Is Lisa Cooked?

By Molly Schwartz, cross-asset macro strategist at Rabobank

Yesterday, the lawsuit against Trump over his attempts to remove her. The rest of the Governing Board, including Chair Powell, were also named in the suit, though they are “being sued only to the extent that they are able to effectuate President Trump’s purported termination of Governor Cook.”

Whether Cook is guilty or not, there are clear political incentives for Trump to fire her. As it stands, Trump has two Governors, Waller and Bowman, ready and willing to vouch for cuts if it means it will get them on the short list for Fed Chair. Meanwhile, Stephen Miran is on deck to replace Kugler, who stepped down shortly after the July FOMC decision. With Cook still employed, Trump sympathizers are capped at a 3-4 minority. If Trump can stack the Fed with another pick of his own to replace Cook and pull in a sympathetic outsider to act as Fed Chair when Powell steps down, Trump would achieve a 5-2 majority on the Board in 2026.

But before Miran can step into Kugler’s shoes, he must be confirmed by the Senate. Yesterday, Miran testified before the Senate Banking Committee, making his case for confirmation. According to Senator Moreno, Miran is already ahead, having confirmed that Miran has “never lied on a mortgage application.” Miran made sure to emphasize his commitment to Fed independence in his paper published in March of 2024. In the article, Miran (and Katz) take aim at Chicago Fed President Austan Goolsbee, indirectly referring to him as a “Biden campaign surrogate.” While complimenting Goolsbee’s talents as an economist, Miran and Katz went so far as to argue that “to pretend that one can easily shift between highly political and allegedly nonpolitical roles without letting political biases inform policy is, at best, naïve – and, at worst, sinister.”

While perhaps a tad melodramatic, it’s an unfortunate position for Miran to be in the hot seat and have his own words spun back at him by Elizabeth Warren. But question remains if Miran is the exception to his own rule.

Across the Atlantic, NATO’s Prioritized Ukraine Requirements List (PURL) initiative, agreed upon in July of this year, which helps to supply Ukraine with American weapons.

In an absence of data yesterday on the Eastern Hemisphere, we once again turn our focus back to the United States. Yesterday morning, ADP employment data registered only 54k payrolls added to the economy, down from 104k the month prior, for the fifth sub-100k print year-to-date. This was followed by similarly weak data in ISM services employment at 46.5, fueling the ever-increasing likelihood of a Fed cut at the September meeting. Surprisingly enough, despite slipping yields, USD was still the strongest performing G10 currency. We also saw economic activity data from south of the U.S. border, suggesting continued economic lethargy in Mexico as gross fixed investment contracted at a rate of 6.4% year-over-year and 1.4% month-over-month in June. Meanwhile, the Canadian trade balance, which registered its deepest deficit in April, has shown some improvement in July, with the deficit creeping back up to “only” -$C 4.94 billion, which is at least better than the April 2020 deficit.