Andrew Curtayne: Milford Asset Management expert on the market reactions to the Federal Reserve changes

The state of the US Federal Reserve has always prompted responses from financial markets, but recent actions from the Trump administration have raised eyebrows.

Trump recently came out and said he was going to fire Federal Reserve Board member Lisa Cook earlier in the week.

Milford Asset Management's Andrew Curtayne unpacked the market reactions 

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Episode Transcript

Speaker 1 (00:00):
Andrew Curtain Mulford Acid Management is with us.

Speaker 2 (00:02):
Hey, Andrew hid In Heather, how are you.

Speaker 1 (00:05):
I'm very well, thank you. I'd imagine that the global
markets are pretty focused on what's happening with the Fed
Reserve this week.

Speaker 3 (00:10):
Yeah, Yeah, lots going on because we had Jackson Hole,
which was HOWLD Friday and over the weekend, and key
message coming out of that was that power was getting
more inclined to cut interest rates in the US next month.
So Marc's been reacting a little bit to that. We
saw an inequity rally of a couple was at one
and a half percent on Friday night from that. But

(00:33):
the big news really on Monday was Trump came out
with quite a big surprise when he said he was
going to fire the Federal Reserve board member Lisa Cook.
So this is really created a lot of noise about
the independence of the Federal Reserve, which is meant to
be separate from the Trump administration and the US government. Yes,
so we'll see how that plays out over the rest

(00:54):
of the week.

Speaker 1 (00:55):
Now, Trump has been very vocal and wanting to lower
the interest rates. Does getting rid of Lisa Cook actually
achieve this?

Speaker 2 (01:03):
It does move things in his favor.

Speaker 3 (01:06):
So the Fed works by a vote by twelve board members,
and if twelve boar members vote to cut interest rates,
then they cut interest rates. Now, Lisa Cook has been
against cutting interest rates, so she's not aligned with what
Trump wants.

Speaker 2 (01:22):
If he removes.

Speaker 3 (01:22):
Her, he will likely appoint someone who would be favorable
to him and will be aligned with cutting interest rates.
Now he can propose someone and then it gets voted
through by the Senate, which he has essential de facto
control over, so he can push things through in his favor.

Speaker 1 (01:40):
And does he actually have the power to fire her.

Speaker 2 (01:44):
Yeah, this is where it gets tricky.

Speaker 3 (01:46):
So the Federal Reserve is independent from the government, so
Lisa Cook does not report or work for Donald Trump.
What he is trying to do is he's found an
angle whereby the leeging that Lisa Cook has essentially conducted
mortgage fraud back in nowther it was twenty one or

(02:07):
twenty two before she was a FED governor, if they
can make a case whereby this means.

Speaker 2 (02:14):
She's not fit for the job.

Speaker 3 (02:16):
Essentially, if you've done mortgage fraud and you're in a
job which is sort of controlling your influencing interest rates
it's not a great look, then he may have a
case to remove it.

Speaker 2 (02:24):
However, this is likely going to have to go to
the courts.

Speaker 3 (02:27):
Both Trump and Lisa Cook have said they were waiting
to see what courts will say, and the feed have
said they were also appined by whatever the courts say.
So look, it feels like a little bit of a
long shot at the moment, but they may have a
potential avenue here.

Speaker 1 (02:40):
Interesting. Okay, now listen, we've got the Nvidia results tomorrow.
What are we expecting.

Speaker 3 (02:46):
Well, it's going to have to be a strong result
because nobody has rallied about one hundred and ten percent
since the recent loads of its share price in April,
so the market's clearly expecting some big numbers. What the
sort of the consensus out there is for revenue and
earnie is to grow around about fifty percent year on year,
So that reflects incredibly strong demand for Navidia's AI chips.

(03:09):
It looks like they're going to have you know, they
should have decent numbers. The problem when you have such
a strong share price move over the last few months
is that a little miss on these expectations can send
the share price down However, our sort of base.

Speaker 2 (03:23):
Cases that should should have decent numbers.

Speaker 3 (03:25):
I mean, if you look at what's been going on
in the AI space over the last few months, it's
all about more and more spending. All the largest companies
in the world, such as Microsoft and Amazon, Meta, Google,
have been spending more and more money on AI, which
essentially means they're spending more money on the video chips.
So we expect the demand drove backdrop to be favorable
enough that we shouldn't see too many surprises coming other results, however, Yeah,

(03:48):
it is n video and the SHEHAP price tends to
be quite volatile, so we'll see how it goes.

Speaker 1 (03:52):
Thanks for talking us through to appreciated Andrew Andrew Curtain,
Milford Asset Management.

Speaker 3 (03:56):
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