Fed Chair Analysis
Similar to the current World Series, it has been an interesting path of ups and downs in determining the candidates for Fed Chair. There are four candidates leading the way. The first is the current Fed Chair, Janet Yellen. She would be very easy on monetary policy which could be very good, in theory, for the stock and bond markets. The second is the perceived front-runner, Jerome Powell. From an interest rate standpoint, he would be a continuation of the current policy. On the regulatory side, he would be much more lenient than Yellen. The third is the reformer, Kevin Warsh. He is very young which could bring a unique approach to the table. The fourth and final candidate is the Stanford professor, John Taylor. He would be considered more risky in terms of the policy to raise interest rates. All these candidates are very smart individuals who could lead us into the future. There is always a chance it could be someone other than these four individuals, as well as the possibility of a vice chair, which could implement two of these four. This big change in electing a new chair could certainly have an impact on the market.
As we have these types of announcements coming out, it’s important to see that the economic data is still showing a lot of confidence. The GDP number was a surprise to the upside for the quarter at 3%, which is a great growth level. An interesting item to point out is that there wasn’t as much of a drag impact from the hurricanes. A core of this percentage consists of a combination of consumer confidence and business growth, which we have continued to discuss in our vlogs.
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