President Trump has made no secret he wants Fed
chair Jerome Powell gone. And markets have been reacting when Trump lobbs verbal grenades over
Truth Social. Pundits are even whispering about a shadowfed chair guiding monetary policy behind
POW. But who’s poised to become Pal’s replacement? I I I know within three or four people who all
going to pick. I mean, he goes out pretty soon, fortunately, cuz I think he’s terrible. How will
they approach their mandate and how will their actions affect the market? We’re discussing it all
in today’s video. This is one you cannot afford to miss. Now, before we begin, there’s something I
need to make absolutely clear. Although we will be looking at some market odds today, I am not a
financial adviser and nothing in this video should be considered financial or investment advice. This
is purely educational content meant to inform you about the markets. If that sounds good to you,
punch those like and subscribe buttons, smash candidates for the next Fed chair. But who are
the contenders? Well, one helpful development this cycle has been the growing maturity of betting
markets, which have consistently helped distill scattered information into a clearer picture. But
before we have a look at the market’s prospective Fed chair nominees, we’ll first need to provide
some context. At the time of making this video, Poly Market gives only a 34% chance that no
successor is announced before December with Pal’s term coming to an end in May 2026. The pricing of
that single market largely explains the current drama. In recent history, the typical lead time
between the announcement of a Fed chair successor and the candidate assuming office has been about
2 to 4 months. If Trump were to name someone very soon, as he said he would, that would be as much
as 11 months ahead of the transition. Far from normal. But so what? But so what? Well, markets
are forward-looking, so traders and investors will begin pricing in the newcomers policy leanings and
treating Powell as a lame duck with his remaining actions carrying less and less weight as his
departure next year approaches. believe it or not, but it was actually Trump himself who named Pal in
November 2017 with just four months left in Janet Yellen’s term. If Trump stays silent, which let’s
admit he’s not known to do, Pal retains relevance, but the guessing game drags on. So, what do the
betting markets have to say? Both Poly Market, crypto’s favorite betting market, and Kelchi, a
CFTC regulated competitor, consistently give four particular individuals leading odds. Fed Governor
Chris Waller, Treasury Secretary Scott Bessant, former Fed Governor Kevin Walsh, and Director
of National Economic Council Kevin Hasset. We should note that there is some divergence between
Poly Market and Kelshi. Uh, which reminds me, these odds are sensitive and they update every
time Trump opens up the throttle on Truth Social. Nevertheless, this gives us a picture of the
leading candidates. So let’s have a look at each of these contenders and consider what impact
they may have on the financial markets. We begin with Christopher Waller. Currently considered by
many pundits as the favorite. Waller typically leads Kelshi’s betting market for the next Fed
chair. What’s more, he’s the only contender who can actually shape policy today in his position
as a Fed governor, which he has held since 2020. Waller used a speech last month to argue that
the Fed should look through any tariffdriven pop in prices and still aim for rate cuts later
this year. A Bloomberg picked up on the headline stressing that Waller sees a clear path to cuts
despite headline inflation risks. Within 15 minutes of Waller’s remarks, the 2-year Treasury
yield dropped 20 basis points, a very sharp swing. And that instant reaction partially explains
why some analysts now refer to Waller as Trump’s shadow Fed chair. Pundits are voicing concerns
over Trump’s public weighing of candidates, claiming the early nomination talks look designed
to let a chosen successor guide expectations while Pal still occupies the big office. If Waller is
that successor, the process has already begun. Waller’s policy DNA certainly tilts doubbish but
also pragmatic. He has spent much of the past year insisting that supply side shocks whether energy
spikes or the renewed tariff barrage tend to wash out of the inflation data faster than people
expect. In the same speech we referred to earlier, he warned that tariffs could nudge prices higher
in the second half of 2025. Yet he framed that pop as temporary and said stable long-run inflation
expectations are the real north star. The market translation is simple. Waller will tolerate a
short-lived bump in inflation measures if it means safeguarding growth and employment. And he would
likely lean toward rate cuts the moment the labor market starts to wobble. For bonds, that likely
means lower short-term yields. And if he does become Fed chair, a flatter yield curve overall.
And that’s because the markets would expect the Fed to cut rates more quickly than the long-term
expectations for growth or inflation would decline. For currencies, it signals a lighter
dollar. And June’s knee-jerk drop in the DXY after Waller spoke previewed exactly that. Stocks
and crypto do like the combination of falling real yields and a softer dollar. So, a Waller Fed would
be expected to provide a natural bid for crypto. But Waller is not a strict Uber Dove. In early
2024, he backed Pal’s decision to pause rate cuts, arguing that inflation, particularly in services,
remains stubbornly high. Earlier this year, he once again supported a decision to wait on
cutting rates. And that willingness to toggle from patient to proactive gives him credibility
with market participants who may be worried about a purely political appointee. Still, some critics
do argue that the prospect of a Trump nomination for the top job may already be influencing his
decisions, hence concerns over the Fed’s future independence and a current shadow chair. One
could actually argue Waller’s level of realtime influence is the definition of a shadow chair.
And if Trump makes the appointment official, the market will merely accelerate a trend it has
already begun to price. Christopher Waller is a name you need on your terminal alerts because
in effect, he may already be driving the bus. Whichever way you look at it though, Waller would
certainly have a dovish tilt that tends to favor crypto. And most importantly for crypto traders
is the speed with which Waller’s words would translate into price action. And if you want to
make the most of that price action, then check out a familiar fixture in every round of Fed chair
speculation since the 2008 financial crisis. A former Morgan Stanley banker, Walsh has sat on the
Fed board from 2006 to 2011. He has been critical of the Fed, claiming it has wandered out of its
lane, cushioning bad fiscal policy with easy money. I think that introduction gives you a clear
idea that Walsh’s monetary policy leanings differ somewhat of those of Chris Waller with Walsh being
consistently more hawkish. Nevertheless, at the time of making this video, Walsh is a favorite
to replace Powell. According to Poly Market, Walsh has warned that the Fed’s recent statements
imply impaired credibility and that policy makers are still relying on stale revised later data
to steer a super tanker economy. Walsh’s broader philosophy on monetary policy is straightforward.
Rate cuts should be avoided until inflation is firmly on a sustained path back to target, even
if that means accepting weaker nearterm growth. In contrast to Waller’s doubbish comments
moving markets, traders seem to take Walsh’s warnings on potential central bank blunders in
their stride, being little affected. Granted, Waller is a sitting Fed governor, while Walsh is
not. Even so, the trading desks still recognize an ironfist undertone in Walsh’s rhetoric. relatively
stronger real yields, a sturdier dollar, and tighter liquidity would all tilt stocks and
crypto toward caution, even if such moves don’t always materialize based on his current public
comments. Worsher’s critical stance meshes neatly with Donald Trump’s public frustration that the
Fed waited too long to tackle inflation in 2022, but it clearly coides with Trump’s current
push for rate cuts along with the one big beautiful bill and its potential to increase the
US deficit. Walsh has repeatedly argued that low rates and a swollen balance sheet blur the line
between monetary and fiscal policy, encouraging unsustainable levels of government spending. The
implication of a wash chairmanship would be stark, particularly as traders don’t seem to be pricing
that in with as much likelihood as the betting markets would suggest. A sharp turnaround in
expectations if Walsh’s odds were to significantly rise from here would have a more dramatic market
impact as a result. Should Trump actually choose him, expect an immediate repricing, a stronger
dollar, growth stocks down, and a scramble out of risk assets. For crypto, this would mean the
pricing in of more restrictive policy rates well into 2026. Funding costs would remain pinned at
higher levels. Tempered risk sentiment would weigh down flows, and higher real yields would offer
competition to Bitcoin’s digital gold narrative. Doesn’t sound great for bulls. However, it’s
worth noting that some analysts have asserted that Walsh is on the short list precisely because
floating a hawk keeps bond traders honest. It reminds them that doubbish outcomes are not the
only outcomes on the table. Even the threat of a Walsh appointment can stop the cut now crowd from
getting too far over their skis. Whether or not that outlook is accurate, Walsh is the candidate
who would test every conviction you have about the trajectory of the market. and he’s only one Truth
Social post away from becoming the market’s base case. The next prospective nominee in the running
is Scott Bessant. As you’re likely no doubt aware, Bessant is already running the US Treasury and by
extension half the plumbing that keeps the global dollar liquidity alive. During a Fox Business
interview last week, host Maria Butter Romo pointed out that Wall Street has Bessent near
the top of the short list to replace Pal and asked directly whether he would accept the chair.
Bessent ducked the question, saying he already has quote the best job in Washington, but would quote
go where the president thinks I am best suited. Bessent has stated that he expects a rate cutainly
by September. uh coming from the man who oversees the US Treasury that reads less like a forecast
and a bit more like marching orders. Bessent has also cautioned that if the Fed defers a cut
at its late July meeting, policymakers may have to make a larger move in September. He framed
the bigger September step as a consequence of waiting rather than a prediction of any specific
magnitude. Bessent essentially views things like this. When short-term Treasury rates rise
above long-term rates, an inverted yield curve, it means the Fed is being slow to adjust. He
notes that the 2-year Treasury has signaled every big Fed shift over the past decade, and
it’s flashing a warning right now. Specifically, the yield on the 2-year Treasury is lower than
the Fed funds rate, which is sending a strong signal to the Fed to cut. But the Fed isn’t
cutting. To avoid a rise in long-term yields, Bessant plans to hold off on issuing more 10 and
30-year bonds for the next few quarters. Instead, he’ll rely on short-term Treasury bills, which
are cheaper for taxpayers and keep long-term interest rates from rising further. Analysts
have started to call the stance a Treasury put, arguing that by skewing supply toward the short
end, he can hold Treasury yields down, even if the Fed does drag its feet. Since interest rates are
priced off Treasury yields, this has the effect of lowering interest rates just like the Fed. Beyond
bond issuance tactics, Bessant is also pushing complimentary regulatory tweaks. A Reuters reports
offer analysis estimating that relaxing leverage ratio rules for banks and initiative Bessant backs
could knock 10 to 50 basis points off the 10-year yield by itself. And that’s 0.1 to 0.5% for anyone
wondering. All of Besson’s stances essentially boil down to one word, liquidity. Cheaper funding
at the front end, a flatter curve on the long end engineered by Treasury short duration issuance
tactics, and the promise of regulatory tweaks that free up bank balance sheet capacity. And
this all amounts to a risk on cocktail that has historically pushed stocks and crypto up. Besson’s
critics say that his bias is obvious. A Treasury Secretary would welcome lower rates to ease a debt
service. He counters that the 2-year yield is a market consensus forged by millions of price
makers and dismisses accusations of political spin. Bullish leaning traders do like the symmetry
here. A liquidity-friendly Treasury chief who becomes a liquidity friendly Fed chair could
deliver the one-two punch that reflates everything from junk bonds to JPEGs. The bottom line is that
Besson’s words already move markets. Whether he’s referring to treasuries, tariffs, regulation, or
interest rates. If Trump hands him the Fed chair, those nudges could turn into a full-blown policy
drive. And for crypto holders, that could feel a lot like the opening bell for a big leg up. Beyond
the three candidates we’ve discussed so far, betting markets also give director of the National
Economic Council Kevin Hasset considerably high odds. A supply side evangelist in Trump’s bullpen
two weeks ago Hasset told CNBC there was quote no reason at all for the Fed not to cut rates right
now arguing that quote if they see one more month of data they’re going to really have to concede
that they’ve got the rate way too high that line repeated across US media lit up Hasset’s odds
as the next Fed chair on Kelshi pushing Hasset’s contract above 22% % and making him another pure
dove option that Trump is likely to consider. Passet’s playbook marries fiscal fireworks to
easier money. He boasts that Trump’s one big beautiful bill will unleash major GDP growth and
he frames rate cuts as the lubricant that keeps that engine from seizing. In practice, trading
desks map his arrival to a weaker dollar, a snap steepening of the Treasury curve once the front
end dives, and a marketwide rally for stocks and crypto. A Fed that explicitly prioritizes growth
over spotless price stability is the starting gun for a continued trend in the current bull run for
stocks and BTC. Yet a prediction markets refuse to give him the crown outright as some bundits argue
that while Hasset tops odds on some Kelchi boards, institutional traders still worry about his thin
monetary resume and the optics of promoting a sitting White House adviser straight into the
Fed’s most powerful seat. Given that outlook for Hasset, any names further down the list
begin to fall under the category of wild cards. David Malpass arises here as a dark horse, a
former World Bank president and longtime Trump economic adviser who says the Fed is behind the
curve on cutting interest rates. In late June, he issued a Wall Street Journal oped arguing the
central bank’s models depend on slowing growth to avoid overheating, a mindset he calls outdated.
That growth first rhetoric does echo Trump’s which explains why Fox News’s short list still slots him
among potential picks. Malpass isn’t lighting up the betting boards. His odds hover in the low
single digits. But if Trump wants a loyalist who will cut hard and talk up a growth focused
Fed, the market would have to repric in a hurry. Inside the Fed, Governor Michelle Bowman is quite
the denter. She told an AP roundtable that she could support a July rate cut if inflation stays
subdued, distancing herself from Pal’s wait andsee approach. Bowman’s odds hover near 1% on betting
markets. But her presence matters. Every speech she gives normalizes the idea that more sitting
governors now lean doubish, turning up the heat on PAL and giving traders another reason to fade the
dollar on any hint of weak data. So while Hasset holds some solid odds, there are certainly other
candidates in contention and if that happens, the recalibration across yields, Dixie, and crypto
could be even faster than the betting boards can refresh. So we’ve walked through four names that
matter most. Fed Governor Chris Waller, the inside dove, whose talk of rate cuts already sways the
2-year. Kevin Walsh, an inflation hawk, whose profile certainly clashes with the other potential
nominees. Treasury Chief Scott Bessant eager to steepen the curve with rate cuts and supply
side champion Kevin Hasset ready to marry big stimulus to easier money. Any of these four could
be unveiled very soon, possibly undermining Jerome Pal as he finishes out his term in the coming
year or so. Then come the wild cards. They’re long shots, but in Trump world, long shots have a habit
of hitting the board. While it seems that Trump is far more likely to go with one of the more
doubbish names out of these, nothing is certain. The only certainty is that the announcement itself
or the choice to tease it out and keep everyone guessing for now will offer bursts of volatility.
So, who do you think will be named the next Fed
