Trump Moves to Oust Fed Governor Lisa Cook, Washington Weighs Equity Stakes in Defense Contractors
Digital Asset Market: Eric Trump revealed that the Trump family became pro-crypto after being "debanked" by several financial institutions following the Capitol attack in early 2021, an experience that made them realize how easily the financial system could be "weaponized." He claims this move was politically motivated and criticized the Biden administration for restricting crypto access to banking services, which further pushed them toward cryptocurrency. The family has since embraced the cryptocurrency industry, with ventures such as Donald Trump's memecoin, TRUMP, the World Liberty Financial USD1 stablecoin, and the American Bitcoin firm, which has raised significant funds. Eric Trump also advocates for the tokenization of real-world assets and denied allegations that the family’s crypto profits are related to Trump's presidency, while leaving open the possibility of another family member running for president in 2028.
Macro Economics: Germany's auto sector, a cornerstone of the country's industry, has cut around 7% of its workforce, or about 51,500 jobs, in the year leading up to June, accounting for almost half of the total 114,000 industrial job losses during that period. This wave of reductions is blamed on falling profits, overcapacity, weak foreign markets, stiff competition from China, slow progress in the electric vehicle market, and uncertainty surrounding U.S.-EU trade policies. Export figures reflect these pressures, with shipments to the U.S. dropping 8.6% in the first half of 2025. Meanwhile, the overall German economy is also struggling, showing GDP declines in 2023 and 2024, as well as stagnation in early 2025. Industry experts such as EY expect these pressures, combined with ongoing restructuring efforts, to result in further job losses and sustained challenges for auto exports to both the U.S. and China.
Equities: US stocks were mixed Tuesday as investors digested President Trump’s bid to remove Fed Governor Lisa Cook and a fresh threat of tariffs tied to digital services taxes, with the Dow slipping, the S&P 500 up about 0.1%, and the Nasdaq up 0.2%; longer-dated Treasury yields rose toward 4.3% on the 10 year and 4.9% on the 30 year amid concern about Fed independence and inflation, while Cook said Trump lacks authority to fire her, setting up a legal fight after prior Supreme Court guidance that Fed governors are not removable at will; the dollar softened as the curve steepened with five year yields little changed and at about 8:15 am S&P and Nasdaq futures were down roughly 0.2% even as Nvidia gained about 0.5% premarket, semis advanced, defensives outperformed cyclicals, and large cap industrials firmed; Trump also signaled new tariffs and export limits on chips and tech in response to foreign digital taxes, risking tension with the EU; Wall Street now looks to Nvidia’s results on Wednesday with expectations high despite China sales restrictions and the stock up about 34% year to date.
In other news, Commerce Secretary Howard Lutnick had earlier stated that Pentagon leaders are considering whether the U.S. should take equity stakes in major defense contractors, such as Lockheed Martin, days after the government purchased a 10% stake in Intel for approximately $ 9 billion. He called Lockheed basically an arm of the government. He said Defense Department leaders are actively weighing the economics, while President Trump is rethinking how to finance munitions and other defense needs, criticizing the current approach as a giveaway that may prompt an overhaul of appropriations. Trump said he would pursue similar deals frequently, and Lutnick argued the Intel move strengthens U.S. semiconductor leadership. The idea has drawn criticism from free market advocates who warn of politicized decision-making.
The Fed and US Treasury: Markets are on edge as President Trump attempts to remove Federal Reserve governor Lisa Cook over mortgage fraud allegations, a move she is resisting by asserting the president lacks the authority to fire her. This standoff has stoked concerns about the independence of the Fed, reflected in rising gold prices, higher long-term Treasury yields, and a widened yield curve, as investors worry Trump could reshape the central bank with more dovish members and push for interest rate cuts. Such a shift can temporarily boost equities but might undermine confidence in the Fed and increase inflation risks, especially given the US's high debt levels. Former Treasury Secretary Larry Summers warned that using legal tactics to pressure adversaries sets a dangerous precedent. At the same time, analysts note that if Trump succeeds, it could have profound and lasting effects on the market and economy. Meanwhile, short-term bond yields fell on expectations of upcoming rate cuts, and the back end of the curve is up slightly, with 30-year yields increasing four basis points to 4.94%.
Geopolitical: US and Russian officials reportedly discussed several energy deals, including potential Russian purchases of US equipment, during peace negotiations about Ukraine in August. Ukrainian President Zelensky met with US Envoy Kellogg to discuss continued US support for Ukraine’s security and military cooperation, particularly regarding weapons and drones, and emphasized the need to pressure Russia towards genuine peace talks. Upcoming meetings between U.S. and Ukrainian officials are expected later this week. US President Trump stated that he and Russian President Putin have discussed denuclearization, involving China, and said Putin is reluctant to meet with Zelensky. However, Trump believes such a meeting should occur and might participate. Trump indicated there could be consequences if talks do not happen within the next week or two, at which point he may intervene directly.
In other news, President Trump said on Monday that the Gaza war will reach a conclusive ending within two or three weeks, though he did not specify how this would happen. He expressed confidence in current US diplomatic efforts and unhappiness about civilian casualties, and urged Israeli leadership to quickly bring the military campaign to a conclusion.
View from our desk
Rotation to Ethereum Continues
Whale wallets are accumulating Ether in size, adding hundreds of millions in spot and layering on sizable long exposure. Positioning leans toward a move toward 5,200, helped by stronger risk appetite after Chair Powell’s recent dovish tone. The result is clear leadership from ETH, up nearly 25% over the past month, and early signs that altcoin season may be forming. We are watching funding, basis, and spot premiums for confirmation that this flow is durable rather than a one-way squeeze.
Bitcoin: Rangebound While Flows Rebalance
Analysts expect Bitcoin to chop between 110,000 and 120,000 over the next two weeks as long-dormant supply hits the market and capital rotates into ETH. That supply overhang has capped upside momentum, even as selective accumulation from large holders continues. Our bias is for muted volatility until this seller completes, with skew and open interest likely to stay subdued unless a macro catalyst breaks the range.
Europe’s Industrial Squeeze
Germany’s manufacturing backbone is under pressure as China gains share in EVs and high-tech at lower costs, while Europe contends with higher labor and persistently elevated energy prices after the loss of cheap Russian gas. Fragmented policy slows response speed, leaving margins thin and investment plans cautious. The United States retains advantages in scale, dollar dominance, and policy agility, yet rising debt loads and political risk keep the global outlook fragile. We are monitoring euro area PMIs, TTF gas, Bunds, and auto export data for signs of stabilization or further deterioration.
Industrial Policy or Ownership
Washington’s purchase of roughly 10 percent of Intel and hints of stakes in defense contractors move the government from customer to shareholder. The GFC precedents were emergency actions with mixed results: autos cost taxpayers $12.1 billion, while AIG and Citi returned gains of approximately $5 billion and $6.85 billion; Fannie and Freddie Mac remain in conservatorship after paying $301 billion in dividends, with principal still outstanding. From our desk, the risk is not whether Intel earns a profit for taxpayers; it is the precedent. Government equity on the cap table invites moral hazard, politicized capital allocation, and procurement conflicts. Ideally, there are no subsidies, tax credits, or other government interventions in private enterprise. The move to direct ownership is many steps in the wrong direction. We prefer clear rules, competitive contracting, and neutral tax policy that preserve market signals. We are watching for any expansion of this approach that could alter the cost of capital, governance, and sector valuations.
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The 1Konto Team
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