During the interesting year of 2017 to say the least, the current race to take the Fed chair is equally interesting. With the most likely candidate to replace Janet Yellen’s seat as someone who will likely have the complete opposite of ideologies, it appears as though this race will be quite interesting. On the other side of this is the possibility that Yellen could end up replacing herself after her six months left in office expire.
With Wall Street predicting that Yellen, who constructed the Fed’s reach to normalization, would not see another term in office, they stand to be in shock at the possibility that she could take yet another term.
The prediction throughout the market stood to be that Gary Cohn, the White House Economic advisor, was a surefire win for the position. This created a sense of comfortability as they seemed to be confident in their prediction.
In a speech given on August 25th, Yellen signaled just as much with her statements that many viewed as an admission of malevolency towards Trumps banking regulations.
After that speech, Cohn later gave an interview where he expressed his concern about Trump’s racially charged comments regarding Charlottesville, Virginia. Some viewed this as an end to Cohn’s possibility as leader of the Fed.
Greg Valliere, chief global strategist at Horizon Investments stated that “I think she’s still on the short list, despite the Jackson Hole speech. Cohn’s standing has slipped following his Financial Times interview.”
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Another candidate, former Fed Governor and Morgan Stanley executive Kevin Warsh, has gone up in his chances to take the position with a 30% lead over Yellen’s 29%.
Quincy Krosby, chief market strategist at Prudential Financial stated that “he bridges the world of a central banker but also having the market experience, which is a strong combination. Perhaps the thinking will be that someone who has Wall Street experience understands markets.”
Only time will tell what will happen with the position opening up in the next six months.