VIEW Investors react to news Miran picked by Trump to be Fed Governor
Here are some investor comments about the impact to markets:
ANDREW BRENER, HEAD OF INTERNATIONAL FIXED INCOME SECURITIES NATALLIANCE SECURITIES, NEW YORK:
"Our view is he is very controversial and will not pass the Senate. He will try to change the Fed. First he has no experience. No street. No business. Always politics."
ROBERT TIPP, CHIEF INVESTMENT STRATEGIST, HEAD OF GLOBAL BONDS, PGIM FIXED INCOME, NEW YORK:
"So far bashing the Fed this term has been fruitless, or possibly even counter-productive — it certainly appeared to be counterproductive in the December 2018 Trump/Powell episode …
Presumably it (Miran's appointment) will have at least a marginal impact — but it will depend on the pliability of the rest of the committee members — which is certainly not a given.
Furthermore, as situations evolve, and nominees become acting chairs, there is at least one prominent example of a Fed Chair -- the first appointee following the 1951 Accord, Martin, who worked on the Accord from the administration's side – (who) proceeded in his long tenure to anger more than one president with his tight money policies ...
Again, while Trump is likely to choose someone more aligned with his thinking than Powell, the impact may not prove as material as some may fear."
RYAN SWEET, CHIEF US ECONOMIST, OXFORD ECONOMICS, PHILADELPHIA:
"I don't think it means too much in the context of altering the course of monetary policy.
I think the biggest question mark is whether or not he gets confirmed in time to vote at the September meeting. If he does, then that increases the odds that we get three dissents if the Fed opts to not cut in September.
I do think the odds of a September cut are rising, not because of this nomination, but just because of the recent data on the labor market."
TOM DI GALOMA, MANAGING DIRECTOR OF RATES AND TRADING, MISCHLER FINANCIAL, PARK CITY, UTAH:
"Stephen Miran will be good for the Fed because he will probably be inclined to lower rates. And I think he worked in the first Trump administration. So he has been in two Trump administrations. I think it's going to be a long-term deal for Miran and he will be Fed governor for a while. I don't think this is something that they want to do temporarily."
JOHN VELIS, AMERICAS MACRO STRATEGIST, BNY, NEW YORK:
"A bit of surprise to nominate Miran – he wasn't mentioned as a likely candidate by markets, although he is likely to be a reliable dove, given his current political position (as Chair of CEA) and his public comments to date.
"This is a recess appointment, so it does not need Senate confirmation. As far as I understand about recess appointments, they remain valid until the next session of the Senate is complete.
"This still doesn't remove the current chatter about Christopher Waller being named Fed Chair to replace Powell."
JAY HATFIELD, CHIEF EXECUTIVE OFFICER, INFRASTRUCTURE CAPITAL MANAGEMENT, NEW YORK:
"Miran is somewhat unconventional for this job because he was head of the Council of Economic Advisors and has made some controversial or hard to justify comments about forcing people to buy Treasuries, which doesn't make any sense. But I don't think this is going to be relevant to serving on the Fed board."
"It's an insider, someone who's willing to take one for the team because it's not that great of a position to be the...governor for a short period of time. It's a fairly practical decision because you can't recruit someone from the private sector for such a short period."
The main focus is on the Fed chair appointment, but he believes Miran will put more pressure on Powell to lower rates.
MARC CHANDLER, CHIEF MARKET STRATEGIST, BANNOCKBURN GLOBAL FOREX, NEW YORK:
"I don't think it really matters much because people like me have more or less decided that the Federal Reserve is most likely going to cut rates in September and probably at least one more cut before the end of the year."
"At the end of the day does it really influence our outlook for the Federal Reserve? I'd say probably not."
"Is he qualified? I'd say, yes... he is an economic advisor to the President. He obviously understands the markets. Broadly speaking, we should welcome the view that the Federal Reserve is not going to be picked from a very small inner circle of people."
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