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Investing.com-- U.S. President Donald Trump is likely to face barriers in firing top-level staff in the country’s trade commission and Federal Reserve, TD Cowen analysts said in a late-Tuesday note.
Trump on Tuesday fired both Democratic commissioners at the Federal Trade Commission- Alvaro Bedoya and Rebecca Slaughter- sparking concerns over the independence of regulatory agencies under his administration.
This fueled some concerns that Trump could overhaul the leadership at the Fed, especially amid growing calls from the President for lower interest rates.
But TD analysts said they believed the Supreme Court would reverse Trump’s FTC firings, and even if that were not to be the case, that the Fed has constitutional protections against such actions.
“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,” TD analysts wrote.
But they flagged a greater concern over the precedent set by Trump, stating that administrations after Trump could use these powers to enact “wild swings” in policy, which would in turn discourage investment in the U.S. economy due to uncertainty over policy.
“Trump is pushing this to new levels that we believe may over the long term have as much downside risk as upside potential,” TD analysts said.
They noted that while past administrations have enacted some policies to confirm their nominations for federal roles, their moves have been relatively limited in scope.
The Fed has flagged few plans to reduce interest rates in the near-term, much to the chagrin of Trump, who is seeking to boost U.S. economic growth- with lower rates set to further this agenda.
Trump had appointed current Fed Chair Jerome Powell during his first term, but has clashed with the Chair in recent years.
Powell has signaled that the Fed will remain independent from the White House, and that he plans to serve the remainder of his tenure until May 2026.