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Trump advisors are considering plans to dramatically revamp the Fed, WSJ report says

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Former US President Donald Trump speaks to members of the media at Manhattan criminal court in New York, US, on Thursday, April 25, 2024. 

Jeenah Moon | Via Reuters

Former President Donald Trump’s political operatives are putting together a plan that would give him unprecedented influence over the Federal Reserve, including a plan that could make him an “acting” central bank board member, according to a Wall Street Journal report.

The plans, which the Journal report described as highly secretive, are part of a 10-page document that suggests Trump — if elected — would be consulted on interest rate decisions. In addition, the Treasury Department would be used as an added check and balance to oversee the Fed’s bond-buying activities.

Along with those proposals, the draft contends that Trump could remove current Fed Chair Jerome Powell from office and require that Fed policy be aligned with the administration’s goals. While in office, Trump harshly criticized Powell and his fellow central bankers as they were raising interest rates and reportedly considered ousting him.

Trump campaign officials told the Journal that the draft proposals shouldn’t be considered “official.” It’s unclear what authority the president would have to take such bold steps on a Fed that traditionally has sought to protect its activities from outside political pressure.

A Fed spokesperson declined to comment on the report.

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T. Rowe Price likes stock picking now

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One of the largest active ETF managers on leveraging fund tactics in new ways

It appears T. Rowe Price is benefitting from the record growth in actively managed exchange traded funds.

Tim Coyne, the firm’s head of ETFs, reports the firm is seeing significant growth in the area — listing the T. Rowe Price Capital Appreciation Equity ETF (TCAF) and T. Rowe Price U.S. Equity Research ETF (TSPA) as two established strategies that can satisfy investor demand.

“I think having that professionally managed portfolio is really beneficial to clients,” Coyne told CNBC’s “ETF Edge” this week. “We’re seeing just… greater volatility [and] uncertainty across both the equity and fixed income markets.

According to Coyne, the T. Rowe Price Capital Appreciation Equity ETF suits investors who are looking for long-term growth.

“The objective of the fund is to outperform the S&P 500 with lower volatility and greater tax efficiency,” he said. “It’s also a more concentrated portfolio, typically holding around a hundred names.”

As of April 24, the fund’s top holdings include Microsoft, Amazon, and Apple according to the T. Rowe Price website. But it’s not all Big Tech. The ETF also features smaller positions in companies like Becton Dickinson and Roper Technologies.

The T. Rowe Price Capital Appreciation Equity ETF is down about 5% so far this year while the S&P 500 is off about 7% However, the ETF is up close to 8% over the past year — roughly identical to the S&P 500’s performance.

Coyne notes the T. Rowe Price U.S. Equity Research ETF follows a similar strategy, but with a heavier weighting in top tech stocks.

“This is more of a large-cap growth product [T Rowe Price U.S. Equity Research ETF],” he said. “There are components of characteristics of both passive and active here. This fund is actually managed by our North American directors of research. So again, strong fundamental research is going into the stock selection.”

Both the T. Rowe Price U.S. Equity Research ETF and S&P 500 are down around 7% since the beginning of the year. Meanwhile, the fund is up almost 9% over the past year. That’s less than one percent better than the S&P 500’s performance.

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T. Rowe Price U.S. Equity Research ETF vs. S&P 500

‘Some form of bear market’

Strategas Securities’ Todd Sohn thinks investment demand for active managers will continue to be strong.

“This is the type of the environment where it [active management] can actually shine,” the firm’s senior ETF and technical strategist said. “We are in some form of bear market. This is where the active manager really can come into hand and offer their solution they are doing right.”

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