Polymarket traders: Why we believe Trump will not fire Powell

By Polymarket; Translated by Felix, PANews

IvanCryptoSlav, a German player who trades on the X platform as @BuckmySalls, has accumulated $841,770 in profits on Polymarket, using his political science degree.

Ivan’s most recent firm trade was a $250,000 bet that Jerome Powell would survive the continued pressure from the Trump camp to resign and remain as Fed Chairman until the end of the year. The Oracle recently spoke with Ivan about why he is betting heavily on the TACO (“Trump Always Cold Foot”) trade.

This interview has been edited for length. All responses are his own.

You announced a large position that Trump would not fire Jerome Powell. Please tell me what you think.

I have about $250,000 invested in various Powell-related markets. The largest position is that Powell will remain as Fed Chairman until the end of the year because this market is the most liquid. I also participate in the market on whether Trump will fire him by the end of August.

My point is simple: Trump gets what he wants on issues where there is no real resistance. Look at that big, beautiful bill. I was betting on it passing by July 4 because even with a few naysayers, Trump could pressure them into submission. He’s the president. But he can’t get his way when there’s resistance in the real world. That’s where the TACO theory comes in. The Ukraine ceasefire is an example. He said it was an easy fix, but I knew he couldn’t. But I made a lot of money in that market, even though I was a little bit wrong on the position. Powell’s situation is similar, but with more risk. Trump could theoretically do it, but the market reaction would be so violent that he would be hesitant. All his advisers—Bessant, Lutnick, the CEOs—are putting pressure on him. So you think the financial market reaction is the key constraint? Exactly. Last Tuesday they sent out a tentative message about firing Powell, and the S&P fell 50 points in 30 minutes. That's how they make policy now - send out a headline, see how the market reacts, and then make a decision. They retracted their previous statement in less than half an hour because the market plummeted.

The risk is that Trump might think, "Oh, a 50-point drop isn't too bad." But if he does, we could see a 150-point drop in the stock market. The unknown market reaction is enough to make him hesitant to act rashly.

Tell me about the timeline, when did you enter this trade?

Originally, I bought it as a bond a few months ago, when the probability of "no" was between 85% and 90%. I didn't think Trump was crazy enough to crash the market. My position was small at that time.

Then some guy named Pulte - who seems to be the head of the federal housing department - started tweeting non-stop that Powell should be fired. The market fell slightly. I didn't react at the time.

On Friday or Saturday, Anna Paulina Luna broke the news that Powell would be fired. I thought it was bullshit - she didn't know anything, just another "Make America Great Again" rant. But apparently Trump went around asking members of the House of Representatives whether he should do it with a draft of the Powell firing bill. Of course they all said yes. There were no decent Republicans left in the House.

That’s when I started buying more. The price was down to about 80%.

And then Tuesday was the real test?

Yes, it went downhill on Tuesday. The White House let out a rumor that it was “considering” firing Powell, a typical Trump probing statement. I added to my position, hoping it was just a probing statement. I didn’t expect them to walk it back so quickly, but it was.

Right now I'm heavily traded. If the market gets back to the 90s, I wouldn't mind reducing my position, but it's not where I want it to be yet.

Do you think Polymarket traders are becoming more aware of the "TACO trade," the pattern of Trump backing down?

Of course. You can see this in traditional markets, too: the S&P 500 (SPX) is going to go up no matter what, even though the situation is worse than it was in April and tariffs are almost a done deal.

The problem is that Trump keeps doing the same thing over and over again. The key for me is to hope that Bessant and others continue to tell him that it's not worth it. He's going to get his way with interest rates anyway, so why crash the market?

But one day, things will go wrong. Trump feels he can do whatever he wants. Everyone sees through his game, but no one takes his headlines seriously anymore, but they still back off.

It sounds like you think he could still get fired. What do you think the odds are of that happening? Will you sell before the market clears up?

If prices get back into the 90s, I might reduce my position. But it depends on timing. If it's October and there's only one FOMC meeting left and the market is quiet, I probably won't sell. But if prices quickly get to the 90s in August and this investigation peters out, I'd probably sell.

The FOMC meeting is critical because the rate decision is probably what irritates Trump more than anything else. He was also irritated by the whole Epstein documents thing last week. So this Powell firing thing is partly a diversionary tactic, but he is irritated.

Despite all the threats of firing, multiple market indicators for rate cuts have been pretty steady. Are you basing your stance on these or other indicators?

There is a pretty significant inefficiency in the prediction market on rate cuts. You can make money on the swings because Powell is actually pretty easy to read. He just does what he says. He keeps saying they are data dependent and they are getting the data every day.

Two things I am 100% sure of: Powell is not going to cut rates for political reasons and he is not going to resign. He will only leave if he is fired and then he will fight it in court. But he won’t resign of his own accord.

What is Powell’s state of mind? After his tentative remarks didn’t work, Trump’s allies are pressuring him to report him to the Justice Department for his lies about the new Fed building. Will he just give in to the pressure?

After reading Nick Timilaus’ book on Powell, I have a better understanding of his state of mind, and I have no doubt about this: Powell will not resign under any circumstances. They have to get rid of him. Resigning would mean admitting guilt, and he has a mission. He has said that he hopes his political legacy will be like Volcker’s, who stood up to political pressure and didn’t give in.

This is very annoying to Trump because there is one person in the United States that he cannot push around. Powell has not said anything publicly, but he is standing up to Trump with his actions.

If Trump tweeted today, “I’m firing Powell,” would you try to sell? Or would you hold on and hope that Powell can keep his job somehow?

I probably won't sell. I'm too over-positioned in the market. If I think the bet still has a chance of winning, I might consider buying more at a low price. A good strategy on Polymarket is to provide liquidity when no one else wants to trade.

Markets often surge on headlines and then fall back. It's rare that a headline becomes fact immediately. I'd rather he doesn't do that. If he does, it would put a big dent in my P&L for the year. But I've had a good year so I don't mind adding to my position.

Any final thoughts on the risks here?

This is the most dangerous of all Trump-related trades because he personally dislikes Powell and it's too easy to manipulate. He won't annex Greenland or occupy Gaza, but firing Powell may be just a tweet away.

The worst-case scenario is that the market remains the same: the bulls are still high because the bill has to pass Congress, they are questioning Powell, Trump is talking nonsense, and the market has no catalyst to rebound. I am a bit torn now. This is why I don't mind a smaller position. But for now, I just have to bite the bullet and hold on.