Newscasts - Market Talk: Trump's move to oust Cook an effort to influence Fed

First Citizens BancShares

26/08/2025 22:05

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Source: 'Reuters - Business videos'

Description: Nancy Tengler, CEO and chief investment officer of Laffer Tengler Investments, said U.S. President Donald Trump is "playing his cards out very clearly" by attempting to fire Federal Reserve Governor Lisa Cook just weeks before the central bank's next policy meeting. Lisa Bernhard has more.

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Video Transcript:

President Trump deepens his fight with the Fed. Nancy Tengler of Laffer Tengler Investments joins us. Nancy, in a rather unprecedented move, President Trump is threatening to fire Fed Governor Lisa Cook. It's interesting timing because of course, or it's pretty critical timing because, of course, the Fed policy meeting is coming up in September, the Fed is expected to resume rate cuts. As an investor who's obviously closely following Fed policy, Fed independence, what is your take on this whole situation?

Yes, Lisa, thanks. That's a great question. I'm probably going to alienate people on both sides of the aisle with my answer, but I think what we've had under Fed Chairman Powell is a number of compliance and trading issues that occurred a couple of years back. And so, it showed a lack of oversight, in my view. Now we have a situation where if true, it's a pretty serious error of omission to try to claim to primary residence. We don't know if it's true. And so, I guess I would say that if it is true, I think the President is within his rights, but it would seem to me even better if the Fed Chairman would step up or Lisa Cook would take herself out of the mix because this is distracting to the markets. It's not necessarily, I know a lot of people are conflating this issue with Fed independence, but if there was fraud committed, I don't think and particularly in an environment where you are held to a much higher standard and your ethics really go unchecked. I would say, I'd rather see the problem get fixed and worry about the politics later.

If Trump were able to replace her with somebody who maybe, for lack of a better word, a bit more of a loyalist, I mean, do you see that as affecting Fed policy?

Yes, I do. And I think it puts the Fed presidents at risk, some of whom, by the way, should be at risk. And we only have to go back as far as Silicon Valley Bank to kind of wonder why no one was held accountable for that at the Fed in oversight and regulatory matters. But that said, it will probably be bullish for equities because markets like free money, cheap money, and that's going to be the assumption that the market's going to make, and it'll probably create volatility in the bond market. So, we're staying pretty short and waiting for some of this to settle out.

To play a little bit of devil's advocate, do you see the timing of this as particularly interesting and also when some people are saying that she was vetted by Congress before she got presumably by the Biden administration and Congress before she got this position. So, you would think that something like this might have come up. So, what do you think?

Yes, I mean, I think everything the President has been doing lately is interesting, and maybe we'll talk a little bit more about some of the other things. But I'll say this. I interviewed for a position at the Fed. I was wholly unqualified. They ask you right up front if you have anything to disclose. So, this would have been something that should have been disclosed in the background check. Somebody missed something if, in fact, this is true. It may not be true. And yes, I think he is playing his cards out very clearly. He wants to have influence over the Fed. He is not the first President to do so. I'm not condoning it, but he likely won't be the last President let's also remember that the Fed independence goes two ways, and Chairman Powell should be very concerned about the institution if this based on previous trading problems with other governors that resigned, and now this.

So right now, the stock market is fairly muted. What do you make of the stock market reaction and of the bond market reaction today in terms of what it expects?

Yes, I mean, I think it's a little uncomfortable. And we've had movements around all of the Fed policies that we've seen over the last five years, where the Fed Chairman has pivoted. He said one thing at one time, he waited too long. He didn't wait long enough in last fall. And so, I think these things end up getting kind of smoothed out over time. And I think what you have today is the hedge funds in trading around the headlines. And we even saw that yesterday in the stock market. So, this will soon be in the rearview mirror, in my view, Lisa.

Trump is also signaling that perhaps the federal government will take stakes in other companies like it took a stake in Intel and set up a revenue sharing, not revenue sharing, but taking some revenue from NVIDIA, the major chipmaker, and AMD. What do you think this means? Now today, let me backtrack a little bit also, Commerce Secretary Howard Lutnick is saying that perhaps this will also come to fruition with some defense contractors like Boeing and Lockheed Martin, or even Palantir big AI powerhouse. So, what do you think this means for those companies and their shareholders, you may be one of them going forward?

Yes, well, I don't like it one bit. Let's just start with Intel. So, we've got money that was passed in legislation and granted to Intel. Now the government is rewriting the terms of that, saying, no, we want equity for that, diluting existing shareholders who have gone through enough pain over the last 10 years and then adding in warrants that will further dilute shareholders if in fact they exercise the warrants. I was alive and paying attention when we bailed out Chrysler, not so much the first time in 1979 under Jimmy Carter. That was a $1.5 billion loan bailout, which was a lot of money back then. But then again in April of 2009, once again, the company had to declare bankruptcy and be bailed out. So, it doesn't work very well. The government does not have a good track record of picking winners and losers or even being involved in private sector and frankly has no business in doing so. So as a shareholder, I'm concerned because we do own some of those names. This export tax is the same thing with NVIDIA and AMD, having to pay 15% of sales to China. And I don't think any of it, Lisa, is constitutional. So, this thing will probably be it'll happen in the near term and then be fought out in the courts over the medium to long term.