- The markets this morning: The VIX fear index remains elevated. Bitcoin is up 1% to $88K. Asian markets were up marginally or flat. Stocks in Europe lost 0.3% this morning in early trading. Futures contracts for the S&P 500 were up 1% this morning premarket, suggesting some investors think yesterday’s crash — the S&P 500 was down 2.4% yesterday after President Trump attacked Fed Chair Jerome Powell — might be oversold.
Stocks: The Dow, S&P 500, and the Nasdaq all lost more than 2% yesterday after President Trump renewed his attacks on U.S. Federal Reserve chair Jerome Powell. The president previously called for Powell to go, but yesterday called him “Mr. Too Late, a major loser.” Gold hit record highs, though the dollar fell to a three-year low.
Analysts expressed a high degree of nervousness at the prospect that Powell might be replaced by someone who would give Trump more direct political control over the Fed, which has operated U.S. monetary policy independently from the White House since the 1970s.
If Trump actually fired Powell, the loss of confidence in the U.S. generally — its government, its asset market, and its economy — would be catastrophic, argues the FT’s Robert Armstrong. That’s why he believes it is unlikely that Trump will do the deed. Analysts disagree, however. Some put its chances at 50/50. The betting markets have the odds at 26% (Kalshi) and 21% (Polymarket).
There was a selloff in the bond markets, too. The yield on the 10-year Treasury rose 0.02% to 4.43%; the yield on the 30-year went up 0.02% to 4.93%. Among the sellers were Japanese pension funds and banks, which ditched $20 billion worth, the FT reported.
The dollar’s decline continued. It’s now down 9.4% against the DXY index of foreign currencies.
Here’s a snapshot of today’s action across global indexes:
- The VIX is at 32.25, up 9%.
- Bitcoin is at $88,464.31, up 1%.
- S&P 500 futures are at $5,236.25, up 1% this morning. The S&P itself sits at 5,158.20.
- Hong Kong’s Hang Seng was up 0.78% today.
- China’s SSE was up 0.25%.
- India’s Nifty 50 was up 0.17%.
- Japan’s Topix was up 0.13%.
- The Stoxx Europe 600 was down 0.32% in early trading.
- The U.K.’s FTSE 100 was up 0.36% in early trading.
“Equity market destruction of epic proportions”: The Bespoke Investment Group sent a note to clients that said it all. “The S&P 500 is now down 14.5% since President Trump was sworn in for his second term. The 14.5% drop for the S&P is by far the biggest decline the index has seen three months into a Presidential term since 1928. … We’re truly dealing with equity market destruction of epic proportions since the President re-took office.”
Wall Street analysts continue to revise downward their prospects for GDP growth in the U.S. Henry H. McVey, KKR’s head of global macro, balance sheet & risk, published a note that said with the assumption of 10% tariffs across the board, “Our base case now has GDP growth in the U.S. running at 0.5-1.5%, compared to our quantitative GDP model of 2.9% (which does not include tariffs). DOGE likely drags down growth by 60 basis points, while tariffs reduce growth by 1.5-2.0%. As offsets to these headwinds, however, we do expect the Trump administration to push extremely hard on both tax reform and further deregulation in the near-term.”
