The White House-Federal Reserve power struggle… A market test… Trump's only qualification for the next Fed chair… Apple's new supply deal… Mailbag: Tariffs, and are bitcoin ETFs 'skyrocketing'?...

For about 20 minutes today, the market looked a little rattled...

The catalyst was President Donald Trump reportedly telling a room full of Republican lawmakers yesterday that he plans to fire Federal Reserve Chair Jerome Powell "soon."

Mr. Market isn't a fan of surprises. The S&P 500 Index went from being up 0.2% this morning to down almost 0.6% in about 20 minutes. But then it reversed direction after Trump told reporters in the Oval Office today that firing Powell would be "highly unlikely"...

We're not planning on doing anything... No, I'm not talking about that. Fortunately, we get to make a change in the next, what, eight months or so, and we'll pick somebody that's good... We want to see lower interest rates. Our country deserves it.

I don't rule out anything, but I think it's highly unlikely, unless he has to leave for fraud [referring to White House allegations of Powell deliberately overspending on renovations to the Fed's headquarters in Washington].

The benchmark S&P 500 finished today slightly higher.

Perhaps the episode was a test to see how the market would react to the idea of replacing Powell before his term is up in May 2026. (It wasn't bullish in the very short term.) It also remains to be seen whether firing Powell would be deemed legal if it did happen.

But as I (Corey McLaughlin) wrote two weeks ago, the broader point when it comes to White House-Fed relations (and what it could mean for the market) is that signs point to lower interest rates eventually...

Seeking 'low-interest people'...

Today, Trump again argued that Powell is "too late" on cutting rates... that doing so would save the U.S. government over a trillion dollars annually... and that "we have no inflation."

About the Fed chair position, he even said, "I'm only interested in low-interest people."

Trump said he would consider Kevin Hassett, the White House's National Economic Council director, for the job. Hassett has emerged as a leading candidate ahead of Treasury Secretary Scott Bessent, who Trump said is doing a "great job" in his current position.

In our July 1 edition, we called the upcoming change in Fed leadership "the coming central-bank power shift."

That might not happen until closer to May when Powell's term ends. But in the interim, the idea of "cheaper dollars" coming then – or sooner if a Powell Fed cuts rates later this year as the market expects – could provide a large bullish tailwind for stocks.

Along the way, though, uncertainty about when a change in the leading voice at the Fed will happen, or who will replace Powell, could shake things up. We saw an example of that today, if only briefly.

As for the claim of 'no inflation'...

According to today's government inflation report, Trump was right – sort of.

The June producer price index, which measures prices paid by businesses, was unchanged from the month prior... but was still up 2.3% year over year.

As we reported yesterday, June consumer price index data came in at or slightly above Wall Street expectations. This benchmark measure of prices rose by 0.3% last month and 2.7% year over year.

So, there's not "no inflation" – even in the official government data. This isn't a political statement... I've long written that so long as there is fiat currency, there will be inflation. That's why you should own "hard assets" like gold in your portfolio.

But for this month at least, the inflation picture was mixed – with spotty price increases in some areas that can be chalked up to tariffs, but also little price movement and even disinflation in other areas (like airlines and hotels, as we wrote yesterday).

Speaking of tariffs, which have been our primary subject of the past week, here's Nick Koziol with a follow-up on a story he wrote about last week...

More good news for MP Materials (MP)...

Last week, we briefly covered the U.S. government's new investment in American rare earths miner MP Materials. From last Thursday's Digest...

The partnership will provide MP Materials with the funding to open a second magnet plant in the U.S. In return, the government gets a 15% stake in the company, and (hopefully) a steady stream of rare earth elements ("REEs").

Well, the good news keeps pouring in for MP Materials. Yesterday, the company announced a $500 million, long-term agreement with consumer-electronics giant Apple (AAPL).

Starting in 2027, MP Materials will supply Apple with rare earth magnets from its facility in Fort Worth, Texas. Eventually, MP Materials said that it will "ramp up [production] to support hundreds of millions of Apple devices."

That's great for MP Materials. Apple shipped more than 228 million iPhones in 2024 alone. And investors are clearly excited – the stock has nearly doubled in the past week on these two announcements.

The headlines have pulled all rare earth stocks higher, with the VanEck Rare Earth and Strategic Metals Fund (REMX) up 15% over the past week.

It's a win for Apple, too...

Trump has had Apple in his crosshairs for months. He has even threatened the company with a 25% tariff if it doesn't bring iPhone manufacturing to the U.S.

Even though Apple has been moving manufacturing to places like India, it still manufactures about 90% of its iPhones in China.

This deal with MP Materials could ease some of the tariff tension. It also lowers Apple's reliance on China, which is the world's dominant player in rare earths.

As recently as 2023, China accounted for more than 60% of rare earth production and about 90% of processing. That concentration can be a problem for the rest of the world – especially when geopolitical tensions are as high as they are today.

During the escalation of the U.S.-China trade dispute earlier this year, China suspended exports of seven of the 17 rare earth metals.

That export ban only lasted a few months, with China approving exports as part of a framework deal with the White House. But Apple is not taking chances, and for good reason.

Back in 2010, China banned rare earth exports to Japan for two months. Some Japanese manufacturing companies nearly ran out of supplies, according to the New York Times. They now hold more than a year's worth of inventory to prevent that issue again.

So, companies like MP Materials are extremely important to cut down on China's large share of the rare earths industry, especially in a new world of trade where the cost of importing has become substantially higher for U.S. businesses.

The Commodity Supercycles team has been following this trend...

In August 2022, our colleagues Brian Tycangco and Bill McGilton highlighted the need to diversify rare earth supplies out of China. Between tariffs, wars, and other disputes, they wrote that "the era of free global trade is over."

Even then, the U.S. was already working to boost its rare earth industry. From that August 2022 Commodity Supercycles issue...

U.S. officials know it's unacceptable to be dependent on one of its top geopolitical rivals for REEs that are vital to its military and high-tech industries. That's why the U.S. and its allies are now in the process of rebuilding REE supply chains independent of unfriendly blocs. But it's a multiyear process, and it's still in the early stages.

Nearly three years later, that process is still underway. The resurgence of trade tensions with China in recent months has only magnified the need for domestic rare earth production and refining. As the Supercycles team wrote in the May 2025 issue...

Even if China's rare earth export restrictions were lifted tomorrow, it has become clear to Western governments that they cannot keep relying on China for supplies.

So, this trend still has plenty of room to run. Commodity Supercycles subscribers and Alliance members can read the original issue, and find Brian and Bill's recommendation about the small business positioned to break the Chinese monopoly on rare earths, right here. The stock remains a buy in the Commodity Supercycles model portfolio.

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New 52-week highs (as of 7/15/25): Ansys (ANSS), Broadcom (AVGO), Alpha Architect 1-3 Month Box Fund (BOXX), Cameco (CCJ), GE Vernova (GEV), iShares Convertible Bond Fund (ICVT), Lynas Rare Earths (LYSDY), Microsoft (MSFT), Sprott (SII), Skeena Resources (SKE), TransDigm (TDG), Global X Uranium Fund (URA), and ProShares Ultra Semiconductors (USD).

In today's mailbag, more thoughts on tariffs, including a positive report from the Gulf Coast... and feedback on bitcoin exchange-traded funds ("ETFs"), which were part of an analysis in yesterday's Digest... Do you have a comment or question? As always, e-mail us at [email protected].

"I live on the Alabama coast and frequently go through Bayou La Batre, a center for shrimping and gulf fishing and fish processing. The town has been withering the last five years and eventually the boats couldn't even afford to go out because they were being undercut by cheap imported shrimp from China and other Asian countries. Despite emergency declarations by the state it continued to wane. After two years with so many boats docked... they are finally back out shrimping and the processing plants are operating again. The tariffs are saving this town and its industry (which also includes thousands of boats across the upper Gulf Coast that we need to keep functional from a national security standpoint as well). This same scenario is happening across the upper Gulf Coast from Texas and Mississippi through Alabama and Florida." – Subscriber Carol M.

"Some very interesting comments [on tariffs]. John W's comments were particularly eye opening, and I thank him for submitting them. The bottom line seems to be that there will be a significant number of Americans adversely impacted by whatever policy the government adopts. I don't pretend to know what the best answer is, or whether Trump's desire to onshore jobs will actually work. If it doesn't, it seems likely that we will end up with the worst of the available alternatives." – Subscriber Sherwin R.

"I've been reading a lot lately about how so many millions (billions?) of dollars are flowing into Bitcoin ETFs. If that's the case, why isn't IBIT (and other [bitcoin] ETFs) skyrocketing? Thank you." – Subscriber Terry O.

Corey McLaughlin comment: It's billions, yes... and, well, I guess it depends on your definition of "skyrocket."

IBIT (the iShares Bitcoin Trust Fund) is up almost 23% since the start of the year and has risen more than 80% in the past 12 months. Other bitcoin ETFs have similar returns. Please note, this isn't a recommendation to buy any of them. I'm just pointing out the returns.

If you're looking for fresh crypto recommendations with potentially even more upside than bitcoin, I'd point you to this short presentation. It includes more information on how you can access our colleague Eric Wade's elite research in the space (because of his stellar returns over the years, we've established a crypto-only Hall of Fame at the bottom of our daily e-mail).

Stansberry Alliance members, of course, have access to all of Eric's research and recommendations in Crypto Capital and Stansberry Innovations Report, where you can find a special report on his No. 1 crypto pick for 2025.

All the best,

Corey McLaughlin and Nick Koziol
Baltimore, Maryland
July 16, 2025