The Making Of A New Fed Chair

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Good morning! Here’s the latest in trending:

Volatility is back: Stocks and gold might not have an inverse relationship anymore, but that also means when the bears take the wheel, they will fall together.

CEO compensation: Wells Fargo (WFC) raised CEO Charlie Scharf’s compensation by 28% to $40M. Here’s how that stacks up against JPMorgan’s (JPM) Jamie Dimon and Goldman’s (GS) David Solomon.

Canada tensions: There are new aircraft tariffs being pitched, while Mark Carney demands sovereignty after U.S. officials met with Alberta separatists.

Some of the intense drama surrounding the Federal Reserve may finally be coming to a close. President Trump will announce his pick for the next chair of the central bank this morning, with Kevin Warsh considered the most recent favorite. As a former Fed governor from 2006 to 2011, Warsh has long advocated for a smaller balance sheet and, more recently, has aligned with calls for lower interest rates.

Other candidates: There is Rick Rieder, chief investment officer of global fixed income at BlackRock (BLK), who is thought to be the next closest contender. Christopher Waller, a current Fed governor appointed by Trump, was also on the shortlist and broke with current chair Jay Powell this week to dissent in favor of faster rate cuts. Kevin Hassett, head of the White House National Economic Council, was under consideration as well, but Trump recently indicated that he prefers to keep him in his current role.

“Jerome ‘Too Late’ Powell again refused to cut interest rates, even though he has absolutely no reason to keep them so high,” President Trump posted on Truth Social. “He is hurting our Country, and its national security. We should have a substantially lower rate now that even this moron admits inflation is no longer a problem or threat. He is costing America Hundreds of Billions of Dollar a year in totally unnecessary and uncalled for INTEREST EXPENSE. Because of the vast amounts of money flowing into our Country because of Tariffs, we should be paying the LOWEST INTEREST RATE OF ANY COUNTRY IN THE WORLD.”

Why now? Since the seven-member Fed Board is currently full, Trump cannot simply add Warsh or another candidate to the roster—though it is less than 48 hours away from when the term of Fed Governor Stephen Miran officially expires. Miran replaced Adriana Kugler in September following her resignation, and this is the Federal Reserve Board opening that Trump will use to designate a new Fed Chair. However, even after Trump makes his nomination today, Miran will stay in the role until the new candidate is confirmed by the Senate, and possibly afterwards – if Jay Powell resigns in the coming months. (2 comments)

Musical chairs: While Powell’s term as board chairman expires in May, he could stay on as a Fed governor for another two years, which is the real worry of the Trump administration. In that role, Powell could be somewhat of a shadow Fed chair, especially with a growing split among officials on policy views. Some even cite the recent criminal probe over renovations at the Fed as a way to up the pressure or make Powell feel uncomfortable about continuing in a governor spot past his chairmanship, but the lawsuit could also have had the opposite effect. Fed yet to comply with subpoenas as part of Powell probe

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Today’s Markets

In Asia, Japan -0.1%. Hong Kong -2.1%. China -1%. India -0.4%.
In Europe, at midday, London +0.3%. Paris +0.5%. Frankfurt +0.8%.
Futures at 6:30, Dow -0.6%. S&P -0.6%. Nasdaq -0.8%. Crude -0.7% to $64.95. Gold -3.7% to $5,154.50. Bitcoin -5.8% to $82,615.
Ten-year Treasury Yield +1 bp to 4.26%.

On The Calendar

Companies reporting today include Exxon Mobil (XOM) and Verizon (VZ).

See the full earnings calendar on Seeking Alpha, as well as today’s economic calendar.