Trump's future Fed influence tests market trust — how to prepare your portfolio

CNBC Finance

3 min read

In this week's Club Check-in, Paulina Likos and Zev Fima break down the uncertainty surrounding the Federal Reserve as markets approach a pivotal transition in May, when a new Fed chair is expected to be appointed, and assess how Club members should be thinking about their investments. Multiple developments have raised questions about the future of the Federal Reserve's independence, including President Donald Trump 's public calls for lower interest rates, a Justice Department probe into current central bank chief Jerome Powell , and a Supreme Court case involving the president's attempt to fire Fed governor Lisa Cook. Perhaps Trump's announcement Friday morning of Kevin Warsh â a former Fed governor â to succeed Powell as Fed chairman will ease some of those concerns because Warsh is perceived to be more hawkish than the other candidates. Either way, the new Fed leader will need to reconcile the president's desire for rate cuts and a stabilizing economy that might not need more easing. In fact, following its two-day January meeting, the Fed on Wednesday afternoon held interest rates steady. Powell said the economy was in a good place for central bankers to wait for more economic data to determine their next move. The Fed has cut rates a total of 175 basis points in three moves at the end of 2024 and three more at the end of last year. Powell, whose term leading the Fed ends in May, defended central bank independence as a cornerstone of modern democracies to prevent "elected official control over the setting of monetary policy." The key for investors in this upcoming time of uncertainty is to consider a diversification of outcomes when it comes to managing their portfolios. In the video, we talk about the Club approach . (See here for a full list of the stocks in Jim Cramer's Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

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Trump's future Fed influence tests market trust — how to prepare your portfolio

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