From Gary Evans of Global Macro Monitor
Politico out with a piece tonight citing souces that National Economic Council Director and Goldman alum, Gary Cohn, is the leading contender to replace Janet Yellen next January. Interesting timing as it comes on the eve of Janet Yellen’s two-day semi-annual testimony before Congress.
We have heard rumors, but our priors were that Trump would pick a more rules-based chairmain, such as John Taylor of Stanford. Kind of surprising, but most presidents prefer easy money policies.
Cohn will be the first Fed Chairman who isn’t a trained economist since Jimmy Carter’s appointment of G. William Miller. Miller was replaced after only 17 months as inflation raged out of control and was replaced by the super hawk, Paul Volcker in August 1979.
The Politico piece states that if Cohn doesn’t take the Chair, the most likely pick will be former Fed governor, Kevin Warsh, who is now at Stanford’s Hoover Institution.
Upshot? Easy money to continue. It will also be kind of refreshing to have a non-academic as the Fed Head. One downside is that Cohn’s strong personality and policy making skills will be missed in the White House. Bad news, in our opinion.
Sources: Cohn is Trump’s top candidate to replace Yellen at Fed– POLITICO
Money quotes:
- “It’s Gary’s if he wants it, and I think he wants it,” one Republican close to the selection process said.
- “He would be easily confirmed,” this person said. “Most of our conservative members like him.”
- Another front-runner for the top job at the central bank, former Fed governor Kevin Warsh, also has industry experience and, though he is an academic, does not hold a Ph.D. in economics.
- Cohn is also mentioned as a potential future White House chief of staff and may decide he would prefer that job to leading the central bank.
- The risks involved in the Fed job now, some analysts say, make it somewhat less appealing than when the central bank was dumping money into the economy and driving the stock market to record highs.
- Cohn does not have a track record on monetary policy. But he is viewed as closer to Yellen’s preference for gradual rate hikes.
- People close to Cohn say he would strongly consider the job if Trump offered it and if he felt he’d completed his work on tax reform. However, Cohn’s status as the leading candidate could change, particularly if efforts to reform the tax code falter.
- Senior aides in Trump’s orbit often rise and fall in the president’s estimation. And Cohn’s nationalist rivals in the White House, led by senior adviser Steve Bannon, could try to sway the president against selecting the NEC director for the top Fed job.
- Other names mentioned as possible candidates for the Fed job include Stanford’s John Taylor, Columbia Business School Dean Glenn Hubbard, current Fed governor Jerome Powell, U.S. Bancorp Executive Chairman Richard Davis, and former PNC Financial Services Group CEO Jim Rohr.