For one hour, investors got a taste of a new world where the Fed is run by a ‘stooge’—and they hated every minute of it

Photo: (Original Caption) President Nixon, in a nationally televised address 8/15, asks for support against "those who would exploit Watergate in order to keep us from doing what we were elected to do." He also proclaimed his innocence of any complicity in the affair. Nixon posed for still photographers after the address, as no pictures were permitted during the telecast.

• Markets dropped sharply yesterday after reports suggested President Trump might fire Fed Chair Jerome Powell, but quickly rebounded when Trump downplayed the idea. The global markets remain buoyant this morning. The episode underscored how sensitive Wall Street is to threats against Fed independence. Nonetheless, Goldman Sachs, Deutsche Bank, and UBS all published notes assessing what would happen if Trump appointed a “stooge.”

The markets got a taste yesterday of what it would be like if President Trump fired U.S. Federal Reserve Chair Jerome Powell—and they threw up. The S&P 500 lost 0.6% and the Nasdaq declined 0.8% during the brief period between when reports suggested Trump would fire Powell, and later, when Trump insisted he was not going to do so.