Why Jerome Powell Might Not Crush Stocks as the Next Fed Chair - TheStreet

Trump wants his guy, or so it seems. 

Federal Reserve governor Jerome Powell, reportedly President Donald Trump's pick to succeed Janet Yellen as Fed chair, would likely continue the current regime of low interest rates, slow balance sheet unwinding and steady growth.

Powell, a former partner at Carlyle Group LP (CG) - Get Report , joined the Fed in 2012 to finish out a term. He was nominated for a full 14-year term in 2014, along with Stanley Fischer and Lael Brainard. Previously, Powell was an official at the Department of the Treasury under George H.W. Bush. He's said to be the favored candidate of current Treasury secretary Steven Mnuchin.

Stanford economist John Taylor and Yellen herself have also been under consideration. Trump's failure to renominate Yellen would represent a departure from precedent. Presidents traditionally reappoint incumbent Fed chairs appointed by predecessors from the opposite party, as President Obama did with Ben Bernanke, Bill Clinton with Alan Greenspan and Ronald Reagan with Paul Volcker.

Still, Powell would provide continuity, as his opinions are close to Yellen's. He's more dovish, for instance, than Taylor and another candidate, former Fed governor Kevin Warsh.

Yellen was sworn in as the first female Fed chair in 2014. During her tenure, the Federal Open Market Committee has raised rates four times. 

A lawyer by training, Powell, if confirmed, would be the first Fed chair without an economics Ph.D. since Volcker, Fed chair from 1979 to 1987.

Powell's work has focused on regulation, including easing the burdens of the 2010 Dodd Frank law, like the Volcker rule's ban on risky proprietary trading. Deregulation is one of Trump's priorities.

While then-candidate Trump railed against Yellen's approach to monetary policy, saying she should be "ashamed of herself" for propping up a "false stock market," he's since changed his tune. Trump told the Journal over the summer that he likes Yellen's "demeanor" and the fact that she's a "low-interest-rate person."

Inflation and unemployment are both at record lows, but Trump told Lou Dobbs that despite her successes and despite precedent, he'd like to replace her. "You like to make your own mark, which is one of maybe the things she's got a little against her," he said on the interview with Fox Business. 

Market highs are one of Trump's favorite talking points when praising his performance as president, as are strong jobs reports, which candidate-Trump similarly claimed were "phony" under his predecessor.

Yellen's term expires in February. She has the option to finish out her 10-year term as a Fed governor even if Trump replaces her as chair.

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