Why a super dove could end up leading a Trumpian Fed
By Barbara Kollmeyer, MarketWatch
Critical information for the U.S. trading day
POTUS could pick a new Fed chief within two or three weeks, one that just might rock the market's world. Or not.
Citing people in the know, Bloomberg says (https://www.bloomberg.com/news/articles/2017-10-04/trump-aides-are-said-to-deliver-shortlist-of-fed-candidates) President Donald Trump's advisers have given him a short list of contenders: Janet Yellen, though she doesn't seem to be a huge favorite, top Trump economic consigliere Gary Cohn, former Fed board governor Kevin Warsh and current governor Jerome Powell. Stanford economist John Taylor is on that list too.
Dollar bulls got excited recently about the prospect of a hawkish Warsh in the top seat. But some view Warsh as a weird pick (http://www.marketwatch.com/story/warsh-would-be-strange-pick-as-fed-chair-for-a-president-who-says-he-cares-about-jobs-2017-10-03), and fresh chatter about not-so-hawkish Powell being a contender helped take some shine off the dollar :
Our call of the day, says forget these picks as a long-shot might get the nod.
"I think I'm the only guy on God's green earth that believes it will be Neel Kashkari," said Jeff Gundlach on his guess as he chatted at the Vanity Fair New Establishment Summit yesterday in LA.
"He happens to be the most easy-money guy that's in the Federal Reserve system today, and that's why he may win," the DoubleLine Capital guru added. He pointed to the Minneapolis Fed president recently saying the central bank should cool it on rate hikes (kashkari).
If Trump wants to keep his base happy, higher rates won't do it, nor will a stronger dollar, and that's why Neel is his man, according to Gundlach.
According to betting site PredictIt (https://www.predictit.org/Market/3306/Who-will-be-Senate-confirmed-Fed-Chair-on-February-4%2C-2018), Kashkari isn't a good bet. Some have already dismissed Gundlach's guess as hogwash, like iBankCoin's The Fly (http://ibankcoin.com/flyblog/2017/10/03/bond-bozo-gundlach-thinks-kashkari-will-next-fed-head/#sthash.TrVnEttV.XuJkD2Ip.dp). Others found it odd:
Richard Perry, market analyst at Hantec, Kashkari is "highly unlikely" to get the nod, and he is not really a good fit for Trump. If it did happen? "He would initially be yields negative, dollar negative, gold positive, supportive for equities," Perry said.
Meanwhile, Gundlach also thinks next year is when stocks are going to start to run into trouble as central banks finally have to realize that they've been artificially propping up markets. And he doesn't like bonds either, but says he's stuck with them. Read all his comments here (https://www.cnbc.com/2017/10/03/jeffrey-gundlach-believes-neel-kashkari-will-be-next-fed-chief.html).
Key market gauges
Dow , S&P and Nasdaq-100 futures indicate a pause for stocks after their record run. Asia mostly shot higher (http://www.marketwatch.com/story/hong-kong-stocks-flirt-with-10-year-high-2017-10-03), with the Hang Seng finishing at a 2 1/2 -year high. Europe is down, led by Spanish stocks as the Catalonia crisis hits markets there again.
(http://www.marketwatch.com/story/european-stocks-pause-for-breath-after-8-day-winning-run-2017-10-03)Gold is up a little, but WTI crude is down and clinging to $50 a barrel. The dollar continues to ease back.
Bitcoin is hanging around the $4,300 mark. Goldman's CEO Lloyd Blankfein says the jury's still out (http://www.marketwatch.com/story/bitcoins-rise-may-be-like-when-paper-money-displaced-gold-says-goldmans-ceo-2017-10-03) about the cryptocurrency.
Read Market Snapshot (http://www.marketwatch.com/story/us-stocks-set-to-catch-their-breath-after-record-run-but-tesla-jumps-2017-10-04) for more.
Tesla (TSLA) is moving up in premarket after Nomura analysts initiated with a buy rating and a Street-high $500 price target (http://www.marketwatch.com/story/teslatstock-gains-after-nomura-initiates-with-street-high-500-price-target-2017-10-03).
CytomX (CTMX) is set to open at new highs after announcing a partnership with Amgen (http://www.marketwatch.com/story/cytomx-stock-rockets-35-after-deal-with-amgen-2017-10-03)(AMGN) last night.
The EU says Amazon (AMZN) will have to pay $294 million in back taxes (http://www.marketwatch.com/story/eu-orders-amazon-to-pay-250-million-in-back-taxes-to-luxembourg-2017-10-04) to Luxembourg.
Verizon (VZ) now says every single account was affected by the Yahoo hack, around 3 billion (http://www.marketwatch.com/story/every-yahoo-account-was-affected-by-2013-hack-verizon-now-says-2017-10-03).
That big Equifax (EFX) breach could have been prevented by Oracle's (ORCL) software, claims Oracle's Larry Ellison (http://www.marketwatch.com/story/ellison-claims-oracle-software-could-have-prevented-equifax-hack-2017-10-03).
Ford (F) is going on the "attack" over costs (http://www.marketwatch.com/story/ford-to-attack-costs-shift-focus-to-suvs-trucks-electric-cars-2017-10-03), shifting its focus to SUVs, trucks and electric cars.
Uber's board OK'd a plan to rein in ex-CEO Travis Kalanick and says an IPO is coming sometime in 2019. (http://www.marketwatch.com/story/ubers-board-approves-plan-to-rein-in-kalanicks-power-2017-10-03) (http://www.marketwatch.com/story/ubers-board-approves-plan-to-rein-in-kalanicks-power-2017-10-03)
How placid has it been for the S&P this year? Schwab's Liz Ann Sonders and others have been highlighting this chart.
ADP's private-sector jobs report is due before the open, then Markit's services data and ISM's non-manufacturing index are on tap once trading is underway.
Check out:MarketWatch's Economic Calendar (http://www.marketwatch.com/economy-politics/calendars/economic)
On the Fed front, Yellen is due to give brief opening remarks at a conference this afternoon, and her second-in-command Stanley Fischer was taking part in a TV interview ahead of the open, saying the pace of interest-rate hikes was "OK."
"They owe a lot of money to your friends on Wall Street and we're going to have to wipe that out. You're going to say goodbye to that, I don't know if it's Goldman Sachs but whoever it is you can wave goodbye to that." -- That's President Donald Trump in a pre-recorded interview (http://www.marketwatch.com/story/puerto-ricos-debt-will-have-to-be-wiped-out-trump-says-2017-10-03) with Geraldo Rivera that aired on Fox News Tuesday night, talking about Puerto Rico debt.
Don't like shakes in the air, don't read this. Severe turbulence on planes flying over the North Atlantic, at a typical cruising altitude of 39,000 feet, will rise 181% by 2050 to 2080. That's all due to climate change, says a new study (https://www.cnbc.com/2017/10/04/climate-change-will-increase-the-risk-of-severe-turbulence-on-planes-research-says.html).
Chilling body-camera footage from police shows chaos of Vegas shooting (https://www.youtube.com/watch?time_continue=65&v=yjMjoH5xB3A)
King of Spain slams Catalans, says they've "undermined harmony" in the region (http://www.marketwatch.com/story/spains-king-says-catalan-separatists-have-undermined-harmony-2017-10-03)
A church record: more than 40 Catholic institutions to massively divest from fossil fuels (https://www.theguardian.com/environment/2017/oct/03/catholic-church-to-make-record-divestment-from-fossil-fuels?CMP=share_btn_tw)
Got 'love' in your food label? The FDA is having none of that (http://www.marketwatch.com/story/fda-doesnt-want-granola-to-be-made-with-love-2017-10-03)
Mark Cuban for president? Maybe he will, maybe he won't (http://www.marketwatch.com/story/mark-cuban-says-he-probably-wont-run-for-president-but-he-might-2017-10-03)
"Thoughts and prayers" and the Vegas shootings. Here's what Jesus might have done (https://www.washingtonpost.com/news/acts-of-faith/wp/2017/10/03/why-thoughts-and-prayers-is-starting-to-sound-so-profane/?tid=ss_tw&utm_term=.0a698439b7fa)
Man, neighbors fighting over man's WW2 tank (http://www.khou.com/news/local/hoa-fight-over-wwii-tank-/479844202?utm_campaign=trueAnthem:+Trending+Content&utm_content=59d0927904d3013c0d6da927&utm_medium=trueAnthem&utm_source=twitter) parked in front of his house.
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-Barbara Kollmeyer; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires