Trump Fires Another Shot at the Fed. The Economy Could Be Collateral Damage.

Federal Reserve Gov. Lisa Cook (Drew Angerer/Getty Images)

You’re fired? President Donald Trump is bringing back his old catchphrase for Federal Reserve Governor Lisa Cook, and while it’s not clear what the conclusion will be, it looks like bad news for the dollar and long-term Treasuries.

It’s not obvious that Trump has the power to remove Cook. The Fed governor, who was appointed by Joe Biden, said she wouldn’t resign over allegations she submitted fraudulent mortgage application information, while the president claimed he had removed Cook with immediate effect.

A legal fight looms, and one with significant consequences. Were the courts to uphold the dismissal, Trump could fill another seat on the seven-person Federal Reserve Board. That would add another voice aligned with his policy goals, including lower borrowing costs. While a September rate cut is already being priced in by the market, it would mean bigger reductions thereafter.

That could drive fears over runaway tariff-driven inflation and reawaken the “sell America” trade, which drove the dollar to its weakest level in three years and caused a selloff in Treasuries earlier this year.

So far there is no sign of panic—the DXY Dollar Index , which measures the currency against a basket of major peers, briefly plunged on Trump’s supposed dismissal of Cook before recovering following her refusal to step down. The 30-year Treasury yield rose but remained under the psychologically important level of 5%. All that could change if the market feels Fed independence is truly under threat.

We’re in uncharted territory—no president has attempted to remove a Fed governor before. So far, the market looks to be betting that the latest drama will just be a fleeting episode. But there’s potential for a shock ending.

—Adam Clark

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President Says Fed’s Cook Is Fired But She Disagrees

President Donald Trump said he removed Lisa Cook from her job as Federal Reserve governor Monday, stoking concerns about the central bank’s independence under the current administration. Cook, however, countered and said she wouldn’t resign.

• “I have determined that there is sufficient cause to remove you from your position,” Trump’s letter, posted on Truth Social late Monday, read. It said the removal is effective immediately.
• Cook disagreed. “President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so,” she said in a statement sent to various media outlets late Monday.
• It comes days after Federal Housing Finance Agency Director Bill Pulte sent a criminal referral to Attorney General Pam Bondi, alleging Cook made false claims on mortgage agreements. Trump later said he would fire Cook, the first Black woman to serve on the Fed’s board, if she didn’t step down.
• With Trump’s move seen as further escalating the administration’s bid to influence the central bank, the dollar dropped immediately after the news but then recovered.

What’s Next: Investors will inevitably view this as an assault on Fed independence but may still think Trump’s powers will be limited by other institutions, noted UBS chief economist Paul Donovan. “If the dismissal survives the courts, the Senate must confirm any successor. Fed presidents still have policy votes. Faith in these checks may limit the negative market reaction,” he said.

— Matthew Bemer and Elsa Ohlen

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Trade Deals Are Still In Flux. All Eyes Are On China.

The South Korea trade deal is on track, President Donald Trump told reporters in the Oval Office after meeting with South Korean President Lee Jae Myung. The U.S. “stuck to its guns” on the details, Trump said. A deal with China is a work in progress.

• The previously announced deal would cut U.S. tariffs on imports from Korea to 15% from a threatened 25%. South Korea, in turn, will lower tariffs and make $350 billion in unspecified investment commitments. “They’re going to make the deal that we agreed to make,” Trump said.
• During the meeting with Lee, Trump stressed his good relationship with China, allowed that the U.S.’s major geopolitical rival holds some cards in ongoing trade negotiations, and appeared to extend the timetable for when he might meet with Chinese leader Xi Jinping.
• The U.S. recently extended the tariff deadline with China by 90 days, ratcheting back tensions after a tit-for-tat during which China restricted the sale of critical magnets and the U.S. retaliated, in part, by restricting the export of aerospace parts to China.
• The truce could hold until Trump is able to meet with Xi and pave the way to a bigger deal. The administration had guided to a possible fall meet up, possibly during a trip to China with U.S. chief executives coinciding with November’s annual meeting of the Asia-Pacific Economic Cooperation.

What’s Next: Trump noted China had negotiating strength on magnets, but so does the U.S. “They have to give us magnets. If not, we have to charge them 200% tariffs,” Trump said. Meanwhile, the U.S. is boosting domestic magnet production and could have an ample supply in a year or so.

— Reshma Kapadia and Liz Moyer

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Musk Sues Apple, OpenAI Over AI Competition, Access

Elon Musk has followed through with a legal threat over how people can use artificial intelligence technology. His start-up xAI and his social-media platform X have sued Apple and OpenAI, alleging they illegally stifle AI competition. OpenAI called the lawsuit consistent with Musk’s “ongoing pattern of harassment.”

• The lawsuit said Apple’s arrangement with OpenAI makes ChatGPT the only generative AI chatbot that can benefit from “billions of user prompts originating from hundreds of millions of iPhones” and that OpenAI’s use of prompts and feedback to improve its model is a major advantage.
• Musk’s lawsuit called it a desperate bid by Apple to protect its cellphone monopoly and says OpenAI most benefits from inhibiting competition and innovation in AI, calling it a “monopolist” for generative AI chatbots. Apple and xAI didn’t respond to requests for comment.
• Musk on Aug. 11 threatened legal action, saying Apple favors OpenAI’s ChatGPT over rival systems: “Apple didn’t just put their thumb on the scale, they put their whole body!” Apple said at the time that its App Store is designed to be “fair and free of bias.”
• Tesla investors are paying close attention to xAI, whose chatbot Grok is now available on Tesla vehicles. Musk has also floated the idea that Tesla should take a stake in xAI, a possibility that investors would eagerly accept, according to Wedbush analyst Dan Ives.

What’s Next: A federal judge is expected to rule soon about potential ways to improve competition after finding that Google illegally monopolized search results through iPhones, and could prohibit, for example, Google’s payment of more than $20 billion a year to be the default search provider on Safari’s browser.

— Al Root and Janet H. Cho

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Intel’s Deal With the U.S. Government Comes With a Catch

New details have emerged about the federal government’s nearly 10% stake in Intel. The mechanics of the deal, as laid out in a securities filing, could become important to investors, including the detail that the government doesn’t have to be a long-term holder of the stock.

• The Commerce Department is prohibited from selling its shares for a year, but as of Aug. 26, 2026, the government is free to sell in “broadly-syndicated offerings.” Such a sale would put downward pressure on Intel’s stock.
• The government will buy 275 million Intel shares issued to the Commerce Department in exchange for $5.7 billion, a share price of $20.74. That deal closes today. A second purchase is more open-ended and tied to Intel receiving its payment for Secure Enclave, a special military project.
• The $3.2 billion disbursement, previously allocated under the Chips Act, would give the government 159 million shares, valuing them at $20.00 a share. A third tranche gives the government 241 million warrants that convert into Intel common stock if the company’s stake in foundry falls below 51%.
• The first tranche contains $1.5 billion that had previously been allocated to Intel pending progress on its new Ohio campus. Intel recently shelved that project. Under the new arrangement, the Ohio factory requirement is gone as is the monetary incentive for Intel to build the campus.

What’s Next: The Commerce Department’s agreement isn’t entirely hands-off. The government agreed to vote in line with Intel’s board, but not if an action would “adversely impact the Company’s or its subsidiaries’ relationship with the U.S. Government.”

— Adam Levine and Bill Alpert

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Labor Day Air Travel Expected to Reach New Record

Expect more crowds and longer lines at U.S. airports this Labor Day weekend. The Transportation Security Administration expects to screen nearly 17.4 million people at U.S. airport security checkpoints between this Thursday and Wednesday, Sept. 3, including a projected 2.91 million people this Friday.

• That’s 2% more than the 17.03 million people TSA workers screened over the same period last Labor Day weekend, which was its busiest-ever for the holiday, according to revised TSA figures, putting this Labor Day on track to break that record.
• The Federal Aviation Administration said as of the week of Aug. 18, it had seen more than five million flights since Memorial Day weekend and called it the busiest summer in 15 years.
• Weather-wise it’s expected to be a pleasant weekend, according to Bill Kirk, founder and CEO of Weather Trends International in Bethlehem, Pa. He says Aug. 29 to Sept. 1 will be the coolest in 16 years, with below-average national temperatures of 84.8 degrees Fahrenheit.
• Temperatures will be hottest in the Northwest, while the rest of the nation will feel more like fall, Kirk said. Whereas last year, hot summer items sold well, this year’s temperatures will favor purchases of hot beverages and back-to-school items and clothing.

What’s Next: The FAA earlier this month extended the limited rate of arrivals and departures to and from Newark Liberty International Airport to 28 an hour during airport construction on weekends through Dec. 31.

— Janet H. Cho

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—Newsletter edited by Liz Moyer, Patrick O’Donnell, Brian Swint