Comment
- The Financial Times – ‘I have seen the future and his name is Kevin’: Dollar bulls boosted by hopes for hawkish Fed
While the turbulence in Spain serves as a reminder of the unwieldy political troubles the eurozone can face, traders are listing a number of factors that are helping the greenback. Among them there is growing speculation that the hawkish Kevin Warsh could succeed Janet Yellen as chair of the Federal Reserve. A governor of the Fed in the wake of the financial crisis, was seen as a sceptic on its quantitative easing programme and left the central bank in 2011…Mr Edwards, present at a conference at which Mr Warsh spoke last year, was impressed at the time, writing: He [Mr Warsh] explained that the Fed has been “captured” by a groupthink of academics led by the ‘Secular Stagnation’ ideas of his friend, Larry Summers. Rather than admitting they are wrong, this group, who failed to predict the current economic malaise, have constructed this theory to explain why ever more stimulus is required. Expect a different, hawkish approach should Mr Warsh head the Fed.
- Bloomberg – Trump Talks to Cohn, Yellen, Warsh and Powell for Fed Chair
President Donald Trump has so far talked with Federal Reserve Chair Janet Yellen, National Economic Council Director Gary Cohn, Fed board governor Jerome Powell and former governor Kevin Warsh as he considers who to nominate to head the U.S. central bank, three people familiar with the discussions said. Trump and Treasury Secretary Steven Mnuchin interviewed Powell on Wednesday, according to a White House official, and Warsh on Thursday, according to two administration officials. Trump has had discussions with Cohn about the job, and has also met with Yellen, one of the people familiar with the discussions said. Meetings with additional candidates are in the works, another of the people said. “I’ve had four meetings for Fed chairman, and I’ll be making a decision over the next two or three weeks,” Trump told reporters before boarding the presidential helicopter at the White House. He’s traveling to his golf club in Bedminster, New Jersey for the weekend.
As the chart above shows, Yellen (orange) is now in third place behind Warsh (dark blue) and Powell (light blue). Predictit added a contract for Powell on Friday when his name as a potential Fed chief first came to light. That led to massive re-positioning among all other candidates’ contracts, accounting for the spike in volume.
Remember we view the betting markets as an aggregate of consensus opinion distilled into one probability.