MW Trump and the Fed are getting along, but now there are new fears about firings.

By Steve Goldstein

Trump's firing of two FTC commissioners raises questions about whether he could do the same to Fed board members.

Happy Fed Day to all who observe, and one of the many surprises of Trump 2.0 is the benign state of relations between the central bank and the president. President Donald Trump agreed with last month's decision by the Fed to keep rates unchanged and picked an insider to head the central bank's supervisory efforts, as other key economic officials in the White House have yet to publicly disparage the Fed.

That said, as is apparent, things can change in a hurry. And while the White House might not need Fed cooperation now, it will later, with lower interest rates, if its plan to reset the economy is to succeed.

An action taken late on Tuesday is again raising the question of Trump's authority to dismiss Fed officials. Trump fired the two Democratic commissioners on the Federal Trade Commission (ironically a body where the policy gap between the last two administrations is not vast). It's a firing that likely will be litigated all the way to the Supreme Court, where there's an obvious precedent - the 1935 ruling in which President Franklin D. Roosevelt's firing of FTC commissioner William Humphrey was ruled to be illegal.

"We are most interested in what this means for the president's power over Federal Reserve Chair Jerome Powell and the Fed governors. Our view is that the Supreme Court is likely to overturn Trump's action against the FTC commissioners as the Supreme Court has previously limited the ability of a president to remove commissioners at will. We would expect that precedent to hold, which would then eliminate the threat to the Federal Reserve," said Jaret Seiberg, managing director of Washington Research Group and TD Cowen's financial services policy analyst.

But this is a Trump-friendly Supreme Court, so what if it ruled with him? Seiberg still says it wouldn't be a precedent for getting rid of Fed officials since the U.S. Constitution expressly grants to Congress the power to coin money and regulate it. "It is why we believe the Fed's monetary policy functions are a delegation of legislative power rather than of executive branch power. This limits, in our view, the president's power to remove officials," he said.

Also note that the White House already has seen a similar legal case over a firing go against it, when a district judge reinstated Gwynne Wilcox to the National Labor Relations Board.

Another analyst, Evercore ISI's Sarah Bianchi, takes the analysis further in a separate piece wondering if Trump would be willing to defy a Supreme Court order. She notes the Trump administration has stepped closer to the line of outright defiance of court orders by having planes carry deportees around the same time a district court judge was determining the lawfulness of the action. Trump's subsequent call for the judge's impeachment led to Supreme Court Chief Justice John Roberts' admonishment that appeals rather than impeachment is the appropriate response to a disagreement concerning a judicial decision.

Bianchi points out other Trump nominees have implied the president doesn't have to follow every ruling. Trump's solicitor general nominee, John Sauer, testified that "generally" a direct court order "should" be followed. His nominee to head the Office of Legal Policy, Aaron Reitz, said there was "no hard and fast rule" as to when disobedience with a court order would be appropriate.

Bianchi notes the markets have generally shown a willingness to shrug off what she called an erosion of legal and political norms. She says markets may care more if Trump were to defy an order on a fundamentally economic or commercial issue, particularly if it's significant enough. "Given the number of cases against the Trump Administration and the speed at which they are moving, there will likely be multiple near-term opportunities to test the markets resolve on this issue," she says.

The market

U.S. stock futures (ES00) (NQ00) inched higher, after a slump in the S&P 500 SPX on Monday.

   Key asset performance                                                 Last       5d      1m       YTD     1y 
   S&P 500                                                               5614.66    0.76%   -8.40%   -4.54%  8.42% 
   Nasdaq Composite                                                      17,504.12  0.39%   -12.66%  -9.36%  8.27% 
   10-year Treasury                                                      4.292      -2.30   -24.60   -28.40  1.60 
   Gold                                                                  3039.4     3.26%   3.04%    15.16%  38.81% 
   Oil                                                                   66.33      -2.01%  -8.04%   -7.71%  -18.55% 
   Data: MarketWatch. Treasury yields change expressed in basis points. 

The buzz

The Fed decision is due at 2 p.m. Eastern, along with a summary of economic projections that's not expected to show any change in the median assessment of the year-end interest rate. Powell's press conference starts at 2:30 p.m.

There are earnings on tap from Signet Jewelers $(SIG)$, Williams-Sonoma $(WSM)$ and General Mills $(GIS)$.

The Turkish lira plunged after the main rival to President Recep Tayyip Erdogan was arrested.

Tesla $(TSLA)$ was granted a ride-hail permit by the California Public Utilities Commission, a first step to launching a robotaxi service.

Best of the web

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The chart

Germany's Bundestag on Tuesday approved a massive fiscal stimulus. UBS strategists led by Bhanu Baweja say Europe's planned fiscal spending boost will give a tailwind of between 0.6% and 0.8% of GDP in 2026 and 2027, compared to this year 0.3% drag. All that said, Europe's fiscal deficit will still be about half of that of the U.S.

Top tickers

Here were the most active stock market tickers on MarketWatch as of 6 a.m. Eastern.

   Ticker  Security name 
   TSLA    Tesla 
   NVDA    Nvidia 
   GME     GameStop 
   PLTR    Palantir Technologies 
   TSM     Taiwan Semiconductor Manufacturing 
   NIO     Nio 
   AAPL    Apple 
   HOLO    MicroCloud Hologram 
   SMCI    Super Micro Computer 
   AMZN    Amazon.com 

Random reads

A 'fish doorbell' has turned into an unlikely online hit.

Three men have been convicted for stealing a gold toilet called America in Winston Churchill's childhood home.

An actual wild goose chase: Emergency services sent out a helicopter and a vessel to help out two swimmers in distress that were actually geese.

-Steve Goldstein

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(END) Dow Jones Newswires

March 19, 2025 06:35 ET (10:35 GMT)

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