When lots of executives leave a company, it is a signal that turmoil is brewing at the top echelons and that decisions won't be made with ease.
So what does it mean when there is a lot of turnover at the
? Probably not nearly as much.
"The turnover among Federal Reserve Bank presidents and Fed governors should have no impact on the Fed's debate or conduct about monetary policy," says Mickey Levy, chief economist at
Bank of America
But there is no denying that the turnover leaves the markets dealing with new faces and voices this year. The Fed is down at least two hawks whose words the markets were comfortable dissecting. There are several spots still open, and the one new replacement is an unknown quantity in terms of whether he leans to the dovish or the hawkish when it comes to monetary policy.
"The market gets a little skittish when there is turnover," says T.J. Marta, chief fixed-income strategist at RBC Capital Markets. But Marta notes that the markets are already dealing with the unexpected from Fed officials. Fed Governor Susan Bies, who announced her retirement Friday, was not very vocal on interest rates, but when she was, she was expected to be dovish. In her last public speech in January, she changed her tune, emphasizing that the recently strong growth was sustaining the risk of higher inflation.
Bies, a Fed member since Dec. 7, 2001, will end her tenure on March 30, and added she will not attend the March 20-21 meeting of the Federal Open-Markets Committee, according to a Federal Reserve press release. Bies, age 59, says she plans to spend more time with her family. Bies was appointed to the Federal Reserve Board of Governors by President Bush and was in charge of banking regulation issues, hence her relative silence on issues of monetary policy.
Bies' retirement comes just a day after one high-level Fed vacancy was filled. Thursday, the Atlanta Fed named Dennis Lockhart its new president, replacing the familiar and hawkish Jack Guynn, who retired in October 2006. Guynn had spent 42 years at the Fed, ending his career at age 64. Lockhart, 60, had a 17-year career at
and is now a professor at Georgetown's Wash School of Foreign Service.
The also-ever-hawkish Chicago Fed President Michael Moskow announced in January that as of Aug. 31, he will resign after 13 years at the post. His resignation was due to an age cap on Fed presidents, which had already been extended once for Moskow, age 68, who was originally slated to retire in 2004.
Also in January, Boston Federal Reserve President Cathy Minehan resigned, saying she'd leave her post when a replacement is found. Minehan spent 39 in various Fed positions and said she is leaving in the interest of "broadening and diversifying" her career.
Other positions open at the Fed are the adviser spot that was vacated by Vincent Reinhart, who is leaving to run the American Enterprise Institute think tank, and Mark Olson's spot on the Board of Governors. Olson left in June 2006 to become chairman of the Public Company Accounting Oversight Board.
Meanwhile the bond market was weakening Friday on the typically hawkish St. Louis Fed President William Poole's comments that if inflation settles at a level over 2%, it is "unacceptable," and might require further rate hikes. The 10-year Treasury yield jumped from 4.75% to 4.77% after Poole's speech to the AIM Management Association in St. Louis.
In keeping with TSC's editorial policy, Rappaport doesn't own or short individual stocks. She also doesn't invest in hedge funds or other private investment partnerships. She appreciates your feedback. Click
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