Economics, Monetary Policy, Pethokoukis

The race to replace The Ben Bernank: Looks like Yellen, not Summers, is more trusted by markets

One of the key selling points of Larry Summers to the Fed was his supposed support on Wall Street. Ezra Klein from a couple of days ago:

There’s also a feeling that the chair of the Federal Reserve can do more if he or she is truly trusted by markets. Rightly or wrongly, there’s a sense that Summers has the market’s trust in a way Yellen doesn’t.

Maybe not. Maybe it’s just the opposite. From CNBC:

Wall Street overwhelmingly believes President Obama will and should pick Janet Yellen to be the next chairman of the Federal Reserve, according to a survey. Preliminary results of the CNBC Fed Survey for July show 70 percent of the 40 participants who responded believe Obama will pick Yellen, currently, the Fed’s vice chair, to replace current Chairman Ben Bernanke, whose term is up in January. Just 25 percent believe it will be the former Treasury Secretary Larry Summers.

Yellen also beats Summers when CNBC asks participants who the president should nominate, with 50 percent choosing Yellen and 12.5 percent saying he should reappoint Bernanke. Even write-in candidate John Taylor, the Stanford University president, beats out Summers on who the president should nominate.

So Wall Street expects Yellen and wants Yellen. Markets are, yes, yellin’ for Yellen. I’m not sure when this survey was taken, but investors probably didn’t like hearing about Summers’ QE skepticism, as reported in the FT.

3 thoughts on “The race to replace The Ben Bernank: Looks like Yellen, not Summers, is more trusted by markets

  1. WELL JUST the fact that wall street like yellen very well might do him in. Because if Obama holds to his traditional hatred of wall street, and his (capital gains is about fairness) typical mindset, I would guess he’ll go with summers.

    Regardless of whether he should go against the grain or not, he has no problem doing merely what he wants vs conventional wisdom.

  2. The Fed has been reckless and cavalier since 2008, marching to a self-exalted mission statement of “fighting inflation” while millions of business and employees suffered.

    To do nothing, or not enough, is reckless and cavalier, if that means standing by idly while your neighbor’s house is burning down.

    The Bank of Japan has done nothing for 20 years.

    It has not worked. Tight money does not work. Dogmas do not replace action, bromides do not equal successful monetary policy. Pompous pettifogging and sanctimonious sermonettes about inflation are not equal to statesmanship.

    The Fed should print money, a lot more money and keep printing until the plates melt….

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