GM. This is Milk Road Macro, the newsletter tracking the Fed drama like it’s the latest season of Succession, but with more interest rates and fewer yachts.

Here’s what we got for you today:

• ✍️ Things are changing at the Fed

• 🎙️ The Milk Road Macro Show: Stablecoins Are Eating the World, Fed Shift Ahead, AI Prints Billions w/ Ram Ahluwalia

• 🍪 Trump replaced the BLS chief with E.J. Antoni

THINGS ARE CHANGING AT THE FED

Donald Trump is slowly getting a firm grip on the Federal Reserve.

He’s adamant that interest rates must be slashed - and has been attacking Fed Chair Jerome Powell for months now.

And this past Friday, Trump appointed a new Fed Governor - meaning things might be about to get spicy.

The surprise new pick is bullish on: 

• Immediate rate cuts

• Upending the Fed as an institution

• Bitcoin and crypto

Yep – he’s definitely set to ruffle some feathers.

But this new guy will not be the new Fed Chair - he’ll only be around temporarily.

So the real question is this: who will Trump pick to take over the top job from Fed Chair Jerome Powell?

Let’s take a look…

There’s a new kid on the block

Two weeks ago, Fed Governor Adriana Kugler suddenly announced her resignation.

That left a hole on the FOMC for President Trump to fill immediately. 

And last week, Trump named Steve Miran, currently chair of the White House Council of Economic Advisers, as the person to fill the hole.

That means Miran will likely take a seat on the Fed board imminently and will vote on rate decisions at upcoming Fed meetings.

But just to make things crystal clear: it’s been confirmed that Miran is not Trump’s pick for next Fed Chair - he will only fill the open Governor role temporarily until January 2026.

This gives Trump more time to decide who he’d like to nominate for the top job, when Jerome Powell's term ends in May 2026.

However, picking Miran was a big surprise – and his presence could mean things get heated at the Federal Reserve for the short time he is there.

Here’s why…

1/ Miran wants rate cuts and he wants them now

For some time Miran has been advocating heavily for rate cuts.

It’s highly likely that he will be voting for rate cuts at upcoming Fed meetings - but his vote is only one of 12.

Still, he’ll be another dovish member of the Fed board, sitting alongside Christopher Waller and Michelle Bowman, who were both “dissents” at the most recent FOMC meeting in July, disagreeing with the decision to hold rates steady.

(The crew of doves on the Fed board is growing.)

2/ He vehemently disagrees with Powell on potential tariff inflation

Miran is a “Trump loyalist” and has aligned with the President on a range of economic issues, including tariffs. 

Miran was actually one of the main architects of the Trump tariff plan.

Last year he wrote a paper outlining how the US could implement large global tariffs and “restructure global trade”.

Speaking last week, he said there was “zero macroeconomically significant evidence of price pressures” from Trump’s tariffs.

This is in sharp contrast to Fed Chair Jerome Powell and some other FOMC members.

Powell has stated on a number of occasions that he believes tariffs will cause a “one-time” boost to inflation - and this is one of the main reasons why the Fed has been holding rates steady.

There could be some heated discussions ahead at the Fed.

3/ He’s got some BIG opinions on the Federal Reserve as an institution

For his short term, Steve Miran could be a disruptive force, representing the vanguard of a large number of the Trump team seeking radical changes at the Fed and questioning the central bank’s independence.

In March 2024, Miran published a paper “clarifying that [Fed] members serve at the will of the US President”, a view the Supreme Court has signaled it would not support.

The paper proposed a top-to-bottom overhaul of Fed governance, claiming the Fed had failed to remain apolitical.

The paper proposed that Fed Governors should be removable by the President for any reason.

In a response to the paper, Bloomberg Economics’ David Wilcox wrote that the plan would “shatter market confidence - and for good reason - an extensive academic literature and our historical experience in the US demonstrate that increased political control tends to generate worse inflation”.

While Miran won’t really have any power to put his proposals into action and upend the Fed as an institution - he might ruffle a few feathers.

4/ He’s a big bitcoin advocate

Miran is a big believer in bitcoin and crypto.

He’s been a strong advocate of the Trump team’s crypto deregulation efforts.

And he’s repeatedly written on X that “bitcoin fixes this”.

So, what about the next Fed Chair?

It’s possible that Miran might shake things up on a short-term basis.

But what’s the latest with the top job?

Last week, it emerged that Christopher Waller is now a clear favorite to become the next Fed Chair.

Waller is already a Governor on the Fed board - and he’s currently particularly dovish.

At the most recent FOMC meeting in July, Waller called for a rate cut, making clear he had concerns over a deteriorating labor market.

Maybe this was his job application for President Trump?

Waller has reportedly met with the wider Trump team about the Fed Chair role and is believed to be the most favoured candidate currently, according to reports.

But he is yet to meet directly with President Trump.

Odds that Waller will become the next Fed Chair have jumped higher on betting markets.

Polymarket puts his odds at 38%, comfortably ahead of other rumoured candidates.

Trump’s continuous heated attacks on Powell have triggered questions about whether his next pick to lead the Fed will damage the independence of the central bank.

Appointing a full-on “Trump loyalist” to Fed Chair could be a bad idea, because the Treasury market might freak-out amid concerns about Fed independence.

But Waller, having been a fairly well-respected member of the Fed for years, might be a pick that is more easily digested by markets.

Waller said in April that the Fed’s independence is “critical to the well-functioning of the US economy”.

Unlike some of the other potential picks that have been rumoured, Waller probably won’t bend the knee and advocate for drastically cutting interest rates just because Trump said so.

Wrapping up

Trump is slowly getting his grip on the Federal Reserve.

Miran might ruffle some feathers in the short-term - and he is another almost-certain dove sitting on the Fed board, potentially increasing the likelihood of rate cuts in the coming months.

But the bigger question is who will become the next Fed Chair.

Waller would be a sensible pick, likely avoiding any potential negative reaction from markets concerning Fed independence, as he (probably) won’t just blindly follow along with anything/everything Trump says.

Maybe in 12 months, the picture won’t have changed that much - Trump will still be constantly attacking the Fed Chair, but it’ll be Waller he’s attacking, not Powell.

That’s it for this edition - catch you in the next one.

STABLECOINS ARE ABOUT TO SHAKE UP THE GAME 💸

We sat down with Raam Ahluwalia to explore why stablecoins could be the most disruptive force in payments in decades, and the winners and losers might surprise you.

Here’s what’s inside the latest episode:

• Why stablecoins could cut merchant fees from ~3% to under 1%, unlocking huge gains for retail and beyond

• Why they might supercharge USD dominance globally, and trigger pushback from the EU and China

• The trillion-dollar boost they could deliver to U.S. Treasury demand

• How Fed policy, politics, and AI adoption could shape the speed and scale of this shift

It’s a must-watch if you want to see where money, tech, and policy collide next 👇

YouTube | Spotify | Apple Podcasts

BITE-SIZED COOKIES FOR THE ROAD 🍪

After firing the head of the BLS (the Government agency tasked with compiling US inflation and job data), President Trump has nominated E.J. Antoni as the new commissioner. Antoni is a long-time critic of the BLS and he might make drastic changes to the way important economic data is compiled.

China has urged local firms to avoid using Nvidia H20 processors, particularly for Government-related purposes. Nvidia recently secured approval to resume AI chip sales to China, under the condition that they give the US Government a 15% cut of revenue.

Circle, the stablecoin issuer that has seen a meteoric rise since its IPO in June, will report quarterly results today for the first time since going public. The stock is up more than 400% from its IPO price. Wall Street expects Circle to post a Q2 loss, but investors will watch for growth in USDC circulation and stablecoin market share following the passage of the Genesis Act.

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