Key Takeaways
- House Speaker Mike Johnson has expressed "disenchantment" with Federal Reserve Chairman Jerome Powell, echoing President Donald Trump's frustrations over high interest rates and questioning the legal power to remove the Fed chief.
- U.S. crude oil and gasoline inventories saw significant draws for the week ending July 11th, signaling bullish demand, while distillate inventories built.
- NextEra Energy (NEE) reported stronger-than-expected profits driven by surging power demand, and Freeport-McMoRan (FCX) anticipates strong margin and cash flow growth with copper demand driven by China and India.
- U.S. existing home sales declined by 2.7% in June, falling short of expectations, though the median home price saw a 2.0% increase year-over-year.
- The White House unveiled an AI Action Plan, including accelerating AI-focused data center construction and removing "onerous" development regulations to boost innovation.
Political Pressure on the Federal Reserve
Political pressure on Federal Reserve Chairman Jerome Powell is intensifying, with House Speaker Mike Johnson stating he is “disenchanted” with Powell amid President Donald Trump’s ongoing criticism over high interest rates. Johnson has indicated a willingness to consider changes to Federal Reserve law and has questioned the legal authority to remove the Fed chief.
Economists at Deutsche Bank conducted an analysis suggesting that attempting to remove Powell as Fed chair might lead to slightly lower short-term rates but higher long-term rates. They estimated the net savings from such a move would be a mere $12-15 billion through 2027, even with an activist Treasury implementation. This contrasts sharply with a presidential claim that lowering short-term rates could save the U.S. $1 trillion per year in interest expenses, a figure that appears highly improbable given the U.S. spent $1.1 trillion on interest expenses in 2024.
Energy Market Dynamics and Corporate Performance
The latest U.S. Department of Energy (DOE) weekly inventory data for July 11th showed significant draws in crude oil and gasoline stockpiles. Crude oil inventories decreased by 3.169 million barrels, exceeding the estimated 1.500 million barrel draw, indicating a bullish signal for oil prices. Gasoline inventories also saw a substantial draw of 1.738 million barrels, much larger than the estimated 200,000 barrel reduction, which is also considered bullish. Conversely, distillate inventories experienced a build of 2.931 million barrels, a bearish development, while Cushing, Oklahoma crude inventories increased by 455,000 barrels.
In corporate news, Chevron (CVX) announced that zinc levels in its Mars Crude are now normal, with no known composition issues. NextEra Energy (NEE) reported smashing profit estimates, attributing its strong quarterly beat to surging power demand, leading to positive market sentiment for the stock. Freeport-McMoRan (FCX) expressed positive sentiment, with its CEO highlighting China as a "major" driver of copper demand and India as an "important growth market." The company sees the fundamentals of copper markets as "highly attractive" and anticipates strong margin and cash flow growth from volume gains and cost reductions in 2026–27.
Economic Indicators and Geopolitical Developments
U.S. existing home sales declined in June, reaching 3.93 million units, below the estimated 4.00 million and the previous month's 4.03 million. On a month-over-month basis, existing home sales fell by 2.7%, missing the estimated -0.7% decline. Despite the sales drop, the median home price for existing homes rose to $435,300, representing a 2.0% increase from June 2024.
In Europe, Eurozone Consumer Confidence for July came in at -14.7, slightly improving from the previous -15.3. Trade tensions are also on the rise, with Germany and France reportedly pushing the EU to prepare for retaliation against potential U.S. tariffs if Washington fails to compromise. Reports suggest the EU is preparing over €90 billion in counter-tariffs, which could include bans on U.S. firms in public tenders and revoked intellectual property rights, potentially impacting companies like Boeing (BA).
Geopolitically, a Ukrainian delegation has arrived in Istanbul for talks with Russia. However, top EU leaders have warned that Ukrainian President Zelenskyy risks derailing Ukraine’s EU membership hopes due to growing concerns over Kyiv’s trajectory. Separately, the U.S. Department of Education is set to probe the University of Miami and the University of Michigan, while the U.S. State Department will investigate Harvard University to ensure its programs align with American interests.
Advancements in AI Policy
The White House has released a statement unveiling an AI Action Plan, confirming plans to eliminate "onerous" AI development regulations. This move is aimed at accelerating innovation and attracting investment in the artificial intelligence sector. The plan also includes efforts to accelerate the construction of AI-focused data centers, positioning the U.S. to lead in next-generation infrastructure.
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.