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Balance of Power: The Yellen Wild Card

Janet Yellen's path toward a second term as Federal Reserve chair has hit some turbulence.

While President Donald Trump said in April that he likes Yellen, Bloomberg's Washington bureau reports today that the idea of her staying beyond February is encountering resistance from some advisers. Short of lifetime Supreme Court picks, there's hardly a juicier nomination than for the Fed chief, and the selection process gives Trump's aides an opportunity to install their own person who will steer the economy for years to come.

One recent strain of Republican thinking says that the Fed has become too independent and unorthodox. Loyalty may be another important factor for Trump's circle. A recent Bloomberg survey showed possible successors include Fed veteran Kevin Warsh, Stanford economics professor John Taylor and Trump adviser Gary Cohn.

True, Yellen is still in the running and Treasury says that the selection process is in the early stages. But any move to dump Yellen would underscore Trump's indifference to Washington tradition -- Reagan, Clinton and Obama all kept on Fed chairs named by predecessors from the other party.

With the Fed prepping for an unprecedented wind-down of its balance sheet, the appointment is another wild card for markets.

Yellen speaks during a news conference in Washington on June 14.
Photographer: Andrew Harrer/Bloomberg

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Global Headlines

Senate unveils Obamacare plan  | Republican leaders will unveil a closely held plan today that includes a longer phase-out of Obamacare’s Medicaid expansion than the House endorsed as part of a broader proposal to roll back the 2010 health-care law. Majority Leader Mitch McConnell must now persuade skeptical Republicans - many of whom are irked that the plan has been drafted in secret - to back the measure in time for a vote next week.

The Brexit talks might be about to get heated | Today's European Union summit in Brussels could spark the first big argument since Brexit negotiations started. Prime Minister Theresa May will outline her proposals on the rights that EU citizens will enjoy in the U.K. after Brexit. It's an emotional and contentious issue for many European leaders, and her pitch is expected to fall short of what many want.

China's new path to power | President Xi Jinping is headhunting for new talent in China's $20 trillion state sector as he prepares for a pivotal Communist Party shake-up later this year. As Bloomberg's Keith Zhai explains, Xi's poaching from state-run companies is disrupting the promotion system preferred by his predecessors and remaking the ruling party.

New Saudi heir has a line to the White House | Trump wasted no time in congratulating Crown Prince Mohammed bin Salman on his promotion -- the latest sign of their close ties after meetings in March and May. Trump says he's rebuilding relations that deteriorated under his predecessor. The new prince is also cultivating ties in the right places. As our Washington bureau writes today, Prince Mohammed has already dined twice with Trump's daughter Ivanka and her husband, Jared Kushner.

Islamic State destroys iconic mosque | As the battle for Mosul enters its final stages, the jihadist group leveled a centuries-old mosque in the city. Mosul was where Islamic State's leader, Abu Bakr al Baghdadi, announced himself ruler of the world's Muslims, and the mosque's destruction is being seen in Iraq as a symbol of the group's demise as a proto-state.

What tweet? | Two of Trump’s top cabinet secretaries said yesterday that China still has a crucial role to play in pressuring North Korea to give up its nuclear ambitions, in effect disregarding the president's tweet that Chinese efforts had failed. The remarks from Secretary of State Rex Tillerson and Defense Secretary Jim Mattis helped alleviate fears that the U.S. is considering a unilateral military strike against Kim Jong Un's regime.

And finally… A timely tweet from supermodel Gisele Bundchen prompted Brazil's Michel Temer to veto legislation removing environmental protections for the Amazon and won the embattled president a rare moment of popular acclaim. It may not last long though. Celebrity environmentalists are now emboldened by their new-found influence just as policy makers push to open up a vast area of jungle to foreign miners. "Thanks for the veto," Bundchen tweeted to Temer this week. "But we are going to keep watching you!"

Bundchen at the UN Headquarters in New York in 2016.
Photographer: Pacific Press/LightRocket
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