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WTF Dailies August 26, 2025

Trump, in a post on Truth Social late Monday night, has claimed to fire Federal Reserve Governor Lisa Cook. The announcement follows a week of threats against Cook surrounding allegations of mortgage fraud

Sage Kakkat

25 Aug 2025 — 7 min read

US stock futures slipped following Trump's announcement he has removed Fed governor Lisa Cook.
Trump, in a post on Truth Social late Monday night, has claimed to fire Federal Reserve Governor Lisa Cook. The announcement follows a week of threats against Cook surrounding allegations of mortgage fraud. Markets have reacted with reticence, going into a holding pattern overnight while the dollar dropped.
President Trump met with South Korea President Lee Jae Myung on Monday, but no changes were made to a trade deal between the countries that sets a 15% tariff on imports. Details of new investments in the US began to circulate after the meeting, however, with Korean Air announcing the purchase of 103 Boeing (BA) airplanes.
Now, Wall Street is bracing for Nvidia earnings, which land Wednesday after the bell. Expectations for its results are sky-high, with the company's stock up almost 34% so far this year, even as restrictions on chip sales to China have possibly cost the company billions. Nvidia's results will also serve as a litmus test for Big Tech since the industry's eye-popping investments in AI have started to convince investors to look elsewhere.
Finally, the latest release of the Fed's preferred inflation gauge, the Personal Consumption Expenditures (PCE) index, arrives Friday.
Most Asian stocks retreated on Tuesday as a rally on optimism over U.S. interest rate cuts ran dry, while investors remained averse to technology shares in anticipation of key earnings from Nvidia.
Chinese shares stalled after rallying to multi-year highs on Monday, while Japanese stocks hovered below record highs. Losses in commodity stocks also weighed on Australian markets.
Asian markets tracked a drop in Wall Street futures as U.S. President Donald Trump’s abrupt firing of Federal Reserve Governor Lisa Cook sparked concerns over the Fed’s independence.
China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rose about 0.1% each. The CSI 300 remained close to a three-year high, while the Shanghai Composite hovered below its highest level in nearly a decade.
Hong Kong’s Hang Seng index fell 0.2% from a near four-year high.
Chinese markets rallied sharply through August amid increasing expectations that Beijing will dole out more economic relief, in particular measures aimed at boosting consumption and supporting local industries.
Chinese tech stocks were a major part of this rally, with chipmakers buoyed by Beijing promoting locally-made chips while scrutinizing offerings from Nvidia.
HSBC analysts said in a recent note that they expected Chinese stocks to continue outperforming this year, and also hiked their year-end targets for Chinese bourses.
Japanese and South Korean markets logged the biggest losses among their Asian peers on Tuesday. The Nikkei 225 and TOPIX indexes lost around 0.9% each, while the KOSPI shed 1%.
Both regions were pressured by losses in tech stocks, as investors locked-in some profits in the sector ahead of key earnings from NVIDIA Corporation (NASDAQ:NVDA), which are due on Wednesday.
Nvidia’s earnings come amid some growing doubts over the long-term prospects of artificial intelligence– doubts that had battered tech stocks over the past week. Nvidia is largely considered as a bellwether for AI and tech demand, with any signs of earnings weakness likely to trigger more losses in tech.
Broader Asian markets fell on Tuesday. Australia’s ASX 200 index shed 0.6% on losses in mining stocks, after iron ore major Fortescue Metals Group Ltd (ASX:FMG) clocked dismal annual earnings. The stock shed 1.6%, while bigger peers BHP Group Ltd (ASX:BHP) and Rio Tinto Ltd (ASX:RIO) fell about 0.5% apiece.
Singapore’s Straits Times index fell 0.3%.
India’s Nifty 50 index fell 0.7% in morning trade, with local markets set for some headwinds this week as Trump’s August 27-28 deadline for 50% tariffs on New Delhi approaches.
Trump’s tariffs are aimed at curbing India’s purchases of Russian oil. But any disruptions in Indian oil supplies present dire headwinds for the South Asian economy, given its large dependence on oil imports.

Market Close

Longer-dated U.S. government bonds sold off and the dollar weakened against every developed market currency following news overnight that President Trump has moved to fire Federal Reserve Governor Lisa Cook. The 30-year Treasury yield was up 2 basis points (0.02%), in contrast to a rally across shorter-dated bonds after a well-received auction for 2-year notes. Following today's price action, the gap between the 5-year and 30-year government bond yield is now at its widest since 2021, as the yield curve steepens. The impact in equity markets was more muted, with the major large-cap benchmark indexes moving higher, helped by strong performance from NVIDIA ahead of its earnings report tomorrow.
The Russell 2000 small-cap index meanwhile was the best performer, adding to signs of a broadening in market leadership over recent weeks.
WTI oil prices moved lower, albeit at $63 per barrel these remain steady in their recent $60-$65 range.
President Trump announced on social media last night that he would remove Fed Governor Cook from the seven-member Board of Governors due to alleged mortgage fraud. Governor Cook has indicated that she will challenge this move in the courts, setting up a potentially lengthy legal battle. The outcome of this case is uncertain, with a recent Supreme Court ruling seemingly limiting the ability of the president to remove senior officials at the Fed, and it is not clear as to whether the allegations meet the threshold of a "for cause" removal of a governor. If successful, the president would have the opportunity to nominate another candidate to the Fed board, in what could be viewed as continuing his bid to reshape the FOMC in a more dovish direction, following repeated calls for the central bank to lower interest rates substantially. Importantly, if any appointment is made before February 2026, the new governor will have a vote in confirming, or not, the terms of the 12 regional Fed presidents, opening the door to a potentially even larger shift in the composition of the FOMC. Against this backdrop, markets are seemingly pricing in some risk that an increase in politicization of the central bank could lead to lower-than-appropriate interest rates in the short term and drive higher inflation and interest rates over the long term.
There were some encouraging signals from this morning's U.S. durable goods report, which suggest that businesses continue to invest despite significant trade-policy uncertainty. Headline durable goods orders were down sharply in June, but capital goods orders excluding volatile defense and aircraft spending were up a robust 1.1% month-over-month (m/m), with this indicator a useful proxy for business equipment investment. By contrast, the news from the housing market remains more downbeat, with both the FHFA and S&P measures of U.S. house prices registering declines over June.
Households more generally appear to remain downbeat on the economic outlook, with the Conference Board's survey of consumer confidence down in August, hurt by concerns over tariffs, the labor market, and potential price increases. This week's personal consumption expenditure report will help give us a better sense on how household income, spending, and the Fed's preferred measure of inflation are evolving over the summer.

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