Episode summary
Fed Served With DOJ Subpoenas; Powell Vows to Stand Firm
Bloomberg Surveillance
· · 12 min · Guests: Thierry Wizman, Michael McKee
Summary
The conversation centered on Jerome Powell’s warning that DOJ subpoenas tied to Fed headquarters renovations are part of a broader campaign against central bank independence. The guest argued that the real issue is structural: the White House responds to short-term political incentives, while the Fed is designed to balance unemployment and inflation without that bias. On that reading, the pressure on Powell matters because it tests whether interest-rate decisions will continue to be driven by evidence and economic conditions rather than intimidation.
The guest said the market reaction looked restrained because investors had already been acclimating to the idea that Donald Trump wanted to remove Powell and reshape the Fed’s direction. Even so, the guest said the move fits a more inflationary backdrop, which helps explain why bond yields at the back end of the curve could rise. The host and guest also discussed whether Powell might stay on as a board member after his chairmanship ends, with the guest suggesting that could expose him to more legal risk.
They also pushed back on the idea that the Trump administration is confronting an abjectly weak economy. The guest pointed to strong productivity and growth, while acknowledging soft job creation and strain on low-income households. A New York City nurses strike was cited as a reminder that labor unrest can have broader economic consequences when health care workers are unable to work.
Key takeaways
- The guest said Fed independence matters because the White House and the Fed have different reaction functions, especially on inflation.
- The guest argued the DOJ subpoenas fit an existing effort to pressure Powell, so markets were already partly prepared for the news.
- The guest said bond yields rising at the back end of the curve makes sense if policy becomes more structurally inflationary.
- The guest said the economy is not abjectly poor, citing strong productivity growth and decent overall growth despite weak hiring.
- The guest warned that low-income households remain the key vulnerability because debt and real wages are still under pressure.
Notable quotes
“We're talking about the structural independence of the Fed, not independence based on a time and and place”
“the White House tends to put more emphasis on what the electorate wants to see in the short term, especially in key election years”
“this is just the latest step in an arc of events. We kind of knew already that President Trump wanted to get rid of of of Jay Powell”
“I don't think this is an abjectly poor economy. There are certain things in the economy are actually going quite well”
How the episode opens
Well, I think the broader question here is why is independence important? Not why is independence important at a particular point in time? We're talking about the structural independence of the Fed, not independence based on a time and and place.
And I think independence of the Fed is important because we believe or at least and certainly academics have shown through their research implicitly that the White House and the executive branch have a different reaction function than the Federal Reserve. In other words, the White House tends to put more emphasis on what the electorate wants to see in the short term, especially in key election years, let's say. And the premise here is that the White House's reaction function, if it's driven by what the electorate want, is going to put more weight on driving growth, on reducing unemployment and on keeping mortgage yields low, more so than it would worry about inflation.
The Fed, on the other hand, has a dual mandate, which is much more balanced, which is much more symmetric. In fact, that's encoded in in the law than it should pertain to ranking on unemployment and inflation without a bias in the way that the White House might have. That's the key behind the need to preserve independence, because if you believe that inflation should be a weighty matter for policymakers, then let's keep the White House away from policy.
Alexis dragging it from 1951 to 2026. So much of this is still about coming off the pandemic and where are we coming off of COVID? Yeah, I mean, I think that's a great question.
And now, of course, we're looking at a new year with a new Fed chairman going to take over whoever that might be come May 15th. I'm wondering if Powell will be inclined to want to stay on it in any capacity after what's happened now, because he's able to write legally.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- fed subpoenas
- jerome powell statement
- trump administration feud
- rate cuts expectations
- us dollar and gold moves
Companies and tickers mentioned
- Macquarie Group
Watch the episode
Watch “Fed Served With DOJ Subpoenas; Powell Vows to Stand Firm” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
More from Bloomberg Surveillance
-
Stocks Rise as Inflation Data Ease Fed-Hike Worry | Bloomberg Surveillance -
Bloomberg Surveillance TV: November 13th, 2026 | Bloomberg Surveillance -
Bloomberg Surveillance TV: November 12th, 2026 | Bloomberg Surveillance -
Jensen Huang Ousted by Nvidia Board as CEO | Bloomberg Surveillance -
Bloomberg Surveillance TV: November 11th, 2026 | Bloomberg Surveillance -
AI Stocks Rebound as Fed Hike Bets Return | Bloomberg Surveillance
Bloomberg Surveillance, this episode and its artwork belong to Bloomberg. Octagon is not affiliated with the show; this page is an independent summary.
