Yesterday was the best example of a summer session we’ve seen this summer. The market moved higher, primarily driven by muscle memory, influenced by growth sectors.

But late in the session, a canvas of green turned red, as midcap sectors all turned lower.

The Shadow Fed?

One of the most incredible runs in radio history was that of the crime fighter known as “The Shadow.” The show debuted in 1930 and ran until 1954.

For months now, there has been talk of President Trump appointing a shadow Federal Reserve chair, who could effectively set policy, as Jay Powell would be rendered a lame duck. I think it’s a great idea in many respects, including putting to rest the nonstop scuttlebutt of Powell’s imminent firing.

My theory has been that it hasn’t been done yet because the top candidate is doing such a bang-up job as Treasury Secretary, he couldn’t be lured away. However, I have long maintained that the Federal Reserve needs to be reformed and restructured with the primary goal of serving the best interests of Main Street, not Wall Street.

Yesterday, Scott Bessent made a similar and ominous comment: "What we need to do is examine the entire Federal Reserve institution and whether they have been successful... All those Ph. D.s over there, I don't know what they do... This is like Universal Basic Income for academic economists."

Now, the chatter is focused on the Fed reform, beginning with DOGE-like housecleaning. The Federal Reserve has seen its employment numbers rocket higher, while other large federal agencies have experienced declines in employment.

When you consider the size of the Fed and its lack of accountability, it seems more like a city-state, such as Sparta, than a government agency (in part because it is not).

Bond yields continue to drift lower, so maybe the market isn’t alarmed and might welcome “The Shadow.”

Today’s Session

The market remains calm, cool, and collected, having gone 18 sessions in a row without going up or down more than 1.0%. 

I cannot say that for the “experts.”

As the bandwagon of folks saying Powell should resign is filling up, and more are not Trump supporters. The mavens are losing it.

They are now up in arms about the so-called Fed independence. None of them are asking households paying higher credit card fees or young adults giving up on the American Dream of homeownership.

I love when they (the experts) say the Fed lowering rates will unjustly help rich people – look around rich people have fared very well with “restrictive policy.”

Lots of earnings out today and it gets hotter the rest of the week.

Comments

I agree with Bessent and your comments on Bessent. The Fed is out of control and needs a significant overhaul. 400 academics trying to make a decision is insane. Powell needs to go Your show today was awesome, especially Judy Shelton. Tom Hall, Phoenix Tom Hall, Phoenx, AZ on 7/22/2025 9:46:16 PM

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