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If Trump actually fires Powell, expect chaos. That’s the blunt warning from Wall Street analysts, legal professionals, and even some people close to the White House. A new research note from Wolfe Research lays it out clearly: “This would be a mess.” Markets will crash, yields will spike, and the U.S. will lose credibility overnight. There’s no elegant way to spin it; kicking Powell out before his term ends would light a match under the whole economy. On Wednesday morning, things looked shaky for the Fed Chair after a senior White House official told CNBC that Trump told Republican lawmakers at dinner the night before that he’d likely fire Powell “soon.” That was the plan. But by the afternoon, Trump pulled a 180 in front of reporters. “We’re not planning on doing it,” he said. Then, as usual, he left the door wide open: “I don’t rule out anything… but I think it’s highly unlikely, unless he has to leave for fraud.” Analysts say markets would tank and lawsuits would follow Wolfe Research’s Tobin Marcus and Chutong Zhu said the firing would almost certainly trigger an equity selloff and push long-term bond yields up sharply. Why? Because it’d signal that the Fed isn’t independent anymore, and investors hate that. The legal fight would be immediate. If Trump tried to force Powell out, the Fed Chair would likely sue. Wolfe Research said as much: “If Trump moves to actually fire Powell rather than just pressure him to resign, Powell would presumably sue to stop it.” They also raised the possibility that Powell might be temporarily sidelined during the court fight. In other words, even if he ends up winning, the markets would still have to operate without a Fed Chair for months. This wouldn’t be Trump’s first battle against the heads…

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Filed under: News - @ July 17, 2025 1:26 pm