Renta 4 | We have finally received confirmation from Trump that Kevin Warsh will replace Powell at the helm of the Fed starting next May, something that the market had already been anticipating since Thursday afternoon. For his confirmation, approval by the Senate Banking Committee and then by the Senate itself is required. We recall that Republican Tillis, of the Banking Committee, said he would not approve any candidate until the investigation into Powell’s expenses for the renovation of the new headquarters was resolved. This could delay the appointment (his vote is decisive, as the Republicans have a very narrow majority in the Banking Committee). In any case, Tillis is not against Warsh, whom he considers a valid candidate, but rather his opposition is a means of putting pressure on the Trump administration for what he perceives as political persecution of Powell.
The choice of Warsh, whom the market considers to have a more technical profile and a more hawkish bias than other candidates (critical of the Fed’s balance sheet expansion), has generated a risk-off movement in the markets, with falls in the stock markets (down 0.05%/1.5% in the main US indices on Friday, which, in light of the evolution of futures, looked at set to continue yesterday) and cryptocurrencies (bitcoin down 10% after falling 6% last week). Given the recovery of the dollar (up 2% in three sessions, from 1.20 to 1.185 against the euro), precious metals have depreciated sharply (on Friday, gold was down 9% and silver 26%, declines that continued yesterday morning, down 7% and 12% respectively).
