Straight Talk

June 30, 2025

Five Things You Missed This Week

1. The Shadow Fed Chairman.

President Trump continues attempting to bully Fed Chair Jerome Powell into cutting interest rates sooner rather than later. Now, he has floated the idea of naming Powell’s eventual successor early. Powell’s term ends in May 2026; naming a successor early could undermine his sway within financial markets. Nevertheless, Treasury Secretary Timothy Bessent, National Economic Council Director Kevin Hassett and current Fed Governor Christopher Waller all reportedly have gained consideration as Powell’s possible successor. In the meantime, if evidence that tariffs are triggering higher inflation does not appear in June consumer price data released in a few weeks, the possibility the Fed will cut rates in July will increase – as it arguably should.

2. The Parliamentarian.

President Trump’s One Big Beautiful Bill hit a snag last week in the form of Senate Parliamentarian Elizabeth MacDonough. She advises the Senate on parliamentary procedure and, in essence, what can and cannot get included in certain legislation or how that legislation can proceed. Last week, she denied Republicans’ plan to cap states’ ability to collect more federal Medicaid funding via health care provider taxes. Most of the savings in the proposed legislation came from those changes. The ruling caused the Senate to work during the weekend to overcome that hurdle in order to approve a budget bill by a simple majority without having to secure any votes from Democrats.

3. The Genius Act.

The Trump Administration’s support for cryptocurrencies has extended to the Senate, which recently approved a stablecoin regulation bill. If signed into law, it could give Treasury Secretary Bessent a new tool to fund the U.S. budget deficit. It would mandate that stablecoin issuers back every stablecoin asset with cash or U.S. Treasury bond reserves. The bill aims to enhance consumer protection in the stablecoin market and provide regulatory clarity for stablecoin issuers. That’s important for validating the place of stablecoins within broader financial markets.

4. The Momentum Factor.

The momentum factor refers to the tendency of stocks that have risen or declined in the recent past to continue outperforming or underperforming, respectively. In the past 12 months or so, this factor has dominated stock market returns more than factors such as growth, value, size or quality. The factor remains somewhat perplexing because no viable academic or theoretical rationale explains it, although some argue it persists across time and markets. It’s also quite fickle: Momentum can shift quickly. Investing heavily on momentum, particularly without curbs or guard rails on the investment process, seems akin to picking up nickels in front of a steamroller.

5. The Inherent Bias In Financial Reporting.

It’s extremely difficult these days to obtain raw, unvarnished financial information. Most news sources seem to have a particular bent in one direction or the other based on political leanings (say, Fox News compared with MSNBC). A famous economist once stated that if one tortures data long enough, it will confess to anything. This highlights the potential for misinformation or misinterpretation. Bias in reporting need not be blatant; it can be subtle. The lesson is clear: Be careful, critical and suspect of getting financial news from the media. And when possible, go right to the source of the data and read it in raw, unadulterated form.