Good morning from the Financial Times.
Today is Tuesday, June 30th, and this is your FT News Briefing.
The U.S.
Supreme Court blocked Donald Trump from firing a Fed governor.
And some investors are saying goodbye, Magnificent Seven.
Hello, chip makers.
Plus, is Japan backsliding on its market reforms?
I'm Sonia Hudson, and here's the news you need to start your day.
The U.S.
Supreme Court ruled yesterday on who the president can and can't fire.
The justices stopped President Donald Trump from sacking Federal Reserve Governor Lisa Cook.
But in a different case they ruled.
The president can fire top officials at federal agencies, including at the Federal Trade Commission.
Joining me now is Ella Lee.
She's the FT's U.S. justice correspondent.
Hi, Ella.
Hi.
So first off, can you summarize each of these two cases and tell us how the court ruled?
Sure.
Yes.
So what we have here are two officials who President Trump sought to fire and who challenged their firings.
There's Lisa Cook, the Federal Reserve governor, who Trump has accused of mortgage fraud, which she has denied.
And then there's also Rebecca Slaughter, who is a Federal Trade Commission member, and she's a Democratic appointee to that board.
So the court here basically, is drawing a line in the sand that any independent agencies that exercise executive power are ultimately beholden to the president and can be removed at his whim, except for those at the Fed, basically to keep the central bank isolated from presidential influence.
So for now, what we get to see is that Lisa Cook gets to keep her job, while Rebecca Slaughter, that Federal Trade Commission member she lost her case and does not.
Yeah.
Tell me more about the distinction that the court is drawing here between the Fed and federal agencies, which include obviously the FTC, but also the Securities and Exchange Commission and others.
Yeah.
So what the court said here is essentially that the bank's history shows that the Fed has always been independent from the White House's whims.
On the flip side, these independent agencies.
These are agencies whose commission members, whose board members, exercise executive power.
And so if you are a commission member and you're exercising executive power, presidential power, then the president is in charge essentially and is able to remove you at will.
So Ella, is there any concern about potential massive turnover then at these agencies and what kind of impact that could have on the work that they do?
Yeah, I think so.
I mean, one of the things that I've heard from the experts that I've spoken to is that this might ultimately lead to sort of a loss of institutional knowledge at some of these agencies where The rules have been in place for decades and decades actually 90 years.
This ruling overturned a 90-year-old Supreme Court precedent that put these protections in place.
And so we may end up seeing sort of as administrations turn over.
Democrats are installing Democrats, Republicans are installing Republicans.
Trump now can decide I don't like that Democrat, I don't like that Republican and decide to sort of remove them and install his own preferred picks.
So I think that there's definitely concern that some of these agencies will start to lose some of that institutional knowledge and then also just some of that stability that came with knowing that these members would be appointed to their terms.
That would sort of pass throughout multiple administrations.
How do you think this ruling will ultimately impact how investors view the Fed?
Yeah.
So, I mean, I think the Fed's independence here is really important to investors.
I think that they are likely going to be pleased knowing that the structure that has been in place over the past you know, 100 plus years is going to remain in place.
It may get a little bit messier when we start looking at some of these other independent agencies and the impact that that has on the way that businesses are sort of interacting with the US federal government.
Ella Lee is the FT's U.S.
Justice Correspondent.
Thanks, Ella.
Thank you.
... ... ... ... ... ...
The FT's Emily Herbert is here to explain more.
Hi, Emily.
Hi, Sonia.
So why did the MAG-7 lose so much momentum this month?
So, after quite a few years of doing incredibly well in the stock market, the Mag7 have done badly this month.
What's happened is that for a lot of the Mag7 companies, they're committing to spending loads of money on the AI build out, on data center infrastructure and basically on this race to make sure that they're the first company to be the best company at ai, to have the best large language model, and investors are getting worried that all of this spending that these companies are doing isn't all going to translate into profits.
Some of it will be wasted on just trying to be the quickest and the first to get there, so there's a fear that not all the spending is going to be productive and turn into a kind of good return on the investment.
Yeah,
And as a result of those fears, we're seeing the sell off.
Where are investors putting their money instead?
Yeah.
So investors are saying, we don't know who's going to win this race.
We don't really want to make a bet on it.
So instead actually, what we're going to do is just bet on the companies who actually already are making a profit just from the physical build out phase itself.
And so those companies are the ones who make the physical things that the data centers need.
So it's chip and memory companies that have done incredibly well this year, but also kind of smaller companies that make bits of maybe cooling infrastructure or say, electricity providers.
It's the companies who are already getting the profit from the physical data center build out.
So if all of these investors are piling into chip stocks, is there a risk that those also become overhyped?
Definitely there is.
And some of the share price moves in those companies have been really quite extreme this year so far.
In the last couple of weeks actually, we've had a few wobbles and we've had a couple of days where the markets moved down quite sharply because some of the chip stocks that have run up a huge amount this year have sold off and investors are just getting a bit worried.
And I think there is a fear that some of the bets that people did feel confident about now maybe are too crowded.
And the next earning season is coming up in not very long.
So I think that will be really crucial for seeing how demand is, how supply is, and giving investors maybe the next signal about where this sector is heading.
Emily Herbert covers markets for the FT.
Thanks, Emily.
Thanks, Sonia.
But in recent weeks those investors have been raising concerns about some initiatives from the government and regulators.
They see the changes as backsliding on those reforms.
I'm joined now by the FT's Tokyo Bureau Chief, Leo Lewis.
Hi, Leo.
Hello there.
Okay, first off, can you tell us what Japan has done in recent years to attract investors?
What are these reforms that we're talking about?
Sure.
So we're 10 years in really, to a long process that the Japanese government has been undertaking since the mid-2010s, when Prime Minister Shinzo Abe was in charge.
The idea was that the long-term future of Japan depended on better governance standards in a market that had been moribund for quite a long time.
Since that time there's been a lot of interest in Japan and that interest has involved a lot of activist shareholders, initially led by foreign activist shareholders, but then picking up and turning into quite the domestic scene as well.
So we are halfway into 2026 and the Japanese stock market is on an absolute tear.
The Nikkei has broken through successive records and a lot of that is driven by foreign investment in Japanese companies.
Can you give us an example of one of the changes that has foreign investors concerned here?
So one of the kind of moves that we've been seeing has been the government putting together a working group on shareholder activism and is looking at tougher thresholds for shareholder proposals and disclosure requirements by shareholders.
And, you know...
Some of the suggestions, of some of the proposals have been made and that made their way out into the kind of domestic media have been a little bit chilling.
Why is the government making these changes if markets are doing so well?
I think one of the things that shareholder activists and engagement shareholders have done in Japan is to reveal just how strongly pro-shareholder a lot of the regulation and the rules are in Japan.
And there is a concern that a lot of the ground that has been gained over the last 10 years in some cases it has gone a little bit over some of the red lines that Japan has when it thinks about where is acceptable in terms of shareholders pushing companies around.
So there's a growing concern among foreign investors that pushback is now probably a little bit overdue, that you've got quite a nationalistic prime minister in charge and an idea that perhaps there is a bit of a sort of groundswell discussion in corporate Japan that says look, let's not let people take too much advantage of all this locked up value and all the other benefits that investors have seen here over the years.
How are government officials addressing these concerns from investors?
So the officials, I have to say, have been playing those concerns down.
They are at great pains to reiterate the fact that they are very keen for this consolidation to take place.
But I think the realization that it can end up being quite a messy process is filtering into the conversation to some extent as well.
Leo Lewis is the FT's Tokyo bureau chief.
Thanks, Leo.
Thank you.
You can read more on all these stories for free when you click the links in our show notes.
This has been your daily FT news briefing.
Check back tomorrow for the latest business news.
