The Federal Reserve’s top banking regulator will be stepping down next month, paving the way for President-elect Donald Trump to name a replacement and heading off a potential confrontation between the two.
Michael Barr’s resignation from the position, which is formally called the vice chair for supervision, takes effect as of Feb. 28, though he will stay on as a governor on the Fed board. His term as Fed governor lasts until 2026.
There had been speculation that Trump might seek to replace Barr after he takes office Jan. 20, the announcement will ease that transition amid speculation that the new president wants someone who is more bank-friendly to take the role.
Though he did not specifically mention the rumors that Trump would attempt to remove him, Barr said in a statement that “the risk of a dispute over the position could be a distraction from our mission. In the current environment, I’ve determined that I would be more effective in serving the American people from my role as governor.”
“It has been an honor and a privilege to serve as the Federal Reserve Board’s vice chair for supervision, and to work with colleagues to help maintain the stability and strength of the U.S. financial system so that it can meet the needs of American families and businesses,” he said.
Bank stocks rallied following the announcement. The SPDR S&P Bank exchange-traded fund that tracks the industry’s leaders gained more than 1%.
CNBC.com has reached out to the Trump transition team for comment.
In a release announcing the decision, the Fed noted that it will not make any major decisions on rules and regulations until a successor is named. The bank has been revising a set of new rules, dubbed the Basel endgame, that has been broadly unpopular in the industry.
Because the Fed is limited to seven board members, Trump will have to name someone from current group to the new position.
The position was created following the 2008 financial crisis that saw the implosion of multiple big names on Wall Street. Under Barr’s watch, the industry saw a crisis in early 2023 in which Silicon Valley Bank and a few other names collapsed, forcing the Fed to implement a liquidity facility to keep the issues from spreading.
In recent days, speculation had swelled that Trump might seek to force Barr from office. A Reuters report in late December indicated that Barr was consulting with a law firm over his legal options should the president-elect make a move.
Check out the companies making headlines in after-hours trading. Cal-Maine Foods – Shares gained 4% after the egg production company posted its latest quarterly results . For its second quarter of fiscal 2025, Cal-Maine Foods earned $4.47 per share on revenue of $954.7 million, with the latter figure marking an 82% increase compared to the year-ago quarter. The results were not comparable to the Street’s estimates due to thin coverage. AAR Corp – Shares of the aviation services provider advanced around 4% after the company’s fiscal second-quarter results beat Wall Street’s expectations. AAR Corp posted adjusted earnings of 90 cents per share on revenue of $686.1 million, more than the 85 cents per share and $654.2 million that analysts were expecting, according to FactSet. AZZ – The stock moved about 1% higher following the metal-coatings company’s better-than-expected third-quarter results. AZZ posted adjusted earnings of $1.39 per share on revenue of $403.7 million. That’s above the $1.26 per share and $394.3 million in revenue that analysts polled by FactSet had penciled in. Getty Images – Shares of the image database slid 4%. In Tuesday’s regular session, Getty soared more than 24% and Shutterstock popped nearly 15% after the companies announced a $3.7 billion merger . Shutterstock was little changed in after-hours trading.
Howard Marks, one of the most respected value investors who famously foresaw the dotcom bubble, is pointing out a handful of red flags in the market like valuation that could mean poor returns over the long term or a sizable decline nearer term. In his latest memo to clients, the co-founder and co-chairman of Oaktree Capital Management laid out five cautionary signs he’s seeing in the stock market after the S & P 500 ‘s best two-year run since 1998. Marks made clear that he’s not necessarily calling a bubble in stocks since his specialty lies in credit these days, but the memo focuses on signs of froth in equities. “It shouldn’t come as a surprise that the return on an investment is significantly a function of the price paid for it. For that reason, investors clearly shouldn’t be indifferent to today’s market valuation,” Marks wrote. Marks’ memo pegs the S & P 500’s current price-to-earnings ratio at 22. Using data from JPMorgan Asset Management, Marks explained that higher PE ratios have historically led to lower returns in the long run. Today’s multiple of 22 is near the top of the range, and this level would translate into 10-year returns between plus 2% and minus 2%, the data showed. Rather than poor performance in the long term, it’s also possible that the correction on the multiple is compressed into a short period of time, resulting in sharp, sudden sell-offs much like when the internet bubble burst in the early 2000s, Marks noted. .SPX 1Y mountain S & P 500 Apart from valuation, Marks specifically took issue with the “enthusiasm that is being applied to the new thing of AI.” Artificial intelligence emerged as the biggest investing theme over the past two years, pushing key beneficiaries like Nvidia to jaw-dropping prices. This AI enthusiasm might also have been extended to other high-tech areas, Marks added. Meanwhile, the “implicit presumption” that the biggest seven companies will be too big to fail also concerned him, he said. The so-called Magnificent 7 stocks — a group that includes high fliers such as Nvidia , Microsoft , Apple and Meta Platforms — was responsible for more than half of the S & P 500’s 2024 gain , according to Bespoke Investment Group. Many are still seeing more gains ahead for these juggernauts. Marks, whose firm managed $205 billion in assets under management as of September, also raised the question whether some of the S & P 500’s advance came from automated buying from passive investors, who don’t take value factors into consideration. The 78-year-old investor started writing investment memos in 1990 and they have become required reading on Wall Street. Even Warren Buffett has said he reads them regularly and always learns something from them. Marks said he has been thinking a lot lately of a quote often attributed to Buffett: “When investors forget that corporate profits grow about 7% per year, they tend to get into trouble.” But Marks said he asked his friend Buffett about that phrase and the legendary investor said he never said that. “But I think it’s great, so I keep using it,” wrote Marks.
Check out the companies making headlines in midday trading. Nvidia — Shares of the artificial intelligent darling slid 5%, reversing course after rising to an all-time high earlier in the session. Nvidia announced new gaming chips for computers that use its Blackwell technology at a conference in Las Vegas. Tuesday’s slide comes after a strong 2024 for Nvidia, during which it was one of the best performers in the S & P 500 . UniFirst — The school and work uniform maker jumped 18% after competitor Cintas confirmed it submitted a proposal to acquire the company for $275 per share in cash. The Wall Street Journal first reported the development. Cintas shares rose 2%. Getty Images , Shutterstock – The two image databases surged on the heels of the companies’ announcing a $3.7 billion merger , with the new entity keeping the Getty name. Following the announcement, Getty jumped more than 24%, while Shutterstock gained nearly 20%. Aurora Innovation — Shares soared 37% after the self-driving technology firm announced a partnership with Nvidia and Continental. The agreement is focused on rolling out driverless trucks. Inari Medical — Shares surged 22% after Stryker said it would buy the medical device maker in a transaction valued at about $4.9 billion, or $80 per share in cash. Stryker shares shed 1.6%. FuboTV — The streaming service jumped nearly 7%, adding to the 251% it gained in the previous session. On Monday, Disney announced it will combine its Hulu+ Live TV service with Fubo. Disney will own 70% of the company, while Fubo shareholders will own 30%. Micron Technology — The chipmaker jumped 3%, extending Monday’s 10% gain. This week’s bump came after Nvidia CEO Jensen Huang said it’s sourcing Micron’s G7 memory for new AI-powered graphic processing units. Moderna — The pharmaceutical stock rallied 11%. Moderna is one of few drugmakers currently developing a vaccine for bird flu, a disease that’s been pushed in the spotlight after the U.S. recorded its first human death. Paychex — The human resources stock added 2% after entering a definitive agreement to acquire HR software provider Paycor for $22.50 a share. Paycor shares, on the other hand, slipped 3%. Tesla — The electric vehicle giant slipped 4% in the wake of a Bank of America downgrade to neutral from buy. The bank cited execution risks and a lofty valuation as reasons for pause. Carvana — Shares added about 7% after RBC upgraded the online car seller to an outperform rating from sector perform. Analyst Brad Erickson said that a “controversial pullback” last month has opened up an attractive buying opportunity for the stock. — CNBC’s Yun Li, Jesse Pound, Lisa Han, Michelle Fox, Sean Conlon and Sarah Min contributed reporting