Trump says he will not try to replace Fed's Powell

Published On Dec 8, 2024, 9:46 AM

Donald Trump, the president-elect, stated in a recent interview that he does not plan to replace Federal Reserve Chair Jerome Powell when he takes office in January. Despite previous criticisms and tensions between them, Trump acknowledged Powell's legal protections under the law that prevent premature dismissal. Trump's focus on lowering mortgage rates and potential tariffs could put him at odds with Powell's policies, especially as traders expect the Fed to cut interest rates soon. This dynamic could lead to significant impacts in interest-sensitive sectors and markets.

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Stock Forecasts

XHBView XHB chart on TradingView

Positive

The potential for interest rate cuts by the Federal Reserve, coupled with Trump's focus on lowering borrowing costs, suggests a favorable environment for real estate and mortgage-related investments. Additionally, Trump's tariffs might affect sectors reliant on imports, particularly manufacturing and consumer goods.

KBEView KBE chart on TradingView

Negative

Investors should be cautious of financials, particularly banks, which may experience pressure on their margins if interest rates fall. However, a lower interest rate environment could stimulate borrowing and consumer spending in the housing market, benefiting ETFs focused on real estate.

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