FED: Reserves Cross The $3T Mark, + ON RRP Lowest Since Nov 2020 (1/2)

Two separate articles published in quick succession Tuesday afternoon point to multiple angles being pursued by the Trump administration to exert more influence on the composition of the FOMC. 

• Bloomberg's "Trump Team Is Weighing Options to Extend Influence to Fed Banks" (link) says that the Trump administration is "reviewing options for exerting more influence over the Federal Reserve’s 12 regional banks that would potentially extend its reach beyond personnel appointments in Washington, according to people familiar with the matter."
• From the Bloomberg piece: "The Board of Governors is next scheduled to authorize the current roster of reserve bank presidents in a once-in-five-year exercise in February... Several of the Fed’s regional presidents began to grow concerned earlier this summer about what Trump’s plans for the central bank could mean for their jobs, according to people familiar with the matter. The president’s announcement late Monday exacerbated those concerns, with presidents making a round of calls to each other about what Cook’s firing could mean for them, according to one person familiar with the matter."
• The Wall Street Journal's "Trump Weighs Quickly Announcing Nominee to Replace Lisa Cook on Fed Board" (link) cites "people familiar with the matter" as saying President Trump wants to "move quickly to announce a nominee" to succeed Cook.
• One potential candidate per the WSJ is ex-World Bank President David Malpass. He wrote in a WSJ op-ed last week that "One foundational change for the Fed would be anchoring its inflation-fighting policies in forward-looking, market-based data with a goal of defending the dollar and expanding its use as the world's reserve currency. There's no necessity for the current high level of interest rates and bond yields....Another foundational change for the Fed would be shrinking itself -- a move that's long overdue."

StatCan estimates that both manufacturing and wholesale trade sales increased strongly in July, portending a continued recovery from a weak Q2.

• The manufacturing flash estimate is for 1.8% M/M growth, with the transportation equipment and petroleum/coal subsectors expanding the most.
• Manufacturing sales rose by 0.3% in June, for the first rise since January - a 1.8% July increase would be the best in 17 months, and raise the 3M/3M annualized rate to -11.7% from -18.0% (which followed outsized gains in Q1 that were partly tariff-front running related).
• For wholesale trade, StatCan estimates a 1.3% rise (ex-petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain), in large part reflecting gains in motor vehicle/motor vehicle parts and accessories sales.
• This wholesale category rose 0.7% M/M in June, the first rise since February. A 1.3% rise in July would help boost the 3M/3M annualized growth rate to -2.5% from -6.6% in June (again, reflecting giveback from a jump in Q2).
• We get the full reports and data on September 15, but the July data suggests that after a very negative quarter for both manufacturing / wholesale sales, there has been a nascent recovery. 

The Atlanta Fed's GDPNow estimate of Q3 growth was a little weaker Tuesday at 2.18% Q/Q SAAR, vs 2.26% in the last full update on Aug 19.

• There were two countervailing factors that ultimately offset each other in producing the latest estimate.
• Equipment investment is now seen rising 4.8% after stronger-than-expected core durable goods orders data for July, compared with the 3.7% estimate prior (and 4.8% in Q2).
• But residential investment is seen pulling back even more than previously foreseen, at -8.2% (-5.9% in Aug 19 est, and -4.6% in Q2) after a slew of housing data (starts/permits/home sales).
• The next update is on Friday after multiple key data points including advance trade data and PCE.