It’s the Friday before a three-day weekend, so I’m pretty sure no one gives a damn about this newsletter. But Fed Governor Lisa Cook is in the news, and if you think I’m going to leave a Labor Day ‘Cook out’ pun on the table, I guess you haven’t been reading these newsletters for very long.

Besides, speculating about the Federal Reserve and monetary policy is what Labor Day is all about.

As you probably know, President Trump has been hammering the Federal Reserve for months, claiming that the FOMC has been too slow to lower interest rates. He’s also repeatedly called for Fed Chairman Jerome Powell to resign.

Powell has consistently dismissed the President’s attacks, and has stressed that Trump has no power to fire the Chairman, or other members of the Fed, without cause.

But as “luck” would have it, Trump’s Housing chief Bill Pulte just happened to find some (alleged) legal issues with one of Governor Cook’s mortgages. And mortgage fraud is just the sort of “cause” Trump needs to fire someone from the Fed. And he did!

But not so fast.

Despite Trump’s attempt to fire her through official channels (a post on Truth Social), Cook is refusing to step down, and is challenging the move in court.

Earlier today, US District Judge Jia Cobb, who just happens to be my favorite Federal judge, heard arguments on whether Cook can keep her job while the legal challenge plays out.

While Judge Cobb seemed sympathetic to Cook’s claims that she is being denied due process, she also seemed skeptical of arguments that the Trump administration’s allegations of fraud were purely a pretext. Rather than decide on the matter today, she asked both parties to submit more written arguments by Tuesday.

The fact that Cobb didn’t immediately rule in Cook’s favor seems to have spooked some traders, which caused the odds of her being ousted this year to rise by 10%. However, the chances that Cook will remain in power for the rest of the year are still at 64%, so we probably won’t be kissing the cook goodbye just yet. But keep a close eye on Cobb’s potential decision next week.

Cook’s odds of keeping her job through 2025 are good, but trending in the wrong direction. However, Chairman Powell’s odds of remaining in power are much better. In fact, there’s currently only a 9% chance he leaves the chairmanship in 2025. So unless Bill Pulte finds evidence that Powell claimed the Martin Building as his primary residence, it looks like his job is safe for now.

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