CNBC Daily Open: The battleground for Fed chair might have shifted to renovations from rates

Homo economicus, or the “economic man,” is an idea that depicts humans as rational beings. This assumption has been used to construct models of the economy and, more broadly, society.

The great flaw in that theory is the supposition of logic in humans. We know, on an everyday basis, how flimsy that notion is. We need to keep our blood cholesterol in check, but the crunch of that fried chicken is irresistible.

On Thursday, the U.S. Office of Management and Budget Director Russell Vought accused Federal Reserve Chair Jerome Powell of shooting over the budget to renovate the central bank’s headquarters by roughly $700 million.

In the same breath, he also questioned why there weren’t any “rooftop terrace gardens, VIP private dining rooms and elevators, water features, premium marble, and much more” constructed, as was originally planned.

To be fair, if all the allegations are true — that the promised luxury features factored into the budgethad been omitted while costs have busted expectations — that wouldconstitute mismanagement. At this point, however, either the budget or the fountain’s got to give.

The accusation, more fundamentally, raises the question of whether U.S. President Donald Trump — who has engaged in multiple tirades against Powell — will use this incident to boot the Fed chair.

The idea of “homo economicus” was widely criticized in the late 20th century. Through psychological experiments, economists have proven no human is fully rational. But, really, did they have to go to such lengths?

— Dan Mangan contributed to this report.

Trump announces 35% tariffs on Canada. In his letter, Trump highlighted how the country “retaliated with its own Tariffs” in March after the White House imposed fentanyl-related levies on it. In response, Canada’s Prime Minister Mark Carney said the government will defend its workers and businesses.

More all-time highs for U.S. stocks. Both the S&P 500 and Nasdaq Composite rose Thursday to notch new closing records. Asia-Pacific markets mostly traded higher Friday. Singapore’s Straits Times Index hit its fifth consecutive high in as many trading days.

The White House accuses Powell of mismanagement. Trump’s budget chief said that Powell had misled Congress about the renovation of the central bank’s headquarters. It raises the question of whether Trump would use the incident to remove Powell.

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