U.S. Stocks Continue to Defy Gravity, Even as Markets and Economies Elsewhere are Crashing; Trump and Federal Reserve at Odds

Attempting to figure out U.S. equity markets has become an exercise in futility.

Amid geo-political upheaval from heavily-indebted countries in Europe - France, Germany, and England in particular - tariff and inflation concerns in the U.S., ongoing conflicts in which the United States is deeply intertwined, and President Trump's unpredictable actions domestically, stocks have been oddly complacent and accommodating to shareholders, with all of the major indices at or near all-time highs.

Tuesday's trading was a case-in-point. While stocks were down everywhere from Asia to Europe, U.S. markets displayed remarkable resilience as if it was on its own trajectory and conditions in the rest of the world didn't matter, when, naturally, they do. Wall Street and the money fueling the rallies seems to have little in the way of conscience or risk assessment.

On Tuesday, in a rare move, Donald Trump fired Lisa Cook, a member of the Federal Reserve board of governors. The markets didn't even blink. Perhaps the assumption is that Trump's firing was more misdirection or revenge and that the Supreme Court will nullify the president's attempt to stack the board with appointees more favorably aligned with his "lower rates, now" mantra.

But, what if the court decides that the firing is within Trump's constitutional authority? It makes the Fed vulnerable to outside influence by setting a precedent that the current president can use to his political and economic advantage, along with future presidents who may use the firing mechanism as a tool of fiscal policy.

The Fed itself is not beloved by most people, especially consumers and anybody who has a credit card or mortgage. The Federal Reserve consistently acts in its own interests, not in those of the American public. If they did, the U.S. dollar would not have been ravaged by inflation over the many decades the Fed had control of the currency in the U.S. and the greenback was the reserve currency of the world.

Compared to its value at the Fed's birth in 1913, the dollar has lost nearly all of its value, debased by a minimum of 97% and currently on a trajectory to eliminate the last three percent of value within a very short time.

Still, the Fed stands between the government and constitution. Federal Reserve Notes, which Americans and most of the world regard as "money" are only IOUs, debt instruments created either out of thin air or by bank loans. While they continue to be a safe medium of exchange, they are by no means a store of value. They lose value consistently over long periods of time.

Beyond the relative security of everybody using the same currency as issued, the Fed also acts as a lender of last resort, especially during crises, as has been obviated as recently as 2008, when they bailed out most of the world's leading banking institutions. Should U.S. presidents gain control of the institution's policy mechanics, the next crisis could be the Fed's last, and maybe that's a good thing.

Heading into Wednesday's "Nvidia day" (the company reports after the close), futures have essentially flat-lined, which leads to no consensus on direction. How long stocks can remain bubbly is something nobody seems able to reasonably predict, only that they'll fly high until the next crisis hits, although one might consider the imminent economic collapse of both England and France, waving white and red flags, to indicate the next crisis is already well underway.

At the Close, Tuesday, August 26, 2025:
Dow: 45,418.07, +135.60 (+0.30%)
NASDAQ: 21,544.27, +94.98 (+0.44%)
S&P 500: 6,465.94, +26.62 (+0.41%)
NYSE Composite: 21,082.56, +81.99 (+0.39%)