Making sense of the forces driving global markets

By Jamie McGeever, Reuters Open Interest Markets Columnist 

Investors on Monday brushed aside the dramatic news of the Trump administration's threat to criminally indict Fed Chair Jerome Powell, lifting the S&P 500 to a new all-time high, while precious metals also soared to new peaks.

I dig into this in my column today, asking the question how long Wall Street can shrug off the 'visible hand' of U.S. President Donald Trump, who is increasingly playing the role of 'activist investor in chief' in corporate America.

I’d love to hear from you, so please reach out to me with comments at jamie.mcgeever@thomsonreuters.com. You can also follow me at @ReutersJamie and @reutersjamie.bsky.social. 

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* Testing dependence on independence

The Trump administration has rapidly escalated its war on the Fed, threatening Chair Jerome Powell with criminal charges related to the Fed building renovation saga. Powell has fired back with an unprecedented rebuttal. The gloves are off. 

While this is uncharted territory, the direction of travel has been clear for a long time. The question now for investors is do they think an independent Fed is in the dustbin of history or can it still be saved? If it's the former, is has yet to show up in asset prices. 

* Precious metals maintain momentum

If doubts over the Fed's independence do deepen, where will investors seek safety? Traditional harbors like Treasuries, the dollar, Swiss franc or Japanese yen seem flawed to varying degrees for various reasons. The clear winners appear to be gold and precious metals.

Last year was so historic - gold, silver and platinum rose between 65% and 150% to record highs - that momentum must surely slow this year, right? Ordinarily, yes. But this is shaping up to be no ordinary year. Annual gains of 150% will be hard to replicate, but new peaks look certain. And lots of them, too.  

* Putting money to work

Despite the challenges and risks facing markets at the start of this year - see my latest column below - investors are putting their money to work. And not just in perceived 'safe havens' like gold and precious metals.

Industrial bellwether metal copper is at a record peak, U.S. corporate debt issuance last week topped $90 billion and global issuance exceeded $300 billion, U.S. high yield spreads are the tightest since September, M&A activity is bubbling up, and stocks are hitting all-time highs. Buy the dip? What dip?  

If record-high U.S. stock prices accurately reflect investors' assessment of the first year of Trump 2.0, then it's a glowing scorecard for the most interventionist government in decades. 

It's yet another example of the topsy-turvy economic world where the global norms and orthodoxies of the last 40 years are being questioned and sometimes discarded by the U.S. president - who is rapidly becoming the market activist-in-chief. 

Under Donald Trump's direction, the U.S. government has taken direct equity stakes in companies, called for the firing of CEOs, attempted to dictate CEO compensation, ensured the government cuts from Big Tech chip exports, and sought to fire Federal Reserve officials.

On top of that, Trump has ordered the purchase of $200 billion of mortgage-backed securities, directed U.S. oil companies' activities in Venezuela, tried to ban defense firms from buying back shares unless they speed up production, and called for a one-year cap on all credit card interest rates as his Justice Department has threatened to