The various struggles surrounding the Federal Reserve have finally reached a climax.
With the criminal investigation into current Chairman Jerome Powell triggering political backlash, and the Supreme Court set to hear a key case next Wednesday, the power struggles surrounding the Federal Reserve may be resolved next week.
<h2>Investigating Powell: Political Backlash and &#34;Finding a Way Out&#34;</h2>
The criminal investigation into Federal Reserve Chairman Jerome Powell seems to be evolving into a political backlash against the Trump administration.
Last weekend, U.S. prosecutors issued a subpoena to Powell regarding the renovation costs of the Federal Reserve building. On January 11, Powell made a rare strong statement, denouncing this move as an excuse to undermine the independence of the central bank.
This counterattack resonated within the Republican Party, seemingly sending a clear signal to the White House: if the investigation does not end, the confirmation process for the next Federal Reserve Chairman nominee will face significant resistance.
Under pressure, Trump's core aides have begun to try to &#34;find a way out.&#34;
Last Friday, Kevin Hassett, Director of the National Economic Council, attempted to downplay the situation on Fox Business, stating that this was merely a &#34;simple request for information,&#34; suggesting that once the information is submitted, the matter could be put to rest.
Treasury Secretary Scott Pruitt subsequently echoed this sentiment, implying that as long as prosecutor Jeanine Pirro received a &#34;satisfactory response,&#34; the matter could be resolved.
The logic behind this shift in attitude is evident: Trump needs to maintain a space for evasion regarding the &#34;no order for investigation,&#34; and quietly closing the case may be the best path forward, aligning with the interests of the next Federal Reserve Chairman—
After all, if the current administration can threaten Powell through judicial means, future successors will also be under the same shadow.
<h2>Supreme Court: The Cook Case and the Survival of Federal Reserve Independence</h2>
Compared to the political maneuvering surrounding the investigation into Powell, the Supreme Court's hearing of the case involving Federal Reserve Governor Lisa Cook next Wednesday is even more crucial for the survival of the Federal Reserve's &#34;independence.&#34;
In August of last year, Trump attempted to dismiss Cook on the grounds of &#34;mortgage fraud&#34; (which Cook firmly denies), prompting Cook to launch a legal counterattack to defend her right to serve.
The outcome of the case will also have significant implications for the independence of the Federal Reserve—if the Supreme Court rules that Trump has the authority to dismiss Cook, it would mean the president could arbitrarily remove any Federal Reserve official.
Data shows that U.S. GDP growth reached 4.3% in the fourth quarter, while Trump has publicly demanded that interest rates be lowered to &#34;near zero&#34; and requested cooperation from the Federal Reserve Board.
Forcing a rate cut in light of such strong economic data lacks justification in the eyes of most economists. If investors believe the Federal Reserve is no longer independent in combating inflation, bond yields could rise sharply.
Currently, the signals from the Supreme Court lean towards protecting Cook, but any shifts in position during Wednesday's hearing could trigger significant market volatility.
<h2>Who Will Steer the Ship: &#34;Two Kevins&#34; or Someone Else?</h2>
Meanwhile, the nomination for the next Federal Reserve Chairman may also see results next week.
Although the candidate list once included BlackRock executive Rick Reed and current Governor Christopher Waller, both failed to pass the &#34;loyalty test&#34; due to their insufficient ties to Trump
The market generally expects that the final choice will be between the &#34;two Kevins&#34; - Kevin Hassett and Kevin Warsh.
Current signs indicate that Hassett is close to being out. Despite his extreme loyalty to Trump, Trump told Hassett directly last Friday:
<blockquote>
&#34;I actually want to keep you in this position (White House economic advisor).&#34;
</blockquote>
It now seems highly likely that the position of Federal Reserve Chairman will fall into the hands of former Federal Reserve Governor Kevin Warsh. This may be good news for Wall Street.
Executives like Dimon on Wall Street generally believe that, compared to Hassett, who is difficult to shake off the &#34;Trump mouthpiece&#34; label, the market will react more positively to Warsh. Warsh is seen as a candidate who possesses professional capability while maintaining a certain degree of independence - although Trump does not want to repeat the mistake of choosing a chairman who appears weak but is actually tough, like Powell.
Next Wednesday, Trump will deliver an important speech in Davos. Treasury Secretary Mnuchin expects that the final decision may be announced before or after Trump's departure.
Although Trump may still delay the decision or even unexpectedly propose other candidates, various signs indicate that the outcome of this battle for the center of global financial power has already been determined

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The outcome of next week's game will directly affect the market's expectations for the Federal Reserve's interest rate direction. If political noise subsides, Wall Street may return to fundamental trading in AI and gold

- A critical moment for the Federal Reserve is approaching, influenced by a criminal investigation of Chairman Powell and an upcoming Supreme Court case regarding the independence of the central bank.  
- Powell's strong response to the investigation reflects political backlash, signaling potential hurdles for his successor's confirmation if the inquiry continues.  
- Meanwhile, speculation about the next Fed chair leans towards Kevin Warsh as market reactions to his nomination are expected to be more favorable than for Kevin Hassett, whose loyalty to Trump raises concerns about his independence.

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Who is the new chairman, suing Powell, and overturning the Federal Reserve? Various struggles surrounding the Federal Reserve will be decided next week?