In a new research memo outlining potential scenarios if President Donald Trump were to fire Federal Reserve Chair Jerome Powell, analysts warned that regardless of how events unfold, “it would be chaotic.”

Tobias Marcus and Chutong Zhu of Wolfe Research wrote in a client note: “We expect, as most do, that the outcome would be sharply negative for markets, including broad-based selling in equities and an unwarranted rise in long-term yields.”

Wolfe Research predicted that the Supreme Court might ultimately have to decide whether Trump has the authority to remove Powell “for cause.”

The analysis came just hours after reports shook the perceived stability of Powell’s leadership at the central bank—reports that were quickly walked back.

CNBC had reported Wednesday morning, citing a senior White House official, that Trump had told a group of Republican lawmakers on Tuesday evening of his intention to “fire Powell soon.”

But during a press Q&A in the Oval Office, Trump swiftly denied his own official’s comments.

“We are not planning to do that,” Trump said, adding: “I never rule anything out… but I think it’s highly unlikely unless [Powell] is involved in fraud.”

Still, Trump is known for unpredictability and has a long history of firing officials shortly after publicly expressing support for them.

In Powell’s case, Trump has criticized him for months, accusing him of refusing to lower interest rates in line with White House demands.

Analysts call the idea ‘disastrous’

Roger Altman, founder of Evercore and former Deputy Treasury Secretary under President Bill Clinton, told CNBC’s Closing Bell: “There are a lot of bad ideas, but firing the Fed Chair—or trying to, because it’s unclear if it would succeed—is among the worst.”

Altman called the idea “horrifying,” highlighting the clear difference in economic performance between countries with truly independent central banks, like the United States, and those where monetary policy is government-controlled, such as Turkey and Argentina, which have seen double-digit inflation in recent years.

“I don’t believe Powell would resign if asked to,” Altman added, suggesting the matter would “end up in the courts.”

Potential chaos scenarios

Wolfe Research analysts agreed with Altman’s view, writing: “If Trump actually proceeds with firing Powell instead of just pressuring him to resign, Powell would likely sue to block the move.”

They asked: “The first question is, would Powell still be considered fired during the legal process?”

They noted that Trump had previously fired commissioners at independent agencies during his second term, and while some filed lawsuits to reclaim their positions, those efforts “failed.”

The memo added: “The exception with Powell is that he heads the agency he leads—unlike prior dismissals of commissioners who were not chairpersons, after Trump had already appointed a new chair.”

“In those cases, the new agency head could enforce dismissals. But at the Fed, there is no one with the authority to remove Powell.”

Wolfe Research outlined three possible scenarios if Trump goes through with the firing:

- Powell continues to function as Fed Chair while Trump seeks a court order to remove him.

- Powell voluntarily resigns and sues the government seeking reinstatement.

- Powell refuses to leave while Trump attempts to remove him via executive order.

The memo warned that the third scenario would be the most dramatic, referencing a recent incident in March when police were called to remove staffers from the US Institute of Peace after Elon Musk’s “Department of Government Efficiency” accused them of trespassing.

“It goes without saying,” the note read, “that the image of Powell being escorted out of the Fed by police would be profoundly unsettling for markets.”

Will the Supreme Court intervene?

If the matter escalates to a legal case, it is likely to reach the Supreme Court.

Analysts noted that the Court recently signaled in an unrelated case that it views the Fed as distinct from other independent agencies in terms of the protections afforded to its leadership.

The majority opinion stated: “The Federal Reserve is a unique, quasi-private entity that falls within a historically distinct tradition beginning with the First and Second Banks of the United States.”

Wolfe Research wrote: “We believe Powell has a good chance of winning in court, but it’s not guaranteed.”

They added that the core issue isn’t just whether the Court will uphold the ‘for cause’ removal protection for the Fed Chair, but also whether it will restrict the President’s authority to define what constitutes ‘cause.’

They raised another potential scenario: that a lower court might issue an injunction preventing Trump from carrying out the dismissal, and that such an order could remain in effect while the case proceeds.

The memo concluded that this would be enough to allow Powell to complete his term as Fed Chair.

US stock indices rose during Thursday’s trading as markets turned their attention to quarterly corporate earnings results.

The second-quarter earnings season for companies listed on Wall Street has officially begun, starting with bank earnings, most of which have shown strong data.

Government data released today showed that US retail sales rose by 0.6% month-on-month in June, exceeding Dow Jones estimates, which had pointed to a 0.2% increase.

Other data showed that initial jobless claims in the US declined by 7,000 to 221,000 in the week ending July 12, while expectations had pointed to an increase to 233,000.

As for trading, the Dow Jones Industrial Average rose by 0.3% (or 125 points) to 44,380 points as of 16:28 GMT. The broader S&P 500 gained 0.4% (or 23 points) to 6,287 points, while the Nasdaq Composite rose by 0.7% (or 140 points) to 20,871 points.

Copper prices declined on both the London and Shanghai exchanges during Thursday’s trading, amid a stronger US dollar against most major currencies and ongoing pressure on the markets ahead of the new US tariffs on copper imports, set to take effect on August 1.

During Thursday’s session, the most actively traded copper futures contract on the London Metal Exchange fell by 0.2% to $9,617.5 per ton as of 2:55 p.m. Mecca time.

Meanwhile, the most traded copper contract on the Shanghai Futures Exchange dropped by 0.15% to 77,840 yuan ($10,838) per ton.

According to analysts at ANZ Bank in a note quoted by Reuters, they stated that Trump’s announcement of a 50% tariff on copper imports would likely push the US market to rely on domestic stockpiles in the near term, putting downward pressure on copper prices in both the COMEX and London exchanges.

Data released Wednesday showed that copper inventories at the London Metal Exchange rose by 10,525 tons, reaching 121,000 tons, as eight new warehouses in Hong Kong officially began operations this week.

On the other hand, the US Dollar Index rose by 0.3% to 98.6 as of 16:10 GMT, recording a high of 98.9 and a low of 98.3.

In US trading, copper futures for September delivery fell by 0.6% to $5.49 per pound as of 16:06 GMT.

Bitcoin prices held largely steady on Thursday as the US House of Representatives moved closer to debating a series of digital asset bills, following a nine-hour deadlock.

The world’s largest cryptocurrency rose slightly by 0.2% to reach $118,747.5 as of 2:25 a.m. Eastern Time (06:25 GMT).

Bitcoin had surged earlier this week to record highs above $123,000, but later retreated below $116,000 amid profit-taking at historical peaks and growing concerns over US tariffs.

Crypto legislation clears key procedural vote

Late Wednesday, the US House narrowly voted in favor of formally opening debate on a package of digital asset bills, including the GENIUS Act, which establishes a federal regulatory framework for stablecoins.

The vote passed 217 to 212, after hours of internal negotiations among Republicans, who were divided over whether to advance the bills individually or as a single package.

This vote marks the first meaningful legislative breakthrough in what lawmakers have dubbed “Crypto Week”—a coordinated effort to bring regulatory clarity to the US digital asset sector.

Among the other bills under discussion are: the CLARITY Act, which aims to define whether tokens should be classified as securities or commodities, and the Anti-CBDC Surveillance State Act, designed to prevent the Federal Reserve from issuing a central bank digital currency (CBDC).

The procedural vote had stalled on Tuesday due to internal Republican disagreements, but gained momentum following intervention from President Donald Trump and House Speaker Mike Johnson.

Nevertheless, the narrow margin and continued uncertainty around the final vote have dampened momentum, keeping Bitcoin in a tight trading range.

Market cautious ahead of final vote

Traders are now awaiting the outcome of individual House votes on each bill, expected later this week, which could determine whether the cryptocurrency sees another breakout similar to last week’s.

Bitcoin is currently attempting to reclaim the $120,000 level, with many market participants asking: what could trigger a break above $130,000 or $150,000?

Technical analysis and institutional demand support Bitcoin

From a technical standpoint, Sunday night’s surge above $120,000 was driven by a short squeeze in the futures market, which triggered liquidations exceeding $1 billion across exchanges, according to data from Coinglass.

According to Ray Salmond, Head of Markets at Cointelegraph: “The spot market momentum needed to maintain prices above $120,000 isn’t clearly visible on centralized exchanges... but strong, ongoing global demand through bitcoin ETFs, public companies building bitcoin treasuries, and infrastructure investment continues to support the price.”

With CPI and PPI data due this week, and markets having absorbed the next wave of tariffs set to take effect on August 1, the risk-off sentiment that hit Wall Street earlier in the week appears to have eased.

Several developments have helped lift market sentiment, including President Trump’s success in advancing the procedural vote in the House on the GENIUS and CLARITY bills.

Bitcoin ETFs see highest inflows in three months

Reports indicate that Cantor Fitzgerald and Adam Back are nearing a SPAC deal that could provide Cantor Equity Partners with as much as 30,000 bitcoins.

Technical targets and upcoming resistance levels

On Bitcoin’s daily chart, an inverse head and shoulders pattern has been confirmed, with price closing above $112,000 on Thursday. This technically opens the door to a target around $143,000.

As the futures market continues to drive price discovery and short-term moves through liquidations, a sustainable push toward $150,000 will likely require consecutive daily closes above the $130,000 level.