⚔️The Race for the next Fed Chairman⏳

The market will soon receive a new sense of volatility as President Biden prepares to announce his preferred candidate to serve as the Federal Reserve chair. The hot race to the finishing line presents two candidates: Fed Governor Lael Brainard and Uncle Powell.

President Biden met with both candidates last week, and it seems that the market is hoping for an announcement soon to remove uncertainty. There is speculation that the decision could be released before Thanksgiving.

In general, the market prefers Uncle Powell and sees him as the forerunner in the nomination race since he has both the support of Democrats and Republicans. So essentially, it is not a given for his confirmation, but markets generally believe that his re-appointment would be easier than getting a new candidate on board.

🎢Uncle Powell, the Preferred Candidate💎

Not all is rosy for Uncle Powell, especially with Elizabeth Warren, who had publicly announced her opposition and called Powell a “dangerous man” in September, especially so with the recent disclosures by Fed officials over their trading matter. This had eroded Uncle Powell’s credibility.

On the other camp is the progressive Democrats who advocate for Brainard as she is seen as a more dovish person on the monetary policy front and is a firm hand on bank regulation. Her nomination would signal to the market that the party of easy money continues. Nonetheless, it might be difficult for Republicans to accept her, as they viewed her as too progressive.

Even when the Fed Chair seat is filled, there are many other positions on the Fed’s board to fill. There is a clear intention that the White House will tap into the remaining seats to be filled to advance their ambition of a robust employment prospect.

If there is a light note, it seems that the betting markets are predicting Uncle Powell to win the race by 75%.

📮What’s on the Menu Today?

At 9.30 pm, we will have Core Retail Sales for October, which we expect to remain at 0.8%.

The retail sales figure will also be released, and we expect an improvement of 1.1%, up from 0.7% in the prior period.

It is Nov 16, Tuesday, at 7.45 am in Singapore and 7.45 pm in New York. It might yet be another volatile week, and we hope all friends of Pika World have a safe ride ahead!