Updated July 16, 2025
Powell to Punch Out? A New Twist in the White House-Fed Saga
Powell to Punch Out? A New Twist in the White House-Fed Saga
Powell to Punch Out? A New Twist in the White House-Fed Saga
Joseph Gradante, CEO
The Macroscope
Powell to Punch Out? A New Twist in the White House-Fed Saga.
FHFA Director Bill Pulte posted on X that he was “encouraged by reports that Jerome Powell is considering resigning.”
No credible sources back up the statement
As President Trump exerts more pressure on Fed Chair Powell, we offer three potential macro scenarios for investors to weigh
For months on end, President Trump has berated Fed Chair Jerome Powell on social media and in front of the White House press corps. Name-calling has become the norm, and insults are fired off left and right without much reaction from markets.
The president has made it clear that he wants the leader of the central bank to lower interest rates to supposedly reduce the nation’s cost of debt. There’s much debate about how markets would react to sharp easing, and, as of now, just a few cuts are priced into the next 12 months.
But someone new has entered the chat: Bill Pulte, Federal Housing Finance Agency (FHFA) Chair and head of Fannie Mae and Freddie Mac. On Friday, July 11, the Trump appointee posted on X that Powell was reportedly “considering resigning,” adding, “I think this will be the right decision for America, and the economy will boom.”
The Market Shakes Off Pulte’s X Post
Source: X
A shocker of a statement from a key player in the housing market. How did markets respond? With a whimper.
The S&P 500 barely nudged in the lazy summer afternoon of trading, while the bond market also largely dismissed the uncorroborated conjecture. Trading arenas are the go-to source when headlines like this pop up; the Kalshi online prediction market moved a bit, but not dramatically so.
Before Pulte’s attention-grabbing statement, bettors pinned a 10-15% chance to Powell resigning before the end of 2025. After he hit the post button on X, it ticked up to 15-20%. Following a few days of digestion, there remained just an implied one-in-five chance that Powell would punch out by December 31.
A 1-in-5 Chance that Powell Exits in 2025, Little Changed in Recent Weeks
Source: Kalshi
So, that’s that, right? Nothing to see here? Perhaps.
But it’s yet another brick in the wall of the ongoing tirade from the administration toward the steadfast Fed chief. In the days after the peculiar post, Deutsche Bank's head of FX research, George Saravelos, described a premature vacancy at the Fed’s helm as “one of the largest underpriced event risks over the coming months.”
Earlier this year, we gamed out what Powell’s final year as Fed chairman might look like, and drama has indeed been building. But with rate cuts coming closer into view and would-be successors vying for consideration in front of the public and President Trump, could Saravelos be right? Is a black swan macro event increasingly possible? Let’s parse the sources and credibility from Pulte’s assertion and consider potential market outcomes.
Who Is Pulte & What’s His Motive?
Pulte has repeatedly called for Powell’s resignation and accused him of mismanaging monetary policy and Fed resources. The FHFA director has been a vocal critic of Powell and has largely supported the president’s efforts to pressure the central bank to cut interest rates.
Markets were ho-hum about the statement on X because no one else emerged to back it up. If there had been a clear source or less partisan officials to support Pulte’s claim, then we would have seen volatility. As it stands, Powell has repeatedly said that he intends to serve out the remainder of his term as chair, through May 15, 2026. After that, he could stay on as a governor, but that may be unlikely given historical precedent and Trump’s apparent disdain toward him.
The Friday afternoon social post garnered no independent confirmation from the mainstream media over the ensuing weekend, which further threw shade on Pulte’s quote. Moreover, the Kalshi prediction market hovered at similar levels to where it traded in the weeks leading up to the eyebrow-raising take.
So, why did he float the notion that Powell wants out? It’s anybody's guess, but perhaps Pulte seeks to curry favor with Trump, or he may simply be on the president’s side and wishes for better days in the beleaguered housing market. The real estate space has been among the hardest hit areas in the economy since the Powell-led Fed began lifting rates in March of 2022.
NAHB Homebuilder Sentiment Index: Housing Market Vibes in Turmoil
Source: Trading Economics
If the name “Pulte” sounds familiar, it should. The 37-year-old businessman is the grandson of William J. Pulte, the founder of PulteGroup (PHM), a $23 billion market cap US homebuilder, based in Atlanta, GA.
Confirmed by the Senate for his current role in March 2025, the director founded Pulte Capital Partners in 2011. Needless to say, he has clear ties to the housing industry. A real estate man, just like the president, he would likely welcome lower interest rates with open arms.
The Fed Holds as Other Central Banks Slash Rates
Source: Goldman Sachs
Macro Investors: Why This Matters
At this point, it all makes for a Wall Street soap opera. “As the Fed Turns,” or “Days of our Rates,” might be the storyline.
There’s a clear trend at play that all investors must acknowledge: The next Fed chair is likely to be in line with President Trump. That may mean accelerated interest rate cuts beginning in Q2 2026, even if Powell holds fast to his current role through its duration.
Pulte’s public outcry is another exercise in coercing the Federal Open Market Committee (FOMC), namely Powell, to conduct monetary policy in a certain way. To be clear, the Fed should probably err toward easing given the state of the softening labor market and the years-long real estate struggle.
Powell has cited uncertainty around tariffs as being the primary driver for a “wait-and-see" approach to interest rate policy; as the year unfolds, we should have more clarity on that front, resulting in a resumption of the Fed’s cutting cycle.
The “Wait-and-See" Fed as Tariff Risks Weigh
Source: Google
Zooming out, the trend of less central bank independence is a macro risk. The belief that the US monetary policy authority acts on its own from the executive branch and is not influenced by fiscal matters makes it different from less-stable emerging market nations. If that confidence is shaken, an interest-rate premium could be factored into the Treasury market, making the cost of debt higher for all prospective borrowers.
The US dollar could also be at risk. Fading Fed independence may cause global investors to flock to gold, bitcoin, or other developed-market currencies. Considering that precious metals and cryptocurrencies are having another banner year, that perception might already be turning into reality.
Our view is that it pays to be globally diversified and hold a dynamic macro portfolio. We believe in enduring American exceptionalism and have an optimistic view of what the economy will look like as President Trump’s policies become reality. Still, amid all the media headlines and chaos, we acknowledge that powerful macro forces are reshaping the global geopolitical construct. Yesterday’s buy-and-hold mindset simply won’t do.
2025 to date: Gold, Bitcoin, S&P 500, 10-Year Treasury All Up. Dollar Down.
Source: Finviz
Muted Mid-Year Asset Class Volatility
Source: Bloomberg
Assessing the Probability & Base Case
Successful traders often employ strategies that involve careful analysis and calculated risk-taking. That’s not to say that they throw caution to the wind and “put it all on red.”
Quite the opposite. They think in bets, constantly analyzing probabilities to put the odds in their favor. They are also sure not to fall victim to what’s known in behavioral finance parlance as “base-rate neglect,” a bias in which individuals tend to ignore the probability of a broad event occurring in favor of more specific, more compelling stories about how it all shakes out.
Case in point, the next leader at the Fed. Before Pulte’s message, there was a 10-15% chance that Powell would exit his post by year's end. It’s not much changed after, increasing by just a handful of percentage points. So, while there’s a material chance that Powell is gone by December 31, the base case has not shifted much.
Speaking of probabilities, the betting market is growing louder about one potential outcome: No appointment announcement by December 31. Polymarket, another online betting site, shows that the collective wisdom of the crowd pins a 36% chance that we won’t even have a new name in 2025. Meanwhile, the leading contenders to be the 17th chair of the Federal Reserve are:
Kevin Hassett, Director of the National Economic Council
Scott Bessent, Secretary of the Treasury
Kevin Warsh, former member of the Federal Reserve Board of Governors, serving from 2006 to 2011
Chris Waller, current member of the Federal Reserve Board of Governors since 2020 (nominated by President Trump)
Hassett, Bessent, and Warsh lead on Polymarket, with Waller trailing. As we have detailed on the Allio Macro Calendar blog, Waller is the lone outspoken dove on the FOMC. His colleague, Michelle Bowman, Vice Chair of Fed Supervision, has also come out in favor of faster rate cuts, suggesting that she may be vying for Powell’s job once his term is up.
Who Will It Be? Will a “Shadow” Fed Chair Emerge?
Source: Polymarket
Slashing the policy rate too soon, no matter who is in charge at the Fed, may have unintended consequences. We have written about the shape of the yield curve and the consensus assumption that fast rate cuts could cause the short-term rate to, of course, drop, but longer-term rates (those off which mortgages are priced) may jump.
Such an outcome would work to the detriment of not only the housing industry but the economy as a whole. The US national debt is knocking on $40 trillion’s door, and if rates 10 years out and beyond eclipse 5%, the fiscal situation could deteriorate quickly.
US Public Debt Soaring
Source: BofA Global Research
A steady, prudent monetary-policy hand is the surest way to bring down interest rates safely. We think the current Treasury Secretary would be an effective Fed chair. He has real-world portfolio management experience, a proven (though brief) track record of professionalism and dealmaking in his current seat, and grasps that markets provide valuable signals in the face of so much media and macro noise. If Bessent is tapped, President Trump must appoint another stand-out candidate to lead the Treasury, however.
Do you have a perspective? Consider investing with us. We strive to adapt to today’s rapidly changing macroeconomic environment.
The Fed HQ Controversy: Fueling the Fire
As if there weren’t enough drama, the Trump administration brought out a new line of attacks on “too-late” Powell: supposed mismanagement of a multi-year renovation at the Federal Reserve’s offices. With a price tag approaching $2.5 billion, critics have dubbed it the “Fed palace.”
Powell to Blame for a Mismanaged Reno?
Source: Fox Business
White House watchdogs have taken a bite out of Powell’s professional and steadfast reputation, accusing him of lying to Congress over cost overruns with the rehab project. Powell insisted that no marble, VIP dining, or rooftop gardens were in the final design, but planning documents suggested otherwise.
Even if there turns out to be a legal cause for Powell’s dismissal in this matter (which is highly unlikely), President Trump reiterated in mid-July that he will not fire him.
Scenarios & How to Position
But let’s put don our screenwriter hat, with a macro feather affixed to it. How might asset classes respond to three scenarios: Powell stays, Powell resigns, and a false-alarm moment that rocks the global economy?
Scenario 1: Powell Serves His Full Term (Likely)
There’s, call it, an 80% chance that it’s status quo. Powell, while being the target of Trump’s verbal abuse, continues to perform his duties as Fed chief.
The policy rate probably drops later this year (based on Fed Funds futures), depending on tariffs, macro trends, and other factors. Volatility possibly stays muted, and the stock and bond markets may enjoy more second-half gains.
Scenario 2: Powell Resigns (Unlikely)
The Treasury yield curve is most at risk should Powell resign and be replaced with an activist seeking to drop the policy rate. It’s not a slam dunk that such a dove would be effective in bringing down short-term yields, though. They must get the majority of the FOMC on their side, and that’s a tough ask given the Committee’s makeup today.
Still, the yield curve would potentially steepen, and the value of the US dollar could decline. Stocks may initially struggle as bond vigilantes come out of the woodwork should long-term rates spike.
Scenario 3: Monetary Policy Panic Amid Uncertainty (Quite Unlikely)
The opportunistic investor yearns for the third scenario—heightened volatility amid an extreme lack of clarity at the US central bank. That might come about if President Trump changes his mind and actively seeks to fire Powell by any means necessary.
The Volatility Index (VIX) could spike, and stocks might plunge, much like they did shortly after Liberation Day. Buying that dip could be lucrative, but timing it well might also be perilous.
Asset/Area | If Powell Stays (Base Case) | If Powell Resigns |
Interest Rates | Flat to mild cuts by late Q4 | Cuts possible sooner/steeper shallow curve |
Stocks | Risk‑on but cautious | Volatility Initially |
Dollar | Stable or slightly stronger | Weakens if rate expectations fall |
Treasuries | Mild yield compression on easing outlook | Sharp rally in front‑end; curve steepening |
Gold & Crypto | A consolidation of YTD gains | Potential rally in gold, immediate selloff in bitcoin |
Inflation data | Monitored closely as drivers of cuts | Market may front‑run a central bank pivot |
The Bottom Line
The financial Twittersphere is ripe with rumors, speculation, and noise; our goal is to provide you with the macro reality while thoughtfully gaming out possible outcomes. It does not appear that Powell will abandon his post any time soon, while the chance of Trump firing the Fed chair is also slim.
Histrionics, hearsay, and hyperbole are likely to occur in the months ahead. And markets are fine with that. The S&P 500 is near record highs, while the bond market steadies itself after a tumultuous period following Liberation Day.
Investors must hold fast to what’s actually happening and not buy into media narratives. Markets may be noisy, but powerful forces drive them, like inflation, interest rates, and global trends. Our ALTITUDE AI technology is designed to adapt portfolios in real-time, with the aim of helping investors of all experience levels manage risk more effectively.
Powell to Punch Out? A New Twist in the White House-Fed Saga.
FHFA Director Bill Pulte posted on X that he was “encouraged by reports that Jerome Powell is considering resigning.”
No credible sources back up the statement
As President Trump exerts more pressure on Fed Chair Powell, we offer three potential macro scenarios for investors to weigh
For months on end, President Trump has berated Fed Chair Jerome Powell on social media and in front of the White House press corps. Name-calling has become the norm, and insults are fired off left and right without much reaction from markets.
The president has made it clear that he wants the leader of the central bank to lower interest rates to supposedly reduce the nation’s cost of debt. There’s much debate about how markets would react to sharp easing, and, as of now, just a few cuts are priced into the next 12 months.
But someone new has entered the chat: Bill Pulte, Federal Housing Finance Agency (FHFA) Chair and head of Fannie Mae and Freddie Mac. On Friday, July 11, the Trump appointee posted on X that Powell was reportedly “considering resigning,” adding, “I think this will be the right decision for America, and the economy will boom.”
The Market Shakes Off Pulte’s X Post
Source: X
A shocker of a statement from a key player in the housing market. How did markets respond? With a whimper.
The S&P 500 barely nudged in the lazy summer afternoon of trading, while the bond market also largely dismissed the uncorroborated conjecture. Trading arenas are the go-to source when headlines like this pop up; the Kalshi online prediction market moved a bit, but not dramatically so.
Before Pulte’s attention-grabbing statement, bettors pinned a 10-15% chance to Powell resigning before the end of 2025. After he hit the post button on X, it ticked up to 15-20%. Following a few days of digestion, there remained just an implied one-in-five chance that Powell would punch out by December 31.
A 1-in-5 Chance that Powell Exits in 2025, Little Changed in Recent Weeks
Source: Kalshi
So, that’s that, right? Nothing to see here? Perhaps.
But it’s yet another brick in the wall of the ongoing tirade from the administration toward the steadfast Fed chief. In the days after the peculiar post, Deutsche Bank's head of FX research, George Saravelos, described a premature vacancy at the Fed’s helm as “one of the largest underpriced event risks over the coming months.”
Earlier this year, we gamed out what Powell’s final year as Fed chairman might look like, and drama has indeed been building. But with rate cuts coming closer into view and would-be successors vying for consideration in front of the public and President Trump, could Saravelos be right? Is a black swan macro event increasingly possible? Let’s parse the sources and credibility from Pulte’s assertion and consider potential market outcomes.
Who Is Pulte & What’s His Motive?
Pulte has repeatedly called for Powell’s resignation and accused him of mismanaging monetary policy and Fed resources. The FHFA director has been a vocal critic of Powell and has largely supported the president’s efforts to pressure the central bank to cut interest rates.
Markets were ho-hum about the statement on X because no one else emerged to back it up. If there had been a clear source or less partisan officials to support Pulte’s claim, then we would have seen volatility. As it stands, Powell has repeatedly said that he intends to serve out the remainder of his term as chair, through May 15, 2026. After that, he could stay on as a governor, but that may be unlikely given historical precedent and Trump’s apparent disdain toward him.
The Friday afternoon social post garnered no independent confirmation from the mainstream media over the ensuing weekend, which further threw shade on Pulte’s quote. Moreover, the Kalshi prediction market hovered at similar levels to where it traded in the weeks leading up to the eyebrow-raising take.
So, why did he float the notion that Powell wants out? It’s anybody's guess, but perhaps Pulte seeks to curry favor with Trump, or he may simply be on the president’s side and wishes for better days in the beleaguered housing market. The real estate space has been among the hardest hit areas in the economy since the Powell-led Fed began lifting rates in March of 2022.
NAHB Homebuilder Sentiment Index: Housing Market Vibes in Turmoil
Source: Trading Economics
If the name “Pulte” sounds familiar, it should. The 37-year-old businessman is the grandson of William J. Pulte, the founder of PulteGroup (PHM), a $23 billion market cap US homebuilder, based in Atlanta, GA.
Confirmed by the Senate for his current role in March 2025, the director founded Pulte Capital Partners in 2011. Needless to say, he has clear ties to the housing industry. A real estate man, just like the president, he would likely welcome lower interest rates with open arms.
The Fed Holds as Other Central Banks Slash Rates
Source: Goldman Sachs
Macro Investors: Why This Matters
At this point, it all makes for a Wall Street soap opera. “As the Fed Turns,” or “Days of our Rates,” might be the storyline.
There’s a clear trend at play that all investors must acknowledge: The next Fed chair is likely to be in line with President Trump. That may mean accelerated interest rate cuts beginning in Q2 2026, even if Powell holds fast to his current role through its duration.
Pulte’s public outcry is another exercise in coercing the Federal Open Market Committee (FOMC), namely Powell, to conduct monetary policy in a certain way. To be clear, the Fed should probably err toward easing given the state of the softening labor market and the years-long real estate struggle.
Powell has cited uncertainty around tariffs as being the primary driver for a “wait-and-see" approach to interest rate policy; as the year unfolds, we should have more clarity on that front, resulting in a resumption of the Fed’s cutting cycle.
The “Wait-and-See" Fed as Tariff Risks Weigh
Source: Google
Zooming out, the trend of less central bank independence is a macro risk. The belief that the US monetary policy authority acts on its own from the executive branch and is not influenced by fiscal matters makes it different from less-stable emerging market nations. If that confidence is shaken, an interest-rate premium could be factored into the Treasury market, making the cost of debt higher for all prospective borrowers.
The US dollar could also be at risk. Fading Fed independence may cause global investors to flock to gold, bitcoin, or other developed-market currencies. Considering that precious metals and cryptocurrencies are having another banner year, that perception might already be turning into reality.
Our view is that it pays to be globally diversified and hold a dynamic macro portfolio. We believe in enduring American exceptionalism and have an optimistic view of what the economy will look like as President Trump’s policies become reality. Still, amid all the media headlines and chaos, we acknowledge that powerful macro forces are reshaping the global geopolitical construct. Yesterday’s buy-and-hold mindset simply won’t do.
2025 to date: Gold, Bitcoin, S&P 500, 10-Year Treasury All Up. Dollar Down.
Source: Finviz
Muted Mid-Year Asset Class Volatility
Source: Bloomberg
Assessing the Probability & Base Case
Successful traders often employ strategies that involve careful analysis and calculated risk-taking. That’s not to say that they throw caution to the wind and “put it all on red.”
Quite the opposite. They think in bets, constantly analyzing probabilities to put the odds in their favor. They are also sure not to fall victim to what’s known in behavioral finance parlance as “base-rate neglect,” a bias in which individuals tend to ignore the probability of a broad event occurring in favor of more specific, more compelling stories about how it all shakes out.
Case in point, the next leader at the Fed. Before Pulte’s message, there was a 10-15% chance that Powell would exit his post by year's end. It’s not much changed after, increasing by just a handful of percentage points. So, while there’s a material chance that Powell is gone by December 31, the base case has not shifted much.
Speaking of probabilities, the betting market is growing louder about one potential outcome: No appointment announcement by December 31. Polymarket, another online betting site, shows that the collective wisdom of the crowd pins a 36% chance that we won’t even have a new name in 2025. Meanwhile, the leading contenders to be the 17th chair of the Federal Reserve are:
Kevin Hassett, Director of the National Economic Council
Scott Bessent, Secretary of the Treasury
Kevin Warsh, former member of the Federal Reserve Board of Governors, serving from 2006 to 2011
Chris Waller, current member of the Federal Reserve Board of Governors since 2020 (nominated by President Trump)
Hassett, Bessent, and Warsh lead on Polymarket, with Waller trailing. As we have detailed on the Allio Macro Calendar blog, Waller is the lone outspoken dove on the FOMC. His colleague, Michelle Bowman, Vice Chair of Fed Supervision, has also come out in favor of faster rate cuts, suggesting that she may be vying for Powell’s job once his term is up.
Who Will It Be? Will a “Shadow” Fed Chair Emerge?
Source: Polymarket
Slashing the policy rate too soon, no matter who is in charge at the Fed, may have unintended consequences. We have written about the shape of the yield curve and the consensus assumption that fast rate cuts could cause the short-term rate to, of course, drop, but longer-term rates (those off which mortgages are priced) may jump.
Such an outcome would work to the detriment of not only the housing industry but the economy as a whole. The US national debt is knocking on $40 trillion’s door, and if rates 10 years out and beyond eclipse 5%, the fiscal situation could deteriorate quickly.
US Public Debt Soaring
Source: BofA Global Research
A steady, prudent monetary-policy hand is the surest way to bring down interest rates safely. We think the current Treasury Secretary would be an effective Fed chair. He has real-world portfolio management experience, a proven (though brief) track record of professionalism and dealmaking in his current seat, and grasps that markets provide valuable signals in the face of so much media and macro noise. If Bessent is tapped, President Trump must appoint another stand-out candidate to lead the Treasury, however.
Do you have a perspective? Consider investing with us. We strive to adapt to today’s rapidly changing macroeconomic environment.
The Fed HQ Controversy: Fueling the Fire
As if there weren’t enough drama, the Trump administration brought out a new line of attacks on “too-late” Powell: supposed mismanagement of a multi-year renovation at the Federal Reserve’s offices. With a price tag approaching $2.5 billion, critics have dubbed it the “Fed palace.”
Powell to Blame for a Mismanaged Reno?
Source: Fox Business
White House watchdogs have taken a bite out of Powell’s professional and steadfast reputation, accusing him of lying to Congress over cost overruns with the rehab project. Powell insisted that no marble, VIP dining, or rooftop gardens were in the final design, but planning documents suggested otherwise.
Even if there turns out to be a legal cause for Powell’s dismissal in this matter (which is highly unlikely), President Trump reiterated in mid-July that he will not fire him.
Scenarios & How to Position
But let’s put don our screenwriter hat, with a macro feather affixed to it. How might asset classes respond to three scenarios: Powell stays, Powell resigns, and a false-alarm moment that rocks the global economy?
Scenario 1: Powell Serves His Full Term (Likely)
There’s, call it, an 80% chance that it’s status quo. Powell, while being the target of Trump’s verbal abuse, continues to perform his duties as Fed chief.
The policy rate probably drops later this year (based on Fed Funds futures), depending on tariffs, macro trends, and other factors. Volatility possibly stays muted, and the stock and bond markets may enjoy more second-half gains.
Scenario 2: Powell Resigns (Unlikely)
The Treasury yield curve is most at risk should Powell resign and be replaced with an activist seeking to drop the policy rate. It’s not a slam dunk that such a dove would be effective in bringing down short-term yields, though. They must get the majority of the FOMC on their side, and that’s a tough ask given the Committee’s makeup today.
Still, the yield curve would potentially steepen, and the value of the US dollar could decline. Stocks may initially struggle as bond vigilantes come out of the woodwork should long-term rates spike.
Scenario 3: Monetary Policy Panic Amid Uncertainty (Quite Unlikely)
The opportunistic investor yearns for the third scenario—heightened volatility amid an extreme lack of clarity at the US central bank. That might come about if President Trump changes his mind and actively seeks to fire Powell by any means necessary.
The Volatility Index (VIX) could spike, and stocks might plunge, much like they did shortly after Liberation Day. Buying that dip could be lucrative, but timing it well might also be perilous.
Asset/Area | If Powell Stays (Base Case) | If Powell Resigns |
Interest Rates | Flat to mild cuts by late Q4 | Cuts possible sooner/steeper shallow curve |
Stocks | Risk‑on but cautious | Volatility Initially |
Dollar | Stable or slightly stronger | Weakens if rate expectations fall |
Treasuries | Mild yield compression on easing outlook | Sharp rally in front‑end; curve steepening |
Gold & Crypto | A consolidation of YTD gains | Potential rally in gold, immediate selloff in bitcoin |
Inflation data | Monitored closely as drivers of cuts | Market may front‑run a central bank pivot |
The Bottom Line
The financial Twittersphere is ripe with rumors, speculation, and noise; our goal is to provide you with the macro reality while thoughtfully gaming out possible outcomes. It does not appear that Powell will abandon his post any time soon, while the chance of Trump firing the Fed chair is also slim.
Histrionics, hearsay, and hyperbole are likely to occur in the months ahead. And markets are fine with that. The S&P 500 is near record highs, while the bond market steadies itself after a tumultuous period following Liberation Day.
Investors must hold fast to what’s actually happening and not buy into media narratives. Markets may be noisy, but powerful forces drive them, like inflation, interest rates, and global trends. Our ALTITUDE AI technology is designed to adapt portfolios in real-time, with the aim of helping investors of all experience levels manage risk more effectively.
Powell to Punch Out? A New Twist in the White House-Fed Saga.
FHFA Director Bill Pulte posted on X that he was “encouraged by reports that Jerome Powell is considering resigning.”
No credible sources back up the statement
As President Trump exerts more pressure on Fed Chair Powell, we offer three potential macro scenarios for investors to weigh
For months on end, President Trump has berated Fed Chair Jerome Powell on social media and in front of the White House press corps. Name-calling has become the norm, and insults are fired off left and right without much reaction from markets.
The president has made it clear that he wants the leader of the central bank to lower interest rates to supposedly reduce the nation’s cost of debt. There’s much debate about how markets would react to sharp easing, and, as of now, just a few cuts are priced into the next 12 months.
But someone new has entered the chat: Bill Pulte, Federal Housing Finance Agency (FHFA) Chair and head of Fannie Mae and Freddie Mac. On Friday, July 11, the Trump appointee posted on X that Powell was reportedly “considering resigning,” adding, “I think this will be the right decision for America, and the economy will boom.”
The Market Shakes Off Pulte’s X Post
Source: X
A shocker of a statement from a key player in the housing market. How did markets respond? With a whimper.
The S&P 500 barely nudged in the lazy summer afternoon of trading, while the bond market also largely dismissed the uncorroborated conjecture. Trading arenas are the go-to source when headlines like this pop up; the Kalshi online prediction market moved a bit, but not dramatically so.
Before Pulte’s attention-grabbing statement, bettors pinned a 10-15% chance to Powell resigning before the end of 2025. After he hit the post button on X, it ticked up to 15-20%. Following a few days of digestion, there remained just an implied one-in-five chance that Powell would punch out by December 31.
A 1-in-5 Chance that Powell Exits in 2025, Little Changed in Recent Weeks
Source: Kalshi
So, that’s that, right? Nothing to see here? Perhaps.
But it’s yet another brick in the wall of the ongoing tirade from the administration toward the steadfast Fed chief. In the days after the peculiar post, Deutsche Bank's head of FX research, George Saravelos, described a premature vacancy at the Fed’s helm as “one of the largest underpriced event risks over the coming months.”
Earlier this year, we gamed out what Powell’s final year as Fed chairman might look like, and drama has indeed been building. But with rate cuts coming closer into view and would-be successors vying for consideration in front of the public and President Trump, could Saravelos be right? Is a black swan macro event increasingly possible? Let’s parse the sources and credibility from Pulte’s assertion and consider potential market outcomes.
Who Is Pulte & What’s His Motive?
Pulte has repeatedly called for Powell’s resignation and accused him of mismanaging monetary policy and Fed resources. The FHFA director has been a vocal critic of Powell and has largely supported the president’s efforts to pressure the central bank to cut interest rates.
Markets were ho-hum about the statement on X because no one else emerged to back it up. If there had been a clear source or less partisan officials to support Pulte’s claim, then we would have seen volatility. As it stands, Powell has repeatedly said that he intends to serve out the remainder of his term as chair, through May 15, 2026. After that, he could stay on as a governor, but that may be unlikely given historical precedent and Trump’s apparent disdain toward him.
The Friday afternoon social post garnered no independent confirmation from the mainstream media over the ensuing weekend, which further threw shade on Pulte’s quote. Moreover, the Kalshi prediction market hovered at similar levels to where it traded in the weeks leading up to the eyebrow-raising take.
So, why did he float the notion that Powell wants out? It’s anybody's guess, but perhaps Pulte seeks to curry favor with Trump, or he may simply be on the president’s side and wishes for better days in the beleaguered housing market. The real estate space has been among the hardest hit areas in the economy since the Powell-led Fed began lifting rates in March of 2022.
NAHB Homebuilder Sentiment Index: Housing Market Vibes in Turmoil
Source: Trading Economics
If the name “Pulte” sounds familiar, it should. The 37-year-old businessman is the grandson of William J. Pulte, the founder of PulteGroup (PHM), a $23 billion market cap US homebuilder, based in Atlanta, GA.
Confirmed by the Senate for his current role in March 2025, the director founded Pulte Capital Partners in 2011. Needless to say, he has clear ties to the housing industry. A real estate man, just like the president, he would likely welcome lower interest rates with open arms.
The Fed Holds as Other Central Banks Slash Rates
Source: Goldman Sachs
Macro Investors: Why This Matters
At this point, it all makes for a Wall Street soap opera. “As the Fed Turns,” or “Days of our Rates,” might be the storyline.
There’s a clear trend at play that all investors must acknowledge: The next Fed chair is likely to be in line with President Trump. That may mean accelerated interest rate cuts beginning in Q2 2026, even if Powell holds fast to his current role through its duration.
Pulte’s public outcry is another exercise in coercing the Federal Open Market Committee (FOMC), namely Powell, to conduct monetary policy in a certain way. To be clear, the Fed should probably err toward easing given the state of the softening labor market and the years-long real estate struggle.
Powell has cited uncertainty around tariffs as being the primary driver for a “wait-and-see" approach to interest rate policy; as the year unfolds, we should have more clarity on that front, resulting in a resumption of the Fed’s cutting cycle.
The “Wait-and-See" Fed as Tariff Risks Weigh
Source: Google
Zooming out, the trend of less central bank independence is a macro risk. The belief that the US monetary policy authority acts on its own from the executive branch and is not influenced by fiscal matters makes it different from less-stable emerging market nations. If that confidence is shaken, an interest-rate premium could be factored into the Treasury market, making the cost of debt higher for all prospective borrowers.
The US dollar could also be at risk. Fading Fed independence may cause global investors to flock to gold, bitcoin, or other developed-market currencies. Considering that precious metals and cryptocurrencies are having another banner year, that perception might already be turning into reality.
Our view is that it pays to be globally diversified and hold a dynamic macro portfolio. We believe in enduring American exceptionalism and have an optimistic view of what the economy will look like as President Trump’s policies become reality. Still, amid all the media headlines and chaos, we acknowledge that powerful macro forces are reshaping the global geopolitical construct. Yesterday’s buy-and-hold mindset simply won’t do.
2025 to date: Gold, Bitcoin, S&P 500, 10-Year Treasury All Up. Dollar Down.
Source: Finviz
Muted Mid-Year Asset Class Volatility
Source: Bloomberg
Assessing the Probability & Base Case
Successful traders often employ strategies that involve careful analysis and calculated risk-taking. That’s not to say that they throw caution to the wind and “put it all on red.”
Quite the opposite. They think in bets, constantly analyzing probabilities to put the odds in their favor. They are also sure not to fall victim to what’s known in behavioral finance parlance as “base-rate neglect,” a bias in which individuals tend to ignore the probability of a broad event occurring in favor of more specific, more compelling stories about how it all shakes out.
Case in point, the next leader at the Fed. Before Pulte’s message, there was a 10-15% chance that Powell would exit his post by year's end. It’s not much changed after, increasing by just a handful of percentage points. So, while there’s a material chance that Powell is gone by December 31, the base case has not shifted much.
Speaking of probabilities, the betting market is growing louder about one potential outcome: No appointment announcement by December 31. Polymarket, another online betting site, shows that the collective wisdom of the crowd pins a 36% chance that we won’t even have a new name in 2025. Meanwhile, the leading contenders to be the 17th chair of the Federal Reserve are:
Kevin Hassett, Director of the National Economic Council
Scott Bessent, Secretary of the Treasury
Kevin Warsh, former member of the Federal Reserve Board of Governors, serving from 2006 to 2011
Chris Waller, current member of the Federal Reserve Board of Governors since 2020 (nominated by President Trump)
Hassett, Bessent, and Warsh lead on Polymarket, with Waller trailing. As we have detailed on the Allio Macro Calendar blog, Waller is the lone outspoken dove on the FOMC. His colleague, Michelle Bowman, Vice Chair of Fed Supervision, has also come out in favor of faster rate cuts, suggesting that she may be vying for Powell’s job once his term is up.
Who Will It Be? Will a “Shadow” Fed Chair Emerge?
Source: Polymarket
Slashing the policy rate too soon, no matter who is in charge at the Fed, may have unintended consequences. We have written about the shape of the yield curve and the consensus assumption that fast rate cuts could cause the short-term rate to, of course, drop, but longer-term rates (those off which mortgages are priced) may jump.
Such an outcome would work to the detriment of not only the housing industry but the economy as a whole. The US national debt is knocking on $40 trillion’s door, and if rates 10 years out and beyond eclipse 5%, the fiscal situation could deteriorate quickly.
US Public Debt Soaring
Source: BofA Global Research
A steady, prudent monetary-policy hand is the surest way to bring down interest rates safely. We think the current Treasury Secretary would be an effective Fed chair. He has real-world portfolio management experience, a proven (though brief) track record of professionalism and dealmaking in his current seat, and grasps that markets provide valuable signals in the face of so much media and macro noise. If Bessent is tapped, President Trump must appoint another stand-out candidate to lead the Treasury, however.
Do you have a perspective? Consider investing with us. We strive to adapt to today’s rapidly changing macroeconomic environment.
The Fed HQ Controversy: Fueling the Fire
As if there weren’t enough drama, the Trump administration brought out a new line of attacks on “too-late” Powell: supposed mismanagement of a multi-year renovation at the Federal Reserve’s offices. With a price tag approaching $2.5 billion, critics have dubbed it the “Fed palace.”
Powell to Blame for a Mismanaged Reno?
Source: Fox Business
White House watchdogs have taken a bite out of Powell’s professional and steadfast reputation, accusing him of lying to Congress over cost overruns with the rehab project. Powell insisted that no marble, VIP dining, or rooftop gardens were in the final design, but planning documents suggested otherwise.
Even if there turns out to be a legal cause for Powell’s dismissal in this matter (which is highly unlikely), President Trump reiterated in mid-July that he will not fire him.
Scenarios & How to Position
But let’s put don our screenwriter hat, with a macro feather affixed to it. How might asset classes respond to three scenarios: Powell stays, Powell resigns, and a false-alarm moment that rocks the global economy?
Scenario 1: Powell Serves His Full Term (Likely)
There’s, call it, an 80% chance that it’s status quo. Powell, while being the target of Trump’s verbal abuse, continues to perform his duties as Fed chief.
The policy rate probably drops later this year (based on Fed Funds futures), depending on tariffs, macro trends, and other factors. Volatility possibly stays muted, and the stock and bond markets may enjoy more second-half gains.
Scenario 2: Powell Resigns (Unlikely)
The Treasury yield curve is most at risk should Powell resign and be replaced with an activist seeking to drop the policy rate. It’s not a slam dunk that such a dove would be effective in bringing down short-term yields, though. They must get the majority of the FOMC on their side, and that’s a tough ask given the Committee’s makeup today.
Still, the yield curve would potentially steepen, and the value of the US dollar could decline. Stocks may initially struggle as bond vigilantes come out of the woodwork should long-term rates spike.
Scenario 3: Monetary Policy Panic Amid Uncertainty (Quite Unlikely)
The opportunistic investor yearns for the third scenario—heightened volatility amid an extreme lack of clarity at the US central bank. That might come about if President Trump changes his mind and actively seeks to fire Powell by any means necessary.
The Volatility Index (VIX) could spike, and stocks might plunge, much like they did shortly after Liberation Day. Buying that dip could be lucrative, but timing it well might also be perilous.
Asset/Area | If Powell Stays (Base Case) | If Powell Resigns |
Interest Rates | Flat to mild cuts by late Q4 | Cuts possible sooner/steeper shallow curve |
Stocks | Risk‑on but cautious | Volatility Initially |
Dollar | Stable or slightly stronger | Weakens if rate expectations fall |
Treasuries | Mild yield compression on easing outlook | Sharp rally in front‑end; curve steepening |
Gold & Crypto | A consolidation of YTD gains | Potential rally in gold, immediate selloff in bitcoin |
Inflation data | Monitored closely as drivers of cuts | Market may front‑run a central bank pivot |
The Bottom Line
The financial Twittersphere is ripe with rumors, speculation, and noise; our goal is to provide you with the macro reality while thoughtfully gaming out possible outcomes. It does not appear that Powell will abandon his post any time soon, while the chance of Trump firing the Fed chair is also slim.
Histrionics, hearsay, and hyperbole are likely to occur in the months ahead. And markets are fine with that. The S&P 500 is near record highs, while the bond market steadies itself after a tumultuous period following Liberation Day.
Investors must hold fast to what’s actually happening and not buy into media narratives. Markets may be noisy, but powerful forces drive them, like inflation, interest rates, and global trends. Our ALTITUDE AI technology is designed to adapt portfolios in real-time, with the aim of helping investors of all experience levels manage risk more effectively.
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