Holdings (OLPX) rises 6% after announcing the acquisition of Purvala Bioscience, a Boston-based biotech company.
• Semtech (SMTC) gains 3% after the semiconductor device company reported second-quarter results that beat expectations and gave an outlook that’s in-line with expectations.

Key corporate news:

• Eli Lilly & Co.’s experimental obesity pill helped patients lose 9.6% of their body weight in a trial that moves the company one step closer to a potential approval.
• EssilorLuxottica SA, the maker of Ray-Ban sunglasses, is exploring a potential deal to increase its stake in Japanese optical equipment manufacturer Nikon Corp., people with knowledge of the matter said.
• Interactive Brokers Group Inc. shares climb as much as 4.7% in premarket trading on Tuesday after the S&P Dow Jones Indices announced that the automated electronic broker will join the S&P 500 Index
• Brevan Howard Asset Management is set to hand a minority stake to Abu Dhabi’s Lunate in a milestone agreement for the macro-trading firm that turned the emirate into its biggest risk center in just a year after setting up a local office.
• Orsted A/S executives are working to reassure shareholders Tuesday after the Trump administration’s decision to halt one of the company’s two wind-power projects in the US raised questions about the viability of its proposed $9.4 billion stock sale.
• Indonesia’s newly established sovereign wealth fund has sounded out investors on a plan to raise $3.1 billion by selling so-called patriot bonds at below-market yields, people familiar with the matter said.

Overnight risk appetite was jolted after Trump said he had fired Federal Reserve Governor Lisa Cook for alleged criminal cause, stoking fears over the long-term outlook for inflation. The president also renewed his trade brinkmanship, threatening fresh tariffs and export restrictions on advanced technology and semiconductors in retaliation against digital services taxes abroad. Stocks and bonds were already under pressure after the optimism that followed Fed Chair Jerome Powell’s address at Jackson Hole faded on Monday. Doubts about the pace of easing are lingering ahead of an inflation report later this week, expected to highlight sticky price pressures.

“If the Fed is perceived as caving to pressure from the administration and lower rates prematurely to placate the White House, it risks inflation becoming more entrenched,” said Tom Essaye at The Sevens Report. “Since longer-dated yields trade primarily off inflation expectations, this pressure is boosting the 30-year Treasury yield.”

For the Fed, swaps imply about an 80% chance of a Fed quarter-point rate cut next month, with at least one more expected by year-end. Forcing out Cook would give Trump an opportunity to secure a four-person majority on the Fed’s seven-member Board of Governors. Her term wasn’t set to expire until 2038.  Trump said he had “sufficient cause” to fire Cook, the first Black woman to serve on the Fed Board in Washington, based on allegations that she made false statements on one or more mortgage loans.

In Europe, the Stoxx 600 fell 0.7% led by French assets which extended losses for a second day as investors fretted that Prime Minister Bayrou’s proposed confidence vote risks toppling his government. The CAC 40 slid 1.7%, leading declines across European bourses. Construction and banks sectors are among the worst performers, while mining and health care shares are leading gains. Here are the biggest movers Tuesday:

• Bunzl shares rise as much as 6.3% after the value-added distributor delivered first-half results broadly in line with expectations, reaffirmed its outlook and resumed its share buyback
• DiaSorin climbs as much as 4%, the most since mid April after Morgan Stanley upgrades to overweight as the bank continues to see strong prospects for the European diagnostics sector
• Huber+Suhner shares gain as much as 3.3% after Baader raised the recommendation to add from sell, citing strong growth ahead thanks to the firm’s optical circuit switch, which allows data centers to operate more efficiently
• Zurich Airport shares gain 3.1%, the most since May. Vontobel says first-half results topped expectations with strong travel demand, especially among local passengers
• Filtronic shares jump as much as 11% after SpaceX agreed to buy £47.3 million worth of the gallium nitride E-band product from the communication
• French stocks are the worst-performers in Europe on Tuesday after Prime Minister Francois Bayrou unexpectedly announced a confidence vote for next month, prompting a selloff in local assets
• British retail stocks drop after a raft of downgrades at Deutsche Bank. Analysts expect a squeeze in discretionary spending power as UK consumer confidence weakens amid concerns over expected tax increases and rising inflation
• Commerzbank shares fall as much as 6.3% after BofA downgrades the German lender to underperform from neutral, saying that its valuation appears stretched
• British American Tobacco shares slide as much as 2.9% as the maker of Dunhill, Rothmans and Camel cigarettes says CFO Soraya Benchikh is stepping down with immediate effect, after a little more than a year in the job

Earlier in the session, Asian stocks fell as a rally in Chinese equities paused amid signs of overheating, while earlier advances in the Japanese yen weighed on export-focused stocks. The MSCI Asia Pacific Index dropped as much as 1.1%, with tech firms Alibaba and Samsung Electronics among the biggest drags. Benchmarks in the Philippines, Japan and Hong Kong were among the biggest decliners in the region. Chinese gauges ended the day lower, after recording a few strong sessions on optimism that more retail money will flow into the market. Red flags are emerging following the surprise rally in onshore shares that’s mostly driven by liquidity rather than improved economic fundamentals. Japanese stocks underperformed in the region, as gains in the yen pressured exporters. Uncertainty around the Federal Reserve’s rate policy was exacerbated by US President Donald Trump’s move to oust Governor Lisa Cook, which weighed on investor sentiment. Elsewhere, South Korean stocks fell as investors grow impatient for concrete corporate reform measures and clearer insight into US tariffs’ impact on earnings.

“The threat to the independence of the Federal Reserve has exacerbated its difficulties in responding to a challenging economic and political environment,” according to a note from the UBS chief investment office. “The next move of the Federal Reserve remains the focus of attention, as investors are closely monitoring signs of further policy shifts.”

In FX, the Bloomberg Dollar Spot Index pared an earlier 0.3% drop to trade little changed, while the euro swung between gains and losses as the common currency got caught between Fed noise and French political risk.

In rates, treasuries are mixed with 30-year yields up 4 bps to 4.94% while two-year yields slip after Trump ousted Fed governor Lisa Cook for mortgage fraud, setting up a legal fight with the central bank, which he’s aiming to remake in pursuit of interest-rate cuts. With shorter-maturity yields little changed to lower, curve spreads widened, pushing 5s30s over 115bp for the first time since 2021 even as Treasury auctions of 2-, 5- and 7-year notes is set to begin. The 30-year is about 2bp higher on the day near 4.95%. Short-maturity yields reflected higher probability of Fed rate cuts, with the 2-year lower by about 1.5bp; swap contracts linked to future Fed rate decisions continue to fully price in one quarter-point rate cut this year in October and a second one by year-end. Month’s final coupon auction cycle begins with $69 billion 2-year note sale at 1pm New York time; WI yield near 3.68% is lower than 2-year auction results since last September. French 10-year yields slip 1 bp to 3.51% as the spread over Germany widens by another 2 bps to the widest since April.

In commodities, WTI crude drops 1.3% to near $64 a barrel. Spot gold rises $10. Bitcoin rises 0.7%.

Looking at today’s US economic data calendar we get the August Philadelphia Fed non-manufacturing activity gauge and July preliminary durable goods orders (8:30 a.m.), June FHFA house price index and S&P CoreLogic home price indexes (9 a.m.), August Richmond Fed manufacturing and business conditions indexes and Conference Board consumer confidence (10 a.m.) Fed speaker slate includes Richmond Fed President Barkin repeating his Aug. 12 remarks on the economy (time TBD). We also get Nvidia’s results out after the US close tomorrow (with a +33.9% gain, Nvidia has again been the best performer in the Mag-7 year-to-date, but the past couple of quarters saw it deliver smaller earnings surprises after its euphoric growth during 2023-24). Rounding out US events, in tariffs, the “de minimis” exemption will end this Friday, while additional 25% tariffs on India (taking the total levy to 50%) are due to come into effect on Wednesday

Market Snapshot

• S&P 500 mini -0.1%
• Nasdaq 100 mini -0.1%
• Russell 2000 mini -0.2%
• Stoxx Europe 600 -0.8%
• DAX -0.6%, CAC 40 -1.8%
• 10-year Treasury yield +3 basis points at 4.3%
• VIX +0.6 points at 15.37
• Bloomberg Dollar Index -0.1% at 1206.27
• euro +0.1% at $1.1634
• WTI crude -1.2% at $64/barrel

Top Overnight News

• Donald Trump escalated his battle to exert more control over the Fed by moving to fire Lisa Cook over allegations she falsified mortgage documents. Cook said the president has no authority to oust her, and she won’t quit, setting the scene for a legal battle. Trump’s move may become a test of the Supreme Court’s intentions when it signaled earlier this year it would shield the Fed from at-will removal of board members. BBG
• The U.S. will increase tariffs and impose export restrictions on countries that tax or regulate U.S. tech firms, President Trump said on Monday evening, in his most direct threat to retaliate against nations that he views as discriminating against companies such as Google and Meta Platforms. WSJ
• Trump said on US stakes in companies, that he wants to get as much as he can and hopes to have many more cases like Intel, while he added there will be other cases.
• A senior Chinese trade negotiator is heading to Washington this week for what is expected to be the first dialogue in the U.S. capital, according to people familiar with the matter, as both sides seek to establish regular communication during an extended tariff truce. WSJ
• An announcement regarding the US-Japan trade deal involving a $550 billion investment vehicle is due this week, Commerce Secretary Howard Lutnick told Fox. BBG
• The US outlined plans to implement a 50% tariff on products from India. A draft notice said the levies would apply from 12:01 a.m. ET tomorrow. BBG
• Refiners in India, among the largest buyers of Russian crude, are planning to trim their purchases in the coming weeks, a modest concession to Washington’s hawks less than a day ahead of a hike in US tariffs, but also a signal that the country has no plans to sever ties with Moscow. BBG
• France’s minority government looked increasingly likely to be ousted next month after three main opposition parties said they would not back a confidence vote which Prime Minister Francois Bayrou announced for September 8 over his plans for sweeping budget cuts. RTRS
• The intensifying Ukrainian drone campaign against Russian refineries has taken some 13% of Russia’s fuel production offline, according to analysts. Sanctions imposed by the West after the 2022 invasion, meanwhile, have limited Moscow’s ability to repair infrastructure and service remaining installations, and forcing them to ration. WSJ
• The Fed’s John Williams said the neutral interest rate may not be much different than before the pandemic. He didn’t elaborate but the latest median estimate of the neutral rate among Fed officials was 3%, up from 2.5% prior to Covid-19. BBG

Trade/Tariffs

• US President Trump threatened on Truth Social to impose substantial additional tariffs on countries that do not remove discriminatory actions such as digital taxes, legislation, and rules against US tech companies, while he also threatened export restrictions on tech and chips.
• According to Politico, citing Top Trade MEP Lange, the European Commission is expected to reveal its proposals to lift tariffs on US industrial goods and cars.
• South Korean President Lee’s office said Lee and US President Trump talked about shipbuilding and that Trump stressed his support for Lee, while it added that the mood from the meeting was good enough that a written joint statement was unnecessary and the meeting was an opportunity for the leaders to get close to each other, rather than discussing the specifics on trade.
• South Korean adviser Wi said details on trade talks still need to be determined and progress has been made on modernising the alliance, while Wi added that Trump and Lee had meaningful talks about nuclear energy.
• Chinese top trade negotiator Li Chenggang is set to head to the US as talks resume and will meet with US Trade Representative Greer and senior Treasury Department officials later this week, according to WSJ. It was later reported that a US government spokesperson said Washington welcomes Chinese efforts to reduce its persistent and massive trade surplus with the US.
• US President Trump’s administration reportedly weighs visa sanctions for EU and EU member state officials over the bloc’s digital services act, according to Reuters citing sources.
• Canadian and US officials are to meet after Canada removes some tariffs, according to Bloomberg News.
• Brazil’s Foreign Minister Vieira said Canada and the South American bloc Mercosur are to resume negotiations for a free trade agreement, while he added a joint decision was made to resume the negotiations and there will be an important meeting in October regarding Canada-Mercosur talks.
• Indonesia’s chief tariff negotiator says the US agrees in principle to exempt palm oil, cocoa and rubber from 19% tariffs.
• Morgan Stanley expects Fed to cut rates by 25bps in September and December (prev. saw no rate cuts in 2025); now expects 25bps cut in March, June, Sept and Dec in 2026, taking terminal target range to 2.75-3.00%

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mostly lower after global markets faded last Friday’s post-Powell dovish reaction, while Trump also moved to fire Fed Governor Cook and threatened to impose substantial additional tariffs on countries that do not remove digital taxes and regulations against US tech companies. ASX 200 retreated amid a continued deluge of earnings releases including from the likes of Coles and Fortescue. Nikkei 225 underperformed with notable weakness seen in power names including TEPCO, and with Nissan pressured as Mercedes-Benz is to offload its 3.8% stake in the Japanese automaker, while participants also digested Services PPI data and Japan’s top tariff negotiator is set to travel to the US as early as this week. Hang Seng and Shanghai Comp pared early losses and returned to flat territory with some resilience seen after another firm liquidity operation by the PBoC, while it was also reported that China’s top trade negotiator Li Chenggang is set to head to the US and will meet with US Trade Representative Greer and senior officials at the Department of the Treasury later this week. US equity futures (ES -0.1%, NQ -0.1%) lacked demand amid Fed independence concerns and after Trump’s latest tariff warning, while participants also await earnings from NVIDIA on Wednesday. European equity futures indicate a lower cash market open with Euro Stoxx 50 futures down 0.5% after the cash market closed with gains of 0.8% on Monday.

Top Asian News

• RBA Minutes from the August meeting stated the board saw a strong case for a 25bps cut in the Cash Rate and judged some further reduction in the Cash Rate is likely needed over the coming year, while the stance of policy was still judged somewhat restrictive and it noted the pace of rate cuts would be determined by incoming data and the balance of global risks. RBA Minutes also stated that the board saw arguments for both a gradual pace of easing and for a faster pace, as well as noted the labour market was still a little tight, inflation remained above the midpoint, and domestic demand was recovering. Furthermore, it said uncertainty about spare capacity and the neutral rate also argued for gradual easing, but faster easing might be needed if the labour market was already in balance, risking inflation undershooting the midpoint.
• Japan will invest USD 68bln in India over 10 years including in AI and chips, while India and Japan’s PMs intend to revise their countries’ joint declaration on security cooperation for the first time in 17 years, according to Nikkei.

European bourses (STOXX 600 -0.7%) began the session on the backfoot and continue to languish around these levels, driven lower by notable underperformance in Paris; France’s Government is at risk of collapse after PM Bayrou called for a confidence vote. European sectors opened almost entirely in the red and continued their bearish bias throughout the morning. The underperformers are led lower by French heavyweights, hurting the likes of Banks, Construction and Insurance. French listed Socgen, BNP Paribas, Vinci, AXA and Alstom are the underperformers in the CAC, with losses ranging between -8% to -4%.

Top European News

• UK think tank Resolution Foundation’s analysis highlighted a rapid weakening of the jobs market and warned the UK unemployment rate could hit 5% in the three months to August which would be the highest level since the start of 2021, according to FT.
• French Finance Minister Lombard says certainly not resigned to Government falling on September 8; needs to find path to prepare the 2026 budget which will be a recovery budget.

FX

• DXY is steady after Monday’s paring of the post-Powell downside. The DXY took a brief leg lower overnight after US President Trump posted a letter removing Fed Governor Cook from her position. If successful, this would put Trump on course for a majority on the Fed board. That being said, Cook has been defiant in stating that she will not resign and that President Trump has no authority to fire her. For today’s docket, US durable goods orders and consumer confidence are both due on deck. DXY held above support via its 50DMA at 98.06.
• EUR is resilient despite an unfavourable Eurozone risk backdrop over the past 24 hours. French politics is back in the headlines after French PM Bayrou called for a vote of no confidence on his government’s fiscal plans on September 8th. Whilst the EUR is unfazed today, French assets are showing greater concern with the CAC 40 down over 2% and the FR/GE spread at its widest level since April. EUR/USD is back below its 50DMA 1.1651 and towards the bottom end of Monday’s 1.1603-1.1723 range.
• JPY is slightly firmer vs. the USD but unable to hold onto the bulk of its APAC gains that were seen as the risk mood soured post-Trump/Cook. A decline in services PPI had little follow-through to the JPY. USD/JPY delved as low as 147.00 overnight, with the pair unable to test its 50DMA to the downside at 146.91.
• GBP is slightly firmer vs. the USD as UK participants return to market after the long weekend. UK traders return to little in the way of positivity however, with the latest BRC shop price data showing that UK food inflation in August rose to its highest level since February 2024. That being said, ING writes that EUR/GBP looks to stay offered this week as French politics prompts some reassessment of long euro exposure. Cable ran out of steam ahead of its 50DMA at 1.3492.
• Antipodeans are both are marginally weaker vs. the USD alongside the downbeat risk tone. There was little follow-through into AUD from the RBA minutes release, which showed that the board saw a strong case for a 25bps cut in the Cash Rate and judged some further reduction in the Cash Rate is likely needed over the coming year.
• PBoC set USD/CNY mid-point at 7.1188 vs exp. 7.1670 (Prev. 7.1161)

Fixed Income

• USTs are trading on the back foot today and lower by a handful of ticks, to currently trade in a 111-25+ to 112-03+ range. A tinderbox of catalysts for markets to digest on Monday and overnight, including trade developments and US President Trump’s decision to fire Cook. On the latter, ING highlights that “the US 2-30 year yield curve broke to a new cyclical high overnight at 122bp”, levels not seen since the start of the Russia-Ukraine war. Ahead, some Tier 2 US data, and with more focus on 2yr supply.
• Bunds are outperforming across global paper today, seemingly catching a “safety” bid, following on from the increasing risks of a French government collapse (discussed in OAT section). Currently trading in a 129.15 to 129.45 range, with price action fairly muted throughout the morning.
• OATs are lower today to the tune of around 10 ticks, extending on the prior day’s losses where French paper reacted to PM Bayrou’s calls for a confidence vote – it doesn’t seem likely he will get that (discussed below). In terms of price action today, OATs have traded in a 121.54 to 121.98 range. As it stands, the 10y German-French spread sits at 78.06bps, heading back towards levels seen on Liberation Day. As a reminder, in the prior session the spread widened roughly 4.3bps, a move which has continued slightly to make a total widening of 12.8bps at most (from Monday’s open to current).
• Gilts are the clear underperformer today as UK paper returns from holiday, and plays catch-up to the broader losses seen in the prior session. Of course, French/US political uncertainty is factoring, but also as UK fiscal woes gradually come into the forefront of traders’ minds. As it stands, political commentary has been exceptionally downbeat on how Chancellor Reeves will enact her high growth/no tax increase budget this autumn.

Commodities

• Crude futures trade with losses near USD 0.90/bbl amid a downbeat mood across global markets, and a broad reversal of geopolitical gains made on Monday as Ukrainian Strikes on a Russian oil terminal did not have a great impact to any barrels.
• Spot gold is boasting gains, and is the clear outperformer in the metals space, with Silver flat and Palladium and Platinum continuing losses. The yellow metal benefits after US President Trump ordered the removal of Fed Governor Lisa Cook, alleging false mortgage statements. XAU/USD is currently trading around 3,375/oz.
• Copper outperforms in the base metals space, as it catches up to Chinese optimism after LME trade was closed on Monday. The industrial metal trades within USD 9,792.35-9,867.38/t parameters.
• Chile’s mining regulator added requirements to restart sectors of Codelco’s El Teniente copper mine affected by the collapse.
• Shanghai Futures Exchange lowers price limits and trading margins for aluminium alloy futures effective from close of settlement on 28 August

Geopolitics: Middle East

• US President Trump said Gaza has to be settled soon, while he thinks they will have a good and conclusive ending within the next 2-3 weeks.
• Australian PM Albanese said the Iranian government directed at least two antisemitic attacks in Australia and the Iranian ambassador will be expelled, while he added that operations at Australia’s embassy in Tehran have been suspended and Australian diplomats are now safe in a third country. Furthermore, the government will legislate to list Iran’s Islamic Revolutionary Guard Corps as a terrorist organisation.

Geopolitics: Ukraine

• US and Russian government officials have discussed several energy deals on the sidelines of negotiations in August that sought to achieve a peace deal in Ukraine, according to multiple sources, via Reuters; talks included Russia purchases of US equipment
• Ukrainian President Zelensky said he had a good meeting with US Envoy Kellogg and that Ukraine values US readiness to be part of Ukraine’s security architecture, while he discussed with Kellogg how to exert pressure on Russia to hold “real talks” to end the war and said military cooperation is important with the US, particularly on purchases of weapons and accord on drones. It was separately reported that US and Ukrainian officials are expected to meet later this week.
• US President Trump said regarding talks with Russian President Putin that they are also talking about nuclear missiles and stated “we” would like to denuclearise, while he added that Putin is reluctant to meet Ukrainian President Zelensky because he does not like him. Furthermore, Trump later commented that he discussed denuclearisation with Putin, and thinks that Russia and China would be willing to do it.
• US President Trump said Russian President Putin and Ukrainian President Zelensky should meet, while Trump said he may be there for the Putin-Zelensky meeting or may not and there could be consequences if they do not meet, but we will see what happens over a week or two and at that point, he will step in.

Geopolitics: Other

• US President Trump thinks they can do something on North and South Korea and he looks forward to meeting with North Korean leader Kim, while South Korean President Lee said Trump is the only person who can solve the North Korean issue and that he would like to meet Kim this year.
• South Korean President Lee said he agreed to work closely with US President Trump for peace in the Korean peninsula and noted that North Korea keeps developing its weapons programme as a result of sanctions. Furthermore, Lee said problems cannot be solved solely by pressuring North Korea and that North Korea reached a stage with capabilities of making 10-20 nuclear weapons per year, while it was separately reported that South Korean President Lee invited US President Trump to APEC to pursue a meeting with North Korean leader Kim, according to Newsis.
• North Korea’s military said US-South Korea drills prove a US intention to occupy the Korean peninsula, according to KCNA.

US Event Calendar

• 8:30 am: Jul P Durable Goods Orders, est. -3.8%, prior -9.4%
• 8:30 am: Jul P Durables Ex Transportation, est. 0.2%, prior 0.2%
• 8:30 am: Jul P Cap Goods Orders Nondef Ex Air, est. 0.2%, prior -0.8%
• 8:30 am: Jul P Cap Goods Ship Nondef Ex Air, est. 0.17%, prior 0.3%
• 9:00 am: Jun FHFA House Price Index MoM, est. -0.1%, prior -0.2%
• 9:00 am: Jun S&P CoreLogic CS 20-City YoY NSA, est. 2.08%, prior 2.79%
• 9:00 am: Jun S&P CoreLogic CS U.S. HPI YoY NSA, prior 2.25%
• 10:00 am: Aug Richmond Fed Manufact. Index, est. -11, prior -20
• 10:00 am: Aug Conf. Board Consumer Confidence, est. 96.5, prior 97.2

DB’s Jim Reid concludes the overnight wrap

Readers rejoining us after the bank holiday weekend in the UK will have plenty to catch up on since Powell’s dovish tilt in Jackson Hole drove a buoyant market mood just in time for the European close on Friday. That strong cross-asset rally lost momentum on Monday, while President Trump’s move last night to dismiss Fed Governor Lisa Cook has led long-end Treasuries to sell off amid renewed concerns over Fed independence. Meanwhile in Europe, political risks resurfaced in France yesterday, where the minority government is at risk of collapse in a confidence vote expected on September 8. French assets struggled in response, with the 10yr BTP-OAT spread falling its lowest level since the start of the century.

Starting with the overnight Fed news, in a letter posted last night Trump claimed he had “sufficient cause” to dismiss Governor Cook and was removing her effectively immediately. This follows allegations that Governor Cook had applied for “primary residence” mortgages on two separate properties within two weeks of each other in 2021 before she became Fed Governor. In a statement reported overnight, Cook challenged the move, saying she will not resign as “President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so”. So this could turn into the most market-relevant test so far of Trump’s ability to fire officials of independent government agencies. Were Cook’s dismissal to hold, it would open up another seat for Trump to fill on the seven-person Federal Reserve Board. With Stephen Miran nominated for the seat recently vacated by Governor Kugler and with Governors Waller and Bowman dissenting in favour of a rate cut at the July meeting, this would increase the prospects of a dovish majority on the Board.

With Trump’s move seen as further escalating the US administration’s attempts to exert influence over the Fed, the dollar saw a kneejerk drop of nearly -0.4% on the news though it has largely reversed this decline as I type. Gold spiked by +1% and is holding on to most of this overnight gain, while futures on the S&P 500 (-0.14%) and the Nasdaq (-0.18%) are modestly lower. Meanwhile, the Treasury curve has seen a sizeable steepening, with the 2yr yield trading -0.7bps lower but the 10yr up +2.9bps and the 30yr +4.5bps to 4.93%. This has brought the 2s30s slope to 122bps, its steepest since January 2022 when the Fed had not yet started its post-Covid hiking cycle.

Earlier on Monday Treasuries had reversed some of Friday’s rally, with 2yr yields up +3.2bps (-9.7bps Friday) and 10yr up +2.5bps (-7.4bps Friday) even as markets still priced an 83% likelihood of a Fed rate cut in September (up from 71% before Powell spoke on Friday). The S&P 500 (-0.43%) lost ground after having its best day since May on Friday (+1.52%). The headline decline was mitigated by continued gains for the Mag-7 (+0.38%) as Nvidia rose +1.03% ahead of its results after market close tomorrow. However, there were broad declines otherwise with 80% of the S&P 500 constituents declining, which was the most in nearly six weeks.

As a brief recap, Powell’s speech at Jackson Hole showed a couple of notable dovish shifts. First, as the Fed Chair suggested that “downside risks to employment” were rising and second, as he noted that the “shifting balance of risks may warrant adjusting our policy stance”. This left a sense that in Powell’s view further labour market weakening was no longer needed to ease policy. Our US economists updated their near-term Fed view in response, now expecting a 25bps cut next month, with further 25bps cuts in December and March (see their reaction on Friday for more).

Remarkably, the moves over the past couple of sessions have been a near-carbon copy of those seen after Powell signaled impending rate cuts at Jackson Hole last year (see our EMR at the time). Both in terms of a strong cross-asset rally on Friday partially reversing on Monday, and in terms of the S&P 500 being within 1% of its all-time highs. Last year this was followed by 100bps of rate cuts over the next three FOMC meetings. This time round – with the fed funds rate now 100bps lower, unemployment stable at 4.2% over the past 12 months and core PCE inflation at 2.8% a smidgen higher than it was a year ago – it’s hard to see economic fundamentals justifying swift policy easing.

In Europe, the big news yesterday came in France where Prime Minister Bayrou called for a confidence vote as he seeks to force support for his budget plan that foresees EUR 44bn of fiscal tightening. The vote is due on September 8 and comments from opposition parties suggest that Bayrou’s minority government is likely to lose it. The government would need to achieve a simple majority in the National Assembly to survive, but officials from both the far-left and the right-wing populist RN said yesterday that they would vote against it. It would then require many of the centre-left Socialist MPs to support the government, but the Socialists’ leadership have suggested overnight that the Party will also vote against it. Should the government lose the confidence vote, President Macron may seek to nominate a different Prime Minister to form a government, who would then face the immediate challenge of passing a 2026 budget.

Alternatively, Macron could call snap elections. Current polls point to another fragmented outcome as happened after the summer 2024 snap vote, though with the far-right RN leading in polls, investors would be watchful whether it could translate this lead into an outright majority this time round.

Following the news, the 10yr OAT-Bund spread widened by +5.3bps to 75bps, its highest level since April, while the spread on Italian BTPs over OATs fell to just 9.8bps, its lowest since the start of our Bloomberg series in 1999. France’s CAC index (-1.59%) posted its biggest decline in three weeks, while the euro had its worst day against the dollar so far this month (-0.85%), closing at 1.1618.

Elsewhere in Europe, bonds and equities saw milder declines on Monday. 10yr bunds yield rose +3.6bps to 2.76%, helped by a decent August Ifo survey that saw its expectations series rise from 90.8 to 91.6, its highest level since February 2022. However, stocks still lost ground across the continent, with the Stoxx 600 down -0.44% as both the DAX (-0.37%) and FTSE MIB (-0.19%) posted modest declines.

Recapping yesterday’s other data releases, US new home sales totaled 652k in July, exceeding expectations (630k) as June data was revised higher from 627k to 656k, while median new sales prices edged lower. Meanwhile, we saw underwhelming regional readings in the Chicago Fed’s activity index (-0.19 vs -0.11 exp) and the Dallas Fed’s manufacturing index (-1.8 bs -0.9 exp).

Overnight in Asia, equity markets are reflecting Monday’s losses from Wall Street as well as President Trump’s intensified rhetoric on tariffs yesterday evening. Trump’s comments included a threat of ‘200% tariffs or something’ on China if it does not export rare-earth magnets. He also warned of fresh tariffs and export restrictions on countries that do not remove digital taxes and associated regulations that hit American technology companies. Both the Nikkei (-0.88%) and the KOSPI (-0.94%) are seeing notable declines.

Chinese stocks are mixed this morning, with Hang Seng down -0.22% but the CSI (+0.14%) and the Shanghai Composite (-0.11%) edging higher after rising for the previous four sessions. Indeed, the Shanghai Composite has surged by over +9% since August 1, reaching a new 10-year high on Monday on news of potential additional property market assistance. In a note yesterday (see here ), our China economists dissect what has driven the sudden risk-on performance of China’s on-shore market despite lacklustre economic data and discuss what to expect moving forward.
Looking forward to the rest of the week ahead, Friday will see key inflation data out on both sides of the Atlantic. In the US, our economists expect the July core PCE deflator to come in at +0.29% MoM (vs. +0.26% previous), bringing the YoY rate a tenth higher to 2.9%, with risks of this even rounding up to 3.0%. A 3% reading would be the highest since March 2024. In Europe, we expect the flash August CPI prints for Germany, France and Italy to show a slight uptick in annual inflation (see more from our European economists here).

Before that, we have Nvidia’s results out after the US close tomorrow. With a +33.9% gain, Nvidia has again been the best performer in the Mag-7 year-to-date, but the past couple of quarters saw it deliver smaller earnings surprises after its euphoric growth during 2023-24. Rounding out US events, in tariffs, the “de minimis” exemption will end this Friday, while additional 25% tariffs on India (taking the total levy to 50%) are due to come into effect on Wednesday.

Update (0830ET): Mainstream media is abuzz this morning with the news of Trump’s firing of Fed Governor Cook over her alleged mortgage cheating. Given that she has apparently refused to leave, this puts The Fed (and in particular Chair Powell) in an awkward position.

As Jim Bianco explains in a brief post on X: 

If they allow her to continue with her duties as Fed Governor, starting this morning, and the courts find that the President does have the authority to fire her, even if it’s months later during an appeal, anything she does on behalf of the Fed as a Governor starting today will not be valid.

And the Fed could be held responsible for allowing a non-employee to continue to act like an employee.

Restated, if the Fed allows her to stay and continue to be a Governor, and the court rules that Trump can fire her (again, even if it is later in an appeal), then Jay Powell has potentially committed a “for-cause” offense for which he could be fired.

(allowing a non-Fed employee to make decisions and policy on behalf of the Federal Reserve.)

Additionally, Cook has hired former first son Hunter Biden’s lawyer, Abbe Lowell, to represent her. 

In a statement, Lowell vowed to take “whatever actions are needed” to stop what he described as Trump’s “illegal action.”

As a reminder, Fed Governors resigning is not unusual in recent years:

• 2021: Dallas Fed president Kaplan busted for suspicious stock trades, resigns

• 2021: Boston Fed president Rosengren busted for suspicious stock trades, resigns

• 2022: Fed vice chair Richard Clarida busted for suspicious trades, resigns

• 2025: Lisa Cook vows to stay on

This is far from over.

*  *  *

Update (2330ET): Former Fed governor Lisa Cook says she will not resign, the Washington Post reports, citing a statement from Cook.

“President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so,” Cook said through a spokeswoman: WaPo

“I will continue to carry out my duties to help the American economy as I have been doing since 2022,” Cook said

Good luck with that plan when the FBI turns up tomorrow at your place of work.

*  *  *

Promises made… promises kept…

On Friday, President Trump warned that he would fire Federal Reserve Governor Lisa Cook who allegedly “falsified bank documents and property records to acquire more favorable loan terms” if she didn’t resign…

.@POTUS on Federal Reserve Governor Lisa Cook: “I’ll fire her if she doesn’t resign. What she did was bad, so I’ll fire her if she doesn’t resign.” pic.twitter.com/1vEv7k7ar8

— Rapid Response 47 (@RapidResponse47) August 22, 2025

She immediately played the victim card, claiming she “would not be bullied”.

But now that is moot as President Trump has fired her, effective immediately:

” I have determined that there is sufficient cause to remove you from your position…

…

The Federal Reserve has tremendous responsibility for setting interest rates and regulating reserve and member banks. The American people must be able to have full confidence in the honesty of the members entrusted with setting policy and overseeing the Federal Reserve.

In light of your deceitful and potentially criminal conduct in a financial matter, they cannot and I do not have such confidence in your integrity.

At a minimum, the conduct at issue exhibits the sort of gross negligence in financial transactions that calls into question your competence and trustworthiness as a financial regulator.”

Full letter below: 

Trump will now have a majority on the Fed Board…

If/when Cook leaves/is fired, Trump will have a majority on the Fed board pic.twitter.com/6Hxn8f2PPw

— zerohedge (@zerohedge) August 21, 2025

Trump was quick to make note of her dismissal on Truth Social:

Reminder, The Fed is not political… etc, etc…

Exactly 6 years later, Trump has an answer to Dudley’s op-ed https://t.co/sHwvmxAKhp

— zerohedge (@zerohedge) August 26, 2025

There is a silver lining for her…

The good news is Cook will soon be able to refinance at a much lower rate. https://t.co/5Coxyp8iDd

— zerohedge (@zerohedge) August 26, 2025

How long before Democrats decry this racist act and demand it be appealed all the way to SCOTUS?

Or will she skulk away sheepishly admitting she broke the law rather than face the discovery that Bill Pulte has already exposed?

There was a notable market reaction to this move with gold rallying as the dollar dropped and short-end bonds are bid (stocks lower)…

With rate-cut odds rising for Sept and more for December.

It must be extraordinarily difficult for leftist corporate media outlets and woke government weather forecasters to admit “record-breaking cold temperatures” or “unseasonably cool air” across parts of the Lower 48 – in August of all months. 

August is the prime season when far-left climate NGOs and their political allies, amplified by their MSM propaganda megaphone, usually try to convince everyone of an alleged climate crisis….

But the narrative of imminent doom for planet Earth unless cow farts, gas stoves, 2-stroke weedwhackers, petrol-powered vehicles (MSM always forgets to talk about Bill Gates, Al Gore, and Democrats flying around in private jets) are banned. 

Yet here we are … and years later, no climate disaster. 

In fact, The Weather Channel stated on Monday morning: “Record-breaking cold temperatures for the month of August provide many their first taste of fall.” 

Brr! 

Record-breaking cold temperatures for the month of August provide many their first taste of fall.https://t.co/5C4NulZLNw pic.twitter.com/p8WPMsHJE1

— The Weather Channel (@weatherchannel) August 25, 2025

Here’s more from The Weather Channel:

A strong cold front is bringing heat and humidity relief to millions from the Canadian border all the way to the Deep South. Summer will be put on hold as temperatures will end up 10, to 20 and as much as 25 degrees below average. Dozens of record lows will be in jeopardy from Tuesday through Thursday. Places like Indianapolis could see lows in the 40s, while Kansas City, Memphis and Birmingham drop into the 50s. Some locations, like Wichita and Tulsa, could even see cool record highs! This is unusual in August, so enjoy it this week!

Even government forecasters have been forced to admit it’s beginning to feel like fall in August:

🍂 Fall preview! A strong cold front will bring an unseasonably cool air mass to much of the Lower 48 through the weekend & into next week. Forecast high temperatures are expected to be roughly 10 to 30 degrees below average for this time of year. pic.twitter.com/X5eGqsHRJb

— NWS Weather Prediction Center (@NWSWPC) August 23, 2025

Across the Lower 48, average temperatures are expected to print below the 30-year average through early August. 

In energy markets, U.S. NatGas futures are tumbling….

… at a time when prices should be rising according to 15-year seasonal trends.

NatGas prices are falling because lower cooling demand means less power burn on grids. 

Recall our note on August 20:

• “First True Taste Of Fall”: Might Need A Jacket Next Week

. . .

Authored by Haley Zaremba via OilPrice.com,

• The IEA has reversed course by reintroducing the “Current Policies Scenario” in its flagship World Energy Outlook, marking a significant policy shift.

• The debate highlights the inherent subjectivity of data in energy modeling and the political stakes tied to forecasting fossil fuel demand.

• U.S. political leaders and fossil fuel advocates pressured the IEA, arguing that its previous modeling discouraged oil and gas investment and threatened energy security.

A great debate is unfolding about the subjectivity of data in producing the energy outlooks that guide public policy and private spending, shaping the future of the global energy sector. The International Energy Agency has been caught in the crossfire of a partisan debate in which environmental and energy industry leaders vehemently disagree about what constitutes accuracy, truth, and good science in data, and particularly in the agency’s flagship World Energy Outlook report. And this year, the fossil fuels industry is getting its way.

It’s easy to forget that data is not objective, nor is it purely subjective. This false dichotomy, according to data expert Melanie Feinberg, “distorts the empirical realities of data collection, the challenging work of forcing unruly phenomena to speak in clean, distinct, ideally quantitative phrases.” Instead, good science is about recognizing the responsibility of being an active decision-maker to produce methods and outputs that most accurately represent complex realities. 

Human-led decisions and difficult choices are being made at every step of developing a report like the International Energy Agency (IEA)’s annual World Energy Outlook – from how to collect and clean the data to how to analyze and report on it.

One of those critical choices is how the agency chooses to construct its projected scenarios for the clean energy transition and the phaseout of fossil fuels. 

The choice that has recently come under scrutiny is whether to include a “Current Policies Scenario” along with the typical scenarios that the agency uses to make its forecasts.

The IEA based its “business as usual” outlooks on current policies until 2019, when the agency decided to switch to a “Stated Policies Scenario,” which it believed to be more accurate.

The difference is that the Stated Policies Scenario assumes certain future policy actions, such as the extension and renewal of policies with end dates.

As an example, before the Inflation Reduction Act, the United States implemented solar and wind power tax credits that expired every few years, at which point they would be reviewed and adjusted as needed. A Current Policies Scenario only includes the policy as written, meaning that the scenario assumes those tax credits would end, since their (likely) renewal wasn’t in writing. A Stated Policy Scenario assumes, on the basis of policy analysis and stated aims, that the tax credits would be renewed. The argument is that while this is not based on concrete policy, it is a more accurate representation of policy – and ultimately a more accurate projection. 

This change in modeling has resulted in projections that foresee a much more rapidly approaching peak fossil fuel demand. This change has yielded some harsh critiques, especially from Republican leadership. Robert McNally, president of research and analysis firm Rapidan Energy and former energy advisor for President George W. Bush, wrote an op-ed earlier this year slamming the IEA for being “neutered” by “climate politics.” McNally wrote for the Wall Street Journal that the EIA’s energy modeling is posing “significant risks” to global energy systems by encouraging underinvestment in oil and gas, thereby undermining “its vital security mission.”

The Trump administration has also been a vocal critic of the IEA, and has recently threatened to withdraw from the agency due to what it sees as “unrealistically green” forecasting.

 “We will do one of two things: we will reform the way the IEA operates or we will withdraw,” said Energy Secretary Chris Wright last month.

“My strong preference is to reform it.”

And now we know that the IEA has yielded to this pushback.

The international agency very quietly confirmed in March calendar notice that this year will mark the much-debated return of the Current Policies Scenario.

The IEA statement noted that this year’s report will include a “wide spectrum of possible outcomes that today’s markets and policies imply,” encompassing “exploratory scenarios that flow from different assumptions about existing policies, including the Current Policies Scenario, as well as normative pathways that achieve energy and emissions goals in full.”

This marks a major policy reversal on the part of the agency, which had previously ardently defended its choice to drop the model.

It also reflects a rapidly changing global policy environment that is more concerned with immediate-term energy security rather than long-term climate realities.

Eric Trump, son of US President Donald Trump, said the family became pro-crypto after they were “debanked” in the aftermath of the Capitol attack incident in early 2021.

Several banks shut down hundreds of bank accounts related to the Trump Organization without providing a reason, Trump told The Wall Street Journal, which led to the group having to rely on regional banks before finding a new, unidentified bank, to which they migrated. 

“At that time, I realized how fragile the financial system was and how easily it could be weaponized against you,” said Trump.

CoinTelegraph’s Tarang Khaitan reports that the American businessman said that the reason was purely political in nature, which led him to become pro-crypto, as industry insiders told him that the Biden administration was restricting crypto companies from accessing banking services by applying regulatory pressure.

“This whole system was weaponized against them, no different than it had been weaponized against us for different reasons.”

Notably, The Trump Organization sued Capital One in March this year, claiming the bank had closed their accounts due to political reasons, which caused considerable financial harm to the organization.

A month later, Trump said banks must adopt crypto or face extinction in 10 years.

Some claim that banks are sticking to operation chokepoint policies, with banks closing accounts owned by crypto firms.

Eric Trump also spoke in support of the tokenization of real-world assets.

“Why is it that if I wanted to refinance Trump Tower, I couldn’t tokenize this asset and put it on the street for billions of people around the world to otherwise invest in it?” said Trump.

Trump family’s growing ties to crypto

The Trump family has several ties to the crypto industry, which have become the subject of critics who allege that they have used it to enrich themselves. 

This includes Donald Trump’s official memecoin, TRUMP, launched days before getting inaugurated as the 47th US president.

World Liberty Financial was launched on Sept. 16, 2024, and currently offers the USD1 stablecoin. The website lists Donald Trump as co-founder emeritus, while his sons are listed as co-founders.

Trump’s sons Donald Trump Jr. and Eric Trump are the founders of American Bitcoin, a subsidiary of Hut 8, which raised $220 million to purchase Bitcoin and Bitcoin mining equipment.

According to an Aug. 11 report, Donald Trump has amassed a fortune of $2.4 billion from his crypto endeavors. 

Eric Trump denied allegations that the Trump family profited from his father being elected as the 47th president. He has also floated the idea of him or one of his family members potentially running for the presidency in the 2028 election.