UBS On-Air: Market Moves UBS On-Air: Paul Donovan Daily Audio 'The dangers of being surprised'
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Jul 17, 2025 Tensions rise as the U.S. President aims to reshape the media narrative, spotlighting concerns over the autonomy of the Federal Reserve. The discussion delves into how social media affects public sentiment and investor confidence in central banking. Additionally, trade taxes are examined for their role in inflation and consumer spending, highlighting how tariffs challenge America's competitiveness in global markets. It's a deep dive into political maneuvering and economic repercussions that could shake the financial landscape.
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Rule of Law Crucial for Fed Credibility
- Trump's surprise at Powell's appointment raises concerns about presidential judgment and respect for the rule of law.
- Rule of law is vital for a reserve currency's credibility and impacts investor confidence when legal norms seem flexible.
Independence Key to Inflation Control
- Politicizing the Federal Reserve threatens decades of inflation control successes tied to central bank independence.
- Investors fear Fed chairs who serve as political mouthpieces rather than independent policy makers.
Tariffs' Inflation Impact Considered
- Lower proposed tariffs (10-15%) on foreign products might reflect concerns about raising US inflation too much.
- Consumers may maintain spending by using credit despite price pressures from tariffs.