Investing.com -- The Supreme Court’s latest move in Trump v. Wilcox is sharpening market focus on the growing implications of expanded executive authority in the U.S.—and research firm Jefferies believes investors should start pricing it in.
Strategist Aniket Shah flagged that a broader shift toward the “Unitary Executive Theory”—a legal doctrine embraced by the Trump administration—could materially reshape U.S. governance and inject higher policy risk into financial markets.
The theory posits that the president has sole control over the executive branch, including the power to fire leaders of independent agencies and override congressional spending decisions.
"We believe expanded Presidential power is bearish for risk assets & will further erode the concept of American exceptionalism in markets," Shah wrote in a note sent to clients on Thursday afternoon.
The Supreme Court decision to stay lower court rulings that had protected Biden-appointed officials on the National Labor Relations Board and the Merit Systems Protection Board is seen by Jefferies as a potential turning point.
While not a final ruling, the Court’s move allows the Trump administration to proceed with removals and signals broader judicial acceptance of presidential control over federal agencies.
Jefferies argues that if this interpretation gains further legal traction, it could empower a future President Trump to more freely implement tariffs, deregulate sectors without the usual administrative checks, and replace heads of agencies traditionally shielded from political pressure.
Implication for the Federal Reserve and Chairman Jerome Powell
The Court stopped short of granting the same power over the Federal Reserve, explicitly carving it out as a “uniquely structured, quasi-private entity.”
However, Justice Kagan’s dissent warns that such distinctions may be legally flimsy. That opens the door to future challenges, and in turn, uncertainty over the Fed’s independence.
For investors, this adds another layer of volatility. Jefferies sees these developments as structurally bearish for U.S. risk assets. A wider presidential remit increases the unpredictability of policy, particularly around trade, regulation, and fiscal governance.
Shah argues that the latest Supreme Court decision "will lead to investors putting a higher risk premium on US assets going forward, due to increased policy variability."
“The most important structural changes in how the U.S. government functions will be decided in the courts—and markets can no longer ignore that.”