Key Takeaways:
- Former President Donald Trump has reportedly inquired with Republican lawmakers about the possibility of removing Federal Reserve Chair Jerome Powell, signaling potential instability in monetary policy.
- The European Union has unveiled a new budget proposal for 2028-2034, featuring a €400 billion crisis fund and significant allocations for Ukraine, defense, climate, and competitiveness.
- U.S. crude and fuel futures experienced declines following an unexpected increase in gasoline and distillate stocks, as reported by the EIA.
- S&P has downgraded Nike (NKE) from 'AA-' to 'A+' due to reduced profitability and ongoing tariff risks.
Donald Trump has reportedly asked Republican lawmakers about the feasibility of dismissing Federal Reserve Chair Jerome Powell, with some in the room voicing approval. Sources indicate that Trump suggested he might proceed with the removal, which, if pursued, would mark a significant challenge to the Fed's traditional independence and could introduce considerable market uncertainty. Powell's term as Fed chair is set to end on May 15, 2026.
In Europe, EU Commission President Ursula von der Leyen has announced a comprehensive new budget proposal for the 2028-2034 period, which she termed a "budget for a new era." The plan includes a substantial €400 billion crisis fund and earmarks €100 billion for supporting Ukraine. The budget also emphasizes a five-fold increase in defense spending, a focus on climate and biodiversity with 35% of new budget allocation, and a doubling of the Horizon Europe research fund to support future key technologies. The overall proposed budget could reach €1.717 trillion, representing an increase to 1.23% of the EU's gross national income from the current 1.1%.
Meanwhile, the energy market reacted to the latest data from the U.S. Energy Information Administration (EIA). U.S. gasoline futures and heating oil futures dropped after the EIA reported an unexpected increase in gasoline stocks by 3.399 million barrels and U.S. distillate inventories by 4.173 million barrels week-over-week. This rise in fuel stocks contributed to a decline in both U.S. and Brent crude futures prices, despite a reported decrease of 3.859 million barrels in overall U.S. crude oil inventories.
White House Economic Advisor Kevin Hassett has reiterated his criticism of the Federal Reserve, stating that the central bank has been "very, very slow" in its actions. Hassett asserted that inflation data is "okay and not concerning," suggesting that the Fed should return to an "appropriate rate path." His comments come amidst ongoing debate regarding the Fed's monetary policy and its responsiveness to economic conditions.
In corporate news, S&P has downgraded Nike Inc. (NKE) to 'A+' from 'AA-'. The downgrade is attributed to reduced profitability and persistent tariff risks faced by the sportswear giant. Nike anticipates a $1 billion impact from new tariffs, with plans to mitigate this through supply chain optimization, phased price increases, and cost reductions. The company's gross margin has seen a significant decline, falling 440 basis points to 40.3% in Q4 2025, largely due to U.S. tariffs on imports from Vietnam (46%) and China (34%).
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.