President Trump vs. Fed Chair Jerome Powell: Is it time for investors to sell America?

To “sell America” — trading US stocks for global safe-haven assets like gold — amid a new showdown between President Trump and Fed Chair Jerome Powell, one would have to buy into two key views that are currently a stretch at best.

First, corporate earnings growth is poised to fall off a cliff this year as the tussle over Fed independence increases the cost of capital for companies as bond yields soar.

Second, safe-haven trades like gold see such an influx of nervous investors that the return opportunity is simply significantly higher than stocks.

Most investors I have talked with aren’t there yet on either notion.

“I don’t think you sell America,” Northwestern Mutual Wealth Management chief portfolio manager of equities Matt Stucky told me on Yahoo Finance’s Opening Bid (video above).

“There’s a lot of positives still with the US economy,” he said. “Earnings are rising across the equity landscape, from small caps all the way up to large caps. And we’re heading into earnings season, where we’re likely to see another quarter of double-digit earnings growth year on year.”

Powell revealed on Sunday night that the Justice Department served the central bank with grand jury subpoenas, threatening a criminal indictment related to his testimony before the US Senate. At issue: reportedly, the central bank’s renovation of its Washington, D.C., headquarters and whether Powell misled Congress about the project’s depth.

In a video statement, Powell described the investigation as “unprecedented” and questioned the motivation for the move. The administration has been vocal in its desire for lower interest rates. Powell affirmed that he carried out his duties as Fed chair “without political fear or favor.”

Most investors have never seen a heated battle between the Fed and the president play out in a public forum. While Trump has repeatedly attacked Powell since retaking the Oval Office, the latest news raises the situation to a whole new level.

Read more: How much control does the president have over the Fed and interest rates?

But there was an interesting outcome on Monday’s trading session — the first full one after the subpoenas were issued. After initial selling pressure, the ​S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) registered record closing highs as investors brushed off the news. The moves in the US dollar were minimal.

Stock futures are little changed on Tuesday.

“Markets probably believe this is an act of threat that will blow over,” one market pro told me via email.