Remember all those articles yesterday about how Janet Yellen has a “great friend” in Trump, and not to discount her? Well, at least according to Politico, the race for Janet Yellen and Kevin Warsh is now over. According to Politico’s Ben White (so take it with a grain of salt), with Powell and Taylor emerging as the two Fed Chair finalists – with a likely outcome that both will enter, one as Chair and the other as Vice Chair – both Yellen and Warsh are officially out. To wit:
It’s hard to imagine but this saga gets stranger all the time. On Wednesday, one top MM source who talks regularly to President Trump said the only finalists are Jay Powell and John Taylor and the question is just which one gets it. This person said Janet Yellen is out as is Kevin Warsh. Gary Cohn, as we’ve reported, has been out of it for weeks now. But…
Another senior source very close to the process said not to assume that it’s just a Powell vs Taylor fight because “Trump changes his mind about it every day.” And then Trump appeared on Fox Business with Lou Dobbs, a regular presidential kibitzer, and asked Dobbs who HE thought should be the Fed chair. Here’s the remarkable exchange.
“TRUMP: Tell me who your preference is. … DOBBS: I think I — may I constrain myself? … TRUMP: Yes. … DOBBS: Because an ad hoc advisor to the president – TRUMP: No, but I’d love to hear it. You could even cut it out if you want. You don’t have to — I would love to hear you. I only want that from people I respect. … DOBBS: I personally believe that Janet Yellen might be worth keeping.
“TRUMP: I tell you what, she was in my office three days ago. She was very impressive. I like her a lot. I mean, it’s somebody that I am thinking about. I would certainly think about it.” Video.
While markets reacted modestly to the news, we would not take this anonymously cited “report” as gospel, not just because the source is conflicted and has been openly biased for Jay Powell, but because Trump has a habit of changing his mind several times during the hour, let alone the day.
Bookies’ odds continue to prefer Powell…
Elsewhere, Reuters reported that Powell is the most likely next Fedi chair:
Jerome Powell likely will be the next Federal Reserve chairman, according to a slim majority of economists in a Reuters poll – but most of them said current Fed Chair Janet Yellen would be the best option.
Just over half the 40 economists who participated in the survey, taken in the past few days, tipped Fed Governor Powell to be appointed chair by U.S. President Donald Trump when Yellen’s current four-year term ends on Feb 1, 2018.
Powell, a lawyer and former investment banker, has served as a member of the Fed’s Board of Governors since May 2012.
“The most continuity between Fed chairs would be Yellen to Powell. Given where we are in the tightening cycle some consistency would be welcomed by financial markets,” said Ryan Sweet at Moody’s Analytics.
“A regime change can be a little more rattling and unnerving for markets.”
And interestingly, gold prices bounced back a little on the Yellen/Wasrh headlines…
And equity market liquidty disappeared…
First liquidity drop today (black line) was from Draghi.
2nd was from “Yellen out” news. S&P 500 futures $ES_F $SPY pic.twitter.com/hArqR8bf7a— Eric Scott Hunsader (@nanexllc) October 26, 2017
But if true, well… thanks for the memories:
“Thank you, you did a great job. A really great job. Believe me. We had 5,000 points together. So great.” https://t.co/vxlavUp3Zu
— GreekFire23 (@GreekFire23) October 26, 2017
