Trump removes Fed Governor Lisa Cook. – The Daily Tearsheet

Vital Statistics:

Stocks are flattish this morning on no real news. Bonds and MBS are flat.

New Home Sales fell marginally to a seasonally-adjusted annual rate of 652,000. This was down about 8% compared to a year ago. The median home price fell on a monthly and annual basis to $403,800. The median sales price of new homes has been in a downward trend for the past 3 years.

The downward trend is evident despite the builders using mortgage equity buy-downs to entice buyers while maintaining comps. Home price appreciation is flattening, as are asking rents. I feel like a broken record, but shelter inflation (which was the big driver of the post-pandemic surge) is about to go from inflationary to disinflationary. Some of the tariff-driven inflation will be offset by shelter disinflation. This won’t affect the consumer all that much, but it will affect the inflation indices.

Donald Trump is removing Fed Governor Lisa Cook for cause, citing mortgage fraud. FHFA Director Bill Pulte said that he found she had claimed two properties as primary residences in different states. She attested both were primary residences in applications two weeks apart. “I have determined that there is sufficient cause to remove you from your position,” Trump wrote in a letter to Cook posted on social media on Monday night. He had indicated on Friday that he would fire her if she didn’t resign. She responded with: “I have no intention of being bullied to step down from my position because of some questions raised in a tweet.”

I am not sure if Cook intends to fight this or litigate it. The move does raise questions regarding the independence of the Fed, and it isn’t the best look. I don’t see how it would affect monetary policy either – in fact it could backfire – but unless other members of the Fed have the same issue, they should be safe.

The economy continued to grow below trend in July, according to the Chicago Fed National Activity Index. The CFNAI is sort of a meta-index of leading and lagging economic indicators. The index went negative in April and has stayed there since.

Durable goods orders fell 2.8% last month. If you strip out the volatile transportation orders, they rose 1.1%, which was better than Street expectations. Capital Goods orders also increased, which means businesses are making capital expenditures again.

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Please reach out to brent@thedailytearsheet.com