Fed’s Powell Faces a Power Struggle. Why the Outcome Is Key for Stock Markets.

Federal Reserve Chairman Jerome Powell (Chip Somodevilla/Getty Images)

Is Jerome Powell a lame-duck as chair of the Federal Reserve? The central bank’s meeting this week could give us the answer as he tries to steer a divided monetary-policy committee.

On the surface, the decision shouldn’t be contentious. Traders are pricing in an overwhelming chance of a quarter-point cut to interest rates. There is a general consensus that slowing employment is more of a threat than runaway inflation right now. There’s no panic in the stock market, in fact the prospect of lower borrowing costs are helping—U.S. indexes keep hitting record highs with the S&P 500 headed for a ninth consecutive quarter of earnings growth.

But there is much more at play and this could be the most divided vote in nearly 40 years. Two Fed officials dissented against leaving rates steady at the meeting in July. They could call for a half-point rate cut this time, and in that case are likely to be joined by President Donald Trump’s newest Fed nominee Stephen Miran.

The emergence of a dovish bloc could pave the way for three governors to dissent from the majority decision for the first time since 1988. Meanwhile, Fed Gov. Lisa Cook plans to attend the meeting despite Trump’s attempt to remove her from the board. The market will have to gauge how much weight to put on her vote, while also looking ahead to the end of Powell’s term as chair in May next year.

Powell may be able to hide much of the discord if he can remind his fellow board members about the risks of failing to present a united front. A lack of clarity in the Fed’s monetary-policy decisions leads to market volatility and raises inflation expectations, according to Apollo Global’s chief economist Torsten Sløk.

But even a temporary pact could be exposed if the dot plot—the chart displaying where meeting participants think rates will head in future—shows significant disagreement. Powell’s job is only going to get harder from here.

—Adam Clark

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Fed’s Rate Decision This Week Comes Amid Swirl of Issues

It’s crunchtime for the Federal Reserve. The policy committee meets this week under unusual circumstances that go far beyond expectations for an interest-rate cut, with mixed economic signals, political drama, and questions about central-bank independence and even the makeup of the committee itself.

• In addition to making any changes to the benchmark interest rate, members will provide near- and longer term forecasts for gross domestic product growth, unemployment, inflation, and the federal-funds rate. The economic projections accompany the release of the policy statement on Wednesday.
• Fed Gov. Lisa Cook plans to attend the meeting, even as she fights President Donald Trump’s attempt to remove her from the board. A federal judge temporarily blocked her dismissal, and her lawyers say she will continue performing her duties. Trump’s team is appealing the judge’s decision.
• Council of Economic Advisers Chair Stephen Miran is expected to join the Fed Board. The Senate Banking Committee has advanced Trump’s Fed nominee and a full Senate vote is scheduled for later today. If confirmed, Miran will fill a term that expires at the end of January.
• A quarter-point rate cut is likely. But two Fed governors dissented against holding rates steady in July, and those who favor a looser policy may argue for a larger cut now. Recent economic data, particularly the weak August jobs report, have strengthened the case for more aggressive easing.

What’s Next: With June’s economic projections, Fed officials expected two quarter-point cuts this year, but that consensus may be shifting. The September projections may reflect fewer than the usual 19 committee participants if Miran doesn’t submit his forecasts in time.

— Nicole Goodkind

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Nvidia Broke China’s Antimonopoly Laws, Regulator Says

Nvidia has violated China’s antitrust laws, Beijing’s market regulator said early Monday after a preliminary inquiry. The body said it plans to conduct a further investigation into the U.S. chip maker.

• China’s State Administration for Market Regulation said an initial inquiry found Nvidia had violated Beijing’s antimonopoly laws, according to a statement translated by Barron’s using online tools. Nvidia didn’t immediately respond to a request for comment from Barron’s.
• The inquiry is a blow for Nvidia because it looks very unlikely that China would allow the chip maker to sell new hardware in the country while saying it had breached antimonopoly laws.
• Nvidia previously asked some partners to stop work related to production of its H20 processor for the Chinese market after Beijing told domestic companies not to buy the hardware, The Wall Street Journal has reported, citing people familiar with the matter.
• Despite the Chinese government’s apparent opposition, Nvidia CEO Jensen Huang has said there is a “real possibility” the company might be able to sell its more advanced Blackwell chips in the country in the future.

What’s Next: Beijing announced the inquiry’s initial findings as officials from both the U.S. and China gather in Madrid for another round of trade talks. Nvidia investors will hope there’s a significant breakthrough when it comes to AI chips.

—George Glover and Adam Clark

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Health Plan Subsidies In Play as Congress Races for Funding Extension

Lawmakers are looking for ways to stop health insurance costs from ballooning for tens of millions of people enrolled in government-subsidized marketplace plans. Congress didn’t extend enhanced tax credits this summer, putting enrollees on track for major sticker shock when they re-enroll this fall.

• Nearly 20 lawmakers, including 12 Republicans, signed onto a bipartisan bill to extend the subsidies through next year. Without an extension, a double-whammy of 18% higher premiums and the end of the tax enhanced credit could spike typical monthly payments 75%, a KFF analysis said.
• It’s a tough sell for many Republican lawmakers who are opposed to the program and concerned about its cost. The Congressional Budget Office has estimated that extending the credits through 2034 would increase the federal deficit by $383 billion including interest, with a one-year extension costing $23 billion.
• A compromise could help avert a partial government shutdown at the end of the month. If Republicans agree to fund the extension, they are more likely to win Democrats’ support on their spending extension. Oklahoma Republican Sen. James Lankford told CBS he expects the budget issues to be solved.
• About 24.3 million Americans are enrolled in the healthcare plans known as Obamacare, and 22.4 million of them get subsidies, said KFF. Despite their discomfort with the cost of extending subsidies, some Republican lawmakers acknowledge it’s an issue for next year’s midterm elections.

What’s Next: Senate Majority Leader John Thune doesn’t want to tie the health plan subsidies to the stopgap budget extension. He and other lawmakers have until Sept. 30 to get the extension through and avert a federal government shutdown.

— Anita Hamilton and Liz Moyer

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Bank Merger Market Heats Up In Looser Regulatory Times

Bank mergers have risen to a four-year high, with more deals on the way, under the Trump administration’s looser financial regulation, the dismantling of stringent merger guidelines, and a push for faster reviews of bank deals. Expectations of lower interest rates and healthy credit quality are boosting bankers’ optimism.

• S&P Global Market Intelligence said 118 bank tie-ups worth a combined $23.3 billion have been announced in the U.S. so far this year, on pace to surpass last year’s 126 deals valued around $16.3 billion. In 2023, there were 96 deals for about $4.1 billion.
• Texas-based Comerica is one such bank facing activist pressure to seize on the opportune regulatory climate and sell itself. But Comerica sees itself differently. A spokeswoman cited its differentiated business and operations in “desirable, high-growth markets.”
• After Capital One Financial acquired Discover Financial Services in a $35.3 billion all-stock megadeal in May, it became the largest U.S. credit card issuer and sixth-largest bank by assets. Consumer-advocacy groups and some lawmakers said the combination will increase fees, concentrate power, and reduce competition.
• Separately, Bank of America CEO Brian Moynihan, 65, confirmed plans to stay in his role through 2030 after running the second-largest U.S. lender since 2010. The company elevated longtime regional banking chief Dean Athanasia and global markets head Jim DeMare to co-president.

What’s Next: Morgan Stanley’s Grant Gregory, the co-head of the Wall Street bank’s North America financial institutions group, sees the possibility of $100 billion in bank consolidation in the years ahead. Jefferies analysts view Utah’s Zions Bancorp and Oklahoma’s BOK Financial as potential targets, among others.

—Rebecca Ungarino and Janet H. Cho

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More Ordinary Investors Getting a Piece of IPO Market

It’s a market long dominated by the wealthy and well-connected. But, increasingly, ordinary investors are getting in on initial public offerings. Some recent hot IPOs such as Bullish and Gemini Space Station made hundreds of millions of dollars of stock available to retail clients of brokers Robinhood Markets and Moomoo Financial.

• Issuers like the crypto platform Bullish have demanded that portions of their offering be reserved for the retail crowd. Retail participation also helps post-IPO price performance, according to research by the market maker Citadel Securities. Interest is driven by a boom in retail trading and online investing discussion groups.
• Neil McDonald, CEO of the U.S. unit of online trading platform Moomoo said in the Gemini deal last week, it subscribed for $400 million in the U.S. alone, with the average customer getting $15,000 worth. He estimates that its clients have taken over $1 billion in shares of recent IPOs.
• Companies that do business with small traders want their shares to end up with their superfans, who don’t want to hear their accounts are too small, says Robinhood’s chief brokerage officer Steven Quirk. Since 2021, Robinhood has gotten clients into 36 offerings.
• Big money managers like Fidelity rank customers based on account assets, while Robinhood randomly selects who will get an IPO allocation, with an equal likelihood among clients who request them. Moomoo aims to get most of the shares to its midrange customers—not the largest and not the smallest.

What’s Next: StubHub, a secondary ticketing marketplace for live events, is the next big IPO investors are watching after delaying plans twice. It aims to go public this week, offering 34 million shares to raise $800 million, for a total valuation of around $8.6 billion.

— Bill Alpert and Janet H. Cho

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—Newsletter edited by Liz Moyer, Patrick O’Donnell, Callum Keown