How investors can position for President Trump's Fed Chair pick

Core Viewpoint - The selection of the next Federal Reserve chair could significantly impact investment strategies, with different approaches recommended depending on whether Kevin Hasset or Kevin Worsh is appointed [1][2]. Group 1: Investment Strategies Based on Fed Chair Candidates - If Kevin Hasset is chosen as the next Fed chair, the recommended investment strategy would focus on small-cap stocks, which typically benefit from economic growth and have a higher proportion of floating rate debt (60% for small caps vs. 30% for large caps) [3][4]. - In contrast, if Kevin Worsh is appointed, the financial sector stocks, particularly the financial sector ETF XLF, would be favored due to his experience and perceived market trust, which could lead to a steepening yield curve benefiting banks [5][6]. Group 2: Alternative Investment Options - For investors uncertain about which candidate will be selected, the Vanguard Dividend Appreciation ETF (VIG) is suggested as a stable option. This ETF includes companies with strong pricing power that can maintain dividends in a lower interest rate environment, providing diversification across sectors such as financials, healthcare, tech, and consumer staples [8]. - This strategy is characterized by lower volatility and expected rewards, but it is anticipated to perform well under both potential scenarios of Fed leadership [9].