The race for the next Fer has been complicated.
Kevin's path to the top job took a major step forward with his confirmation hearing date set.
But on the exact same day, prosecutors escalated their investigation into current Fetcher Powell, while Trump doubling down, defending the DOJ probe and also dropping a bombshell.
Senator Tom Tillis said there's to delay Washington's nomination.
Trump may fire Powell if he tries to stay on board past May 15, with monetary policy.
Hanging in the balance, we are joined by Daniel DiMartino Booth who will be weighing in.
She is the CEO and chief strategist for QI Research.
Danielle, good morning.
Thank you so much for joining us today.
Well, the countdown is on to the April Fed meeting, and Trump has indicated he may remove Powell from the board if confirmation delays do persist.
So what do you make of what we're seeing in terms of reaction to this, in particular bond market pricing?
Well, I think we would be seeing a lot more alarm in the bond market if it was actually legal for a Fed chair to be fired.
The reason Um, the Fed is considered to be an independent institution.
It's specifically because once they have been confirmed by the Senate for a 14-year term as a governor, then legally by all rights they can remain in that position in the case of Jay Powell through January of 2028.
If his term ends on May 15th as Fed chair, and there's no other chair that is sitting there by law, he can remain in his post.
He has been elected by all 19 members of the Federal Open Market Committee.
To be the man behind the podium until there is a new sworn in Fed chair that is then elected as also the chair of the Federal Open Market Committee.
This gets rather complicated, but my point to you is there are a lot of threats being thrown around, but it is not legal for Jay Powell to be fired.
Yes, and Danielle, you just honed in on that important point regarding legality and obviously we are paying attention to the politics of this, but independence is a key word here.
So looking beyond the hearings to Actual policy a war that would likely bring a different approach as well as philosophy.
So how does the chairmanship alter your base case for the rate trajectory not just in 2026 but also beyond.
Well, so we have to remember that Kevin Warsch was a Fed governor already.
He's been confirmed by the Senate.
He has roundly applauded his policies by senators.
It looks like he will have an easy.
Senate confirmation final vote.
When that happens, of course, Senator Thom Tillis has to get out of the way for that to happen.
But I would like, I would like to think that a younger Fed chair might be an individual who better embraces alternative data measures and appreciates some of the disconnects between the formal data that is being released and some of the survey data that show that Americans are much more.
Concerned about the job market than what's being revealed in the weekly and the monthly data, we must bear in mind that of all unemployed Americans, only 1 in 4, only 25%, are covered by unemployment benefits.
That's so every Thursday morning we say great low jobless claims number that has to be put in context because only 25% of Americans are collecting unemployment benefits.
I think that those are the things.
That Kevin Warsh will pay attention to real data in front of him that provides a bigger story, and I do think that we would see a more dovish Fed initially under Kevin Warsh, but this is not a man who liked quantitative easing.
He called it Robin Hood for the rich.
So I'm not so sure that we would have an Uber dove replacing Jay Powell given his philosophy and many of the things that he's written in the past.
Yes, and Danielle, you bring up a lot of important points there when it comes to the economic data, because when we're looking at weekly jobless claims, we have to look at the bigger picture here and given the fact that we've had a lot of data points delayed due to the government shutdown or partial government shutdowns, if we strip away all this political noise, what is the actual macro data telling you right now?
And we can't forget about how inflation is spiking because of this ongoing geopolitical conflict in the Middle East.
Again, this is the worst of both worlds for US households, US consumers.
Nearly 80 million Americans work in the gig economy.
They're working a second job to get by, and this energy shock has just made it that much worse for them.
To try and put a roof over their head to try and put food on the table in the face of rising gasoline prices, and again we're seeing wage growth all the way back to where it was prior to when the pandemic hit.
And these are the things again that I, I hope and I wish that current Fed policymakers would be paying better attention to, but I think, I think a younger Kevin Warshch would be more appreciative of the actual data on the ground.
As opposed to the severely lagged data that has a lot of interpolations, imputations, seasonal adjustments, I think, and I hope again that Kevin Warsh will be more attentive to the real data on the ground because that's what Americans happen to be living.
Well Danielle, we will have to leave it there for today, but I appreciate your time and as always, thank you so much for all of your insights as well as your perspective.
Thank you for having me.
