WSJ What’s News - Trump Lashes Out at Powell. But Can the President Fire the Fed Chair?

Episode Date: April 17, 2025

P.M. Edition for April 17. In a post on social media and in comments from the Oval Office, President Trump expressed his displeasure with Fed Chair Jerome Powell. But can Trump actually fire him? WSJ chief economics commentator Greg Ip discusses an upcoming Supreme Court decision that might tilt the scales. Plus, a federal judge has ruled that Alphabet’s Google created an illegal monopoly that allowed it to control parts of the online advertising industry. And private equity, one of Wall Street’s most consistent fee generators, is in danger. Reporter Miriam Gottfried tells us what’s going on, and what it would take to get private equity back on track. Alex Ossola hosts. Sign up for the WSJ's free What's News newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

President Trump hints at dismissing Fed Chair Jerome Powell. But can he do that? If the president gets his way, it essentially turns the Fed chairman into an at-will employee like the Treasury Secretary. And it means that monetary policy is effectively under the control of the president. Plus, a federal judge rules that Google operates in a illegal monopoly of online advertising. And private equity, one of Wall Street's most consistent profit engines, is close to breaking down.

It's Thursday, April 17th. I'm Alex Osala for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today. Today, President Trump has taken aim at Fed Chair Jerome Powell. Yesterday, Powell had warned that the Fed could face a difficult trade-off as tariffs raise prices and weaken the economy. This morning, Trump posted on Truth Social that, quote, Powell's termination cannot come fast enough, adding that the Fed chair, quote, is always too late and wrong,

and that he should be cutting interest rates as other central banks have done. Later this afternoon, in a press conference in the Oval Office with Italian Prime Minister Giorgio Maloney, Trump was asked again about Powell. The reporter noted that Powell says he won't leave even if Trump asks him to. Oh, he'll leave if I ask him to, he'll be out of there.

But I don't think he's doing the job. He won't leave even if Trump asks him to. So can Trump do this? I'm joined now by WSJ Chief Economics commentator Greg Ip. Okay, Greg, give it to me straight. Can the president fire the Fed chair? Well, under the law right now, the Fed chair is one of seven governors and the law says governors can only be fired for cause. So that tells you that the plain reading of the statute is no, the president cannot fire the Fed chair.

There is a more ambiguous question about whether he can demote the Fed chair to being just another governor. And I don't think there's a clear answer on that. But the straight off answer is no, that Trump cannot fire the Fed chair. Earlier this year, Trump fired two federal officials who later sued, arguing that the firings were illegal. fired two federal officials who later sued, arguing that the firings were illegal. Now the Supreme Court is considering the dispute. While the case is not directly about the Federal Reserve, it could determine whether President Trump

can fire the Fed chair. So what would a ruling in the administration's favor mean for the president? The decision in question dates back to 1935. It's called Humphrey's Executor. And then the Supreme Court said Congress is fully able to bar the president from firing members of independent commissions for reasons other than cause. So a few months ago the president fired

a member of the National Labor Relations Board. She is suing to get her job back and when the Supreme Court rules on that case they may decide if that 1935 precedent still stands or they may knock it down. If they knock it down and it is interpreted in such a way that this is also true of the Fed, then in some sense the road is open for Trump to also fire any member of the Fed that he wants, including the Fed chairman.

Now we don't know whether he will actually do that. And it's also likely the case that Jay Powell will not go if the president fires him, and that he will pursue his own legal options in that instance. But I think it's fair to say that we'd be heading for a fairly disruptive and significant clash between the Fed and the White House. That was WSJ Chief Economics commentator, Greg Ipp.

Thank you, Greg. All right, thanks for having me. Tensions between the White House and the Fed could unnerve investors who see the bank's independence as a foundational appeal of U.S. markets. Major U.S. indexes ended the day mixed. The Dow fell 1.3 percent, dragged lower by United Health Group. Its stock fell more than 20 percent after the the healthcare company reported earnings that fell short of Wall Street's expectations and it substantially downgraded

its projected results for 2025. The NASDAQ slipped about 0.1% while the S&P 500 rose about 0.1%. A federal judge ruled today that Alphabet's Google created an illegal monopoly that allowed it to control parts of the online advertising industry. The ruling marked the second time in eight months that a U.S. judge labeled Google an illegal monopolist and could lead the Justice Department to seek a forced sale of some of

the company's advertising products. The Justice Department didn't win on all of its legal claims. The judge rejected the government's position that Google unlawfully monopolized a third market within the ad tech industry, the market for networks that help advertisers buy display ads across the open web. A Google vice president said that the company would appeal the parts of the decision that it lost. WSJ business legal affairs correspondent Jan Wolff told our tech news briefing podcast

what the decision could mean for Google. It's pretty forceful victory for the government. The judge agreed that Google has an unlawful monopoly in two distinct markets, servers and publishers. Basically there's two different sorts of tools that are used to place ads online where Google is just dominant and it achieved that domination unlawfully. And it matters because now that there's this finding of liability, the next phase is for the same judge to hold a remedies trial where she would decide here is some sort of judicial

remedy I can impose that would restore competition. And in the worst case scenario, Google would have to sell off some of its advertising products, which are really a cash cow for the company. To hear more from Jan, listen to tomorrow's episode of Tech News Briefing. Higher than expected subscription and ad revenue helped Netflix beat its forecast for core metrics in the first three months of the year. The company reported $10.5 billion in revenue in the first quarter, up 12.5% year over year. Net income rose about 24% to almost $3 billion, beating its forecast of $2.44 billion.

The streamer said it expects even stronger revenue growth in the second quarter, as it anticipates recent price increases, continued membership growth, and fresh advertising revenue. News Census Bureau data out today shows that housing starts, a measure of home construction, dropped 11.4% in March from February. That marked the steepest plunge in a year. Stubbornly high home prices and mortgage rates have kept home buyers on the sidelines for months. Muted demand has discouraged builders from putting more shovels in the ground. And a survey from Pew Research Center out today showed that Americans view economic ties with Beijing as less beneficial to the US than to China.

But they're also skeptical about addressing the relationship with tariffs, saying that increased tariffs on China would be bad for the US and for them personally. The survey was conducted in the final full week of March, after President Trump slapped the first new tariffs of his second term on China, but before a back and forth between the two countries propelled tariff rates into the triple digits. Coming up, why Wall Street's private equity fee machine is grinding to a halt.

That's after the break. Hey, wouldn't it be great if life came with remote control? machine is grinding to a halt. That's after the break. But pre-diabetes does. With early diagnosis and a few healthy changes, you can stop pre-diabetes before it leads to type 2 diabetes. To learn your risk, take the one-minute test today at doihabprediabetes.org. Brought to you by the Ad Council and its pre-diabetes awareness partners. Private equity is one of Wall Street's most consistent fee generators. But that moneymaker now looks close to breaking down. For more, I'm joined by Miriam Gottfried, who covers private equity.

Miriam, shares of fund managers like Apollo Global Management, Blackstone, and KKR are down 20% or more this year. And that's way more than the broader market. What's going on here? Well, even before the recent tariff turmoil, these firms were facing pressure on one of their key businesses, which is private equity. A lot of firms, not just these publicly traded ones,

went out and bought companies in 2021. Since then, of course, interest rates have risen a lot, which makes it a lot harder to exit the companies either by selling them or taking them public at a profit, because so much of the expectation was built into this model of lower interest rates. So firms have just been sitting on these companies, which means that they haven't returned that much cash to their investors, which means that those investors in turn have not returned that cash to them in the form of new fundraising.

Of course, now we have tariffs, which just makes things worse. That logjam is not coming unstuck anytime soon. Now we have a 90-day pause on many of these reciprocal tariffs, and that means there's a lot of uncertainty and people don't really want to go out and sell companies or buy companies because they don't really know whether the tariffs will be in place. They don't know what the right price is. They don't know if these valuations are the valuations that are going to stick. So it's basically just caused a long pause on an already stuck thing. What would it take to get private equity back on track? You really need more market certainty. If we could say even these are the tariffs and these are the tariffs that are going to

be in place for X amount of time, then people would be able to model that and they would know what their cost structure is and they might be able to move forward. There's also the time factor. Firms might not want to sell them right now, these companies that they've been sitting on, but they might have to because at a certain point your investors, your limited partners need their money back. What does how these firms are doing mean for the broader market? What it really means is a lot for Wall Street because the fee paying potential of these firms is very great.

Banks, lawyers, they all exist off of these fees that these private equity firms pay. Of course, big firms like Apollo, Blackstone, KKR, they have many other business lines. They aren't solely reliant on private equity. That was WSJ reporter Miriam Gottfried. Thank you, Miriam. Thanks. The Trump administration has threatened to stop international students from attending Harvard University.

A letter from Homeland Security Secretary Kristi Noem said that hosting international students was a privilege, not a guarantee, and that because Harvard had, quote, created a hostile learning environment for Jewish students, the administration was requesting information about visa holders by April 30. Harvard president Alan Garber has called the demands an illegal attack on the school's independence. And the European Central Bank cut interest rates today to offset the economic blow of tariffs.

The ECB lowered its key interest rate to 2.25% from 2.5%, its seventh cut in eight meetings, taking borrowing costs to their lowest level since early 2023. And that's what's news for this Thursday afternoon. Today's show is produced by Anthony Bansi with supervising producer Michael Kosmitis. I'm Alex Zosila for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.