Donald Trump may have no time for Europe, but he is full of admiration for the European Central Bank.
The US President watched with envy as it slashed its key interest rate by a quarter of a percentage point to 2.25 per cent – the seventh cut this year.
Trump’s response was to demand the termination of Jay Powell’s stewardship of the Federal Reserve, the US central bank.
He is enormously frustrated at the Fed’s unbending ways with the president of the New York Fed John Williams at the operational arm of the organisation, insisting there was no need to change the benchmark federal funds rate, standing at 4.25 per cent to 4.50 per cent, ‘any time soon’.
The White House and the Fed are engaged in a battle. The more Trump insists on a rate cut the more determined the US central bank is to preserve its independence.
The President’s right to fire the head of independent institutions is being deliberated by the Supreme Court.
Outrage: US President Donald Trump’s has demanded the ‘termination’ of Jay Powell’s stewardship of the Federal Reserve, the US central bank
Should Trump decide to end Powell’s reign before it runs its course next year, market mayhem could become madness. If it were for not the constitutional issues, Trump might achieve his goal of nudging down rates.
The International Monetary Fund managing director Kristalina Georgieva has said next week’s World Economic Outlook report will include ‘notable markdowns’ of growth, but not recession.
The Fed has a mandate to support employment, as well as tame inflation, which means under regular circumstances it ought to be cutting rates to head off a slump. The first 100 days of Trump have been anything but normal.
Private grief
There is predictable outrage in the US over the Trump request to the Internal Revenue Service that it revoke the tax-free status of Harvard. This is in addition to the freeze of $2.26billion (£1.7billion) of multiyear grants.
The reasoning is overtly political. He doesn’t much like the pusillanimous way in which America’s elite college is dealing with anti-Semitism.
In tackling a private educational institution’s tax status, he is taking a leaf out of the Keir Starmer and Rachel Reeves playbook. Almost lost within the £40billion of tax increases in Reeves’s Budget was the £1.5billion hit to public, private and special needs schools from the end of an exemption to 20 per cent VAT. An extra £70million also will be raised from loss of business rate breaks.
The attack on Harvard looks political, but so was Labour’s assault on what it regards as privileged education.
In Harvard’s case it seems a heavy blow. However, donations mean it sits on endowment funds of $53billion (£40billion).
Much of the cash is ring-fenced to support professorships and research. Imagine what the UK’s great science universities could do with that.
All is not lost. Harvard researchers are whingeing over the fact that some of the government grants for innovation have been frozen. What a brilliant opportunity this is for Britain to reverse the tech and bioscience brain drain.
Lost causes
Britain’s pioneering fintech group Worldpay, pre-dating Revolut, Monzo and others, has been on a dizzying journey since it was spun out of Royal Bank of Scotland for £2billion in 2010.
Fattened up by private equity, it floated on the London Stock Exchange for £6bn five years later. After being merged with US rival Vantiv it was sold to Florida-based FIS for an astonishing £33billion in 2019.
Now it is on the move again – to Global Payments for £18bn as part of a complex asset swap.
The journey from Edinburgh to the S&P 500 is a parable of our times, showing how wasteful the UK has been in cultivating home-grown tech.
The investment challenge, if the UK is ever to become an AI high-tech superpower, is overwhelming.
Happy hols
I arrived in the office yesterday to find a delicious-looking hot cross bun on my desk. As it is Passover, season of unleavened bread for Jewish communities, I resisted the temptation.
It was, however, a reminder to wish loyal City readers a great weekend and a break from Trump-driven, market havoc.
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This article was originally published by a www.dailymail.co.uk . Read the Original article here. .