So Friday marks two weeks since Donald Trump said he was two to three weeks away from announcing his nominee for Fed Chair.
Of course if we’ve learned anything when it comes to Trump’s timetables, “two to three weeks” actually means something like 8 months. Remember, it was February 9 when the President told a group of airline CEOs the following:
We are going to be announcing something over the next two or three weeks that will be phenomenal in terms of tax.
About 10 weeks later, we got a double-spaced one-pager from Mnuchin and Cohn that hardly counted as “phenomenal” and another five months after that, we got the latest tax “plan” which, as more than a few folks have noted, isn’t really a “plan” where “plan” is supposed to mean something that is feasible.
Given that, it’s not clear when Trump will actually tell us who’s going to lead the Fed, but according to Politico, the odds have shifted in favor of Jerome Powell. To wit:
Treasury Secretary Steven Mnuchin is strongly pushing for the White House to name Jerome Powell as the next chair of the Federal Reserve. Mnuchin has privately recommended Powell to President Donald Trump, according to one adviser close to the administration. The people familiar with the process indicated that Mnuchin, who knows Powell well, feels comfortable with him and feels that he is a safe pick over whom Mnuchin can exert some measure of influence.
Meanwhile, he’s now the favorite according to betting odds:
In addition to Powell’s “friendlier” stance on regulation, he’s also a better fit for a President who needs low interest rates and a buoyant stock market to bolster an otherwise flagging reputation. As virtually everyone you care to ask will tell you, bringing in Kevin Warsh could prove to be a disaster for risk assets in the event he were to stick to his word when it comes to making the Fed less “S&P dependent.” For the full story on that, see here.
Complicating matters further is the idea that John Taylor might actually be a serious contender. This hit just after the closing bell (hence the jump in Taylor’s odds reflected in the table above from Predictit):
- TRUMP IS SAID TO MEET THIS WEEK WITH FED CANDIDATE JOHN TAYLOR
One has to think that Mnuchin has informed Trump that Warsh could jeopardize the equity rally if nominated. That wouldn’t sit well with a President who just this morning touted the “virtually unprecedented” post-election rise in stocks.
Draw your own conclusions, but it looks like Powell’s got the inside track. We’ll leave you with the definitive guide to the “contenders” (it’s “The Apprentice”, Fed Chair edition) from Deutsche Bank…