1. Report Industry Investment Rating No relevant content provided. 2. Core View of the Report The report analyzes the candidates for the next Federal Reserve Chair, the procedures and rules of the Chairmanship change, and the potential impacts if the Fed's independence is weakened. Trump and Treasury Secretary Bessent are considering new candidates, which has raised concerns about the "independence" of monetary policy [1][9]. 3. Summary by Directory 3.1 Candidates and Their Backgrounds - **Three main contenders**: Waller, Hassett, and Warsh are the leading candidates. As of August 21, according to Polymarket, Waller has a 32.0% probability of being nominated, followed by Warsh (10.7%) and Hassett (10.0%). According to Kalshi, Waller has a 29% chance, Hassett 19%, and Warsh 18% [2][10]. - **Christopher Waller**: A current Fed governor and a dove. He is familiar with the Fed's operations, was appointed by Trump, and his policy views align with the White House. His election may raise questions about the central bank's independence [16]. - **Kevin Hassett**: The current director of the White House National Economic Council. He has rich government experience but relatively less monetary policy experience and is considered too close to the government [17][18]. - **Kevin Warsh**: A former Fed governor, regarded as a dove, and supports Trump's call for rate cuts. He has extensive experience in various fields but lacks direct access to Trump [21][22]. - **Other candidates and potential "dark horse"**: Other candidates include current Fed officials, financial institution professionals, former Fed officials, and former government economists. Each has its own advantages and disadvantages. Milan, recently nominated as a Fed governor, may be a "dark horse." He advocates for reciprocal tariffs, has a dovish stance on interest rates, and wants to weaken the Fed's independence, which has raised concerns about his impact on the central bank's credibility [24][27]. 3.2 Procedures and Rules for the Fed Chairmanship Change The President usually announces the nominee 3 - 6 months in advance, with an average of 4.08 months from nomination to inauguration. Trump is expected to announce the nominee between December this year and January next year. If announced earlier, it may raise concerns about setting up a "shadow Fed." After Powell steps down as Chair, he is likely to resign as a governor. Trump can influence the Fed's policy by nominating new governors, but most current governors' terms extend beyond 2028, making it difficult for him to interfere [29][31]. 3.3 Potential Impacts of Weakened Fed Independence - **Increased stagflation risk**: Historical precedents show that when the Fed loses independence, stagflation can occur. If Trump appoints a closely - affiliated Fed Chair, the market may worry about repeating the 1973 - 1974 stagflation scenario [34]. - **Intensified fiscal concerns**: The Fed losing independence may turn it into a tool for the Treasury to issue debt, exacerbating concerns about the debt crisis given the high deficit and rising debt in the US [36]. - **Weakened US dollar status and capital flight**: The dollar's status as the world's reserve currency depends on the Fed's credibility. If the Fed is seen as politically controlled, investors may shift from dollar - denominated assets to alternatives like gold, leading to a vicious cycle [38]. - **US stock, bond, and currency sell - off**: A "black swan" event where the Fed is controlled by the White House could lead to a sell - off in US stocks, bonds, and the dollar, as demonstrated by the market reaction in July when there were rumors of firing Powell [38].

Group 1: Federal Reserve Background and Structure - Jerome Powell's term as Federal Reserve Chairman will end in May 2026, with President Trump frequently calling for interest rate cuts and criticizing Powell as "too late" this year[4] - The FOMC voting committee consists of 12 members, including 7 Federal Reserve governors with 14-year terms, 1 New York Fed president, and 4 rotating regional Fed presidents[10] - Trump can appoint up to 2 new Federal Reserve governors during his current term, potentially leading to 4 out of 7 governors being appointed by him by 2028[13] Group 2: Potential Candidates for Chairmanship - The top candidates for the Federal Reserve Chair include Christopher Waller, Kevin Hassett, and Kevin Walsh, with Waller having a 34% chance of winning the nomination as of August 18, 2025[30] - Waller advocates for a shift in focus from "controlling inflation" to "preventing economic recession," emphasizing the importance of labor market feedback[30] - Hassett supports a more aggressive interest rate cut path and believes the Fed should prioritize economic stimulation over inflation concerns[34] Group 3: Policy Implications and Risks - If Waller is appointed, the Fed's policy may prioritize labor market conditions, with a potential preventive interest rate cut of 25 basis points[31] - Hassett's appointment could lead to increased scrutiny of the Fed's independence and a shift towards quantitative easing to support fiscal policies[34] - Risks include unexpected policy shifts from Trump and a rapid economic downturn that could prompt Powell to adopt a more dovish stance[37]

Core Viewpoint - The article discusses the potential appointment of Christopher Waller as the next Chair of the Federal Reserve, favored by former President Trump, and its implications for monetary policy continuity and market expectations [2][4]. Group 1: Waller's Profile and Market Impact - Christopher Waller, currently a Federal Reserve Governor since 2020, is recognized for his academic background and policy flexibility, advocating for quicker monetary easing when inflation risks are manageable [4]. - Waller's potential appointment could alleviate market concerns regarding abrupt shifts in monetary policy, as he is viewed as a proponent of a more accommodative stance [2][4]. - The U.S. dollar strengthened against major currencies, with the dollar index rising by 0.23% to 98.400, reflecting market reassessment of policy outlook following news of Waller's candidacy [2]. Group 2: Other Candidates and Market Sentiment - Other candidates mentioned by Trump include Kevin Hassett and Kevin Warsh, with Waller, Hassett, and Warsh being the top contenders according to betting platforms [6]. - Analysts express concerns that candidates closely aligned with the White House may raise fears about the independence of the Federal Reserve, potentially negatively impacting asset prices [7]. - Hassett's close ties to Trump and inclination towards aggressive fiscal stimulus could pressure the dollar and increase volatility in the bond market if appointed [7].

Group 1 - Pfizer's stock rose over 4% as its Q2 revenue exceeded expectations [1] - Logitech and Intel also saw stock increases of over 4% [1] - Popular Chinese concept stocks mostly rose, with Zhihu up over 5%, Bilibili and Xpeng up over 3%, Li Auto up nearly 2%, and NetEase and Pinduoduo up over 1% [1] Group 2 - Multiple international financial institutions have warned clients to prepare for potential declines in U.S. stock prices due to high valuations amid worsening economic data [2] - President Trump criticized Federal Reserve Chairman Powell for delaying interest rate cuts and expressed concerns over politicized labor statistics [2] - Trump announced plans to impose "small tariffs" on imported drugs, with rates expected to rise to 250% over time [5] Group 3 - Trump indicated that he may soon announce a new Federal Reserve Chairman, narrowing the list of candidates to four, excluding Treasury Secretary Basant [3][4] - The resignation of Fed Governor Kugler was described as surprising, and Trump plans to utilize this vacancy for selecting the future Fed Chairman [4]

Group 1 - President Trump has narrowed down the list of candidates for the new Federal Reserve Chair to four individuals, excluding Treasury Secretary Scott Pruitt, who prefers to remain in his current position [1][2] - The current Federal Reserve Chair Jerome Powell's term ends in May 2026, and Trump has repeatedly called for Powell's resignation [1][2] - The early announcement of the new chair, potentially in the summer or fall, could influence investor expectations regarding future interest rate movements [1][2] Group 2 - Federal Reserve Governor Kugar will officially resign on August 8, 2023, and will return to Georgetown University as a professor, allowing Trump to make new appointments to the Federal Reserve Board sooner than expected [2] - Trump has expressed significant dissatisfaction with Powell, criticizing his handling of interest rates and calling for his resignation, stating that Powell is unfit for the role [2]

Core Viewpoint - Kevin Hassett is emerging as a leading candidate to succeed Jerome Powell as the Chairman of the Federal Reserve, amid increasing political pressure and criticism from President Trump regarding the Fed's interest rate policies [1][3][6]. Group 1: Candidates for Federal Reserve Chair - Kevin Hassett and Kevin Warsh are the top contenders for the Federal Reserve Chair position, with Scott Bessent providing advice on the selection process [1][3]. - Christopher Waller is considered a dark horse in the competition for the Fed Chair [1]. - Hassett has expressed a strong desire for the position, although he has maintained a low profile in public discussions [11]. Group 2: Political Context and Implications - President Trump has criticized Powell for maintaining high interest rates, which he believes negatively impacts the economy, and has indicated a preference for a Chair who supports rate cuts [3][6]. - The independence of the Federal Reserve is under threat due to political pressures, which could affect its ability to combat inflation and support the dollar [3][6]. - Hassett has echoed Trump's criticisms of the Fed, suggesting that its actions warrant presidential scrutiny [3][4]. Group 3: Economic Considerations - The selection of a Fed Chair perceived as compromising with the White House could lead to a decline in the U.S. bond market, as independent central banks are generally more effective in controlling inflation [7][8]. - Trump's administration is focused on ensuring economic prosperity ahead of the midterm elections, which adds urgency to the selection process [9][10]. - The ongoing discussions about the Fed's renovation costs have become a point of contention, with Hassett and other Trump allies expressing concerns [17].

Group 1 - The U.S. Treasury Secretary, Becerra, suggests that Federal Reserve Chairman Powell should resign from his Board position after his term ends in May 2026, following traditional practices [2] - Powell's current term as a Federal Reserve Board member extends until January 2028, allowing him to potentially remain involved in monetary policy even after his chairmanship ends [2][3] - The process for identifying the next Federal Reserve Chairman has formally begun, with many qualified candidates being considered both inside and outside the Federal Reserve [2] Group 2 - The expectation of Powell remaining at the Federal Reserve complicates the decision-making process for the Trump administration as they seek a chairman who aligns with their economic agenda, particularly someone who favors interest rate cuts [3] - If Powell continues as a Board member, the Trump administration will only have one vacancy to fill, which is the seat of Board member Quarles, whose term ends in January [3] - Key candidates for the next Federal Reserve Chairman include top economic advisor Kevin Hassett, former Board member Kevin Warsh, Treasury Secretary Becerra, and current Board member Waller [3]

Core Insights - The Bank of America’s global fund manager survey indicates that U.S. Treasury Secretary Basant is the most favored candidate to succeed Federal Reserve Chairman Powell, with 26% of respondents supporting him [1] - Following Basant, 17% of respondents support Waller, while 14% favor Walsh, and 7% believe Hassett will be the next chairman [1] - President Trump is expected to nominate a new Federal Reserve chairman in the second half of 2025, as Powell's term ends in May 2026 [1]

Summary of Key Points from the Conference Call Industry or Company Involved - The discussion revolves around the Federal Reserve and potential candidates for the next Federal Reserve Chair. Core Points and Arguments 1. **Potential Candidates for Federal Reserve Chair**: The Trump administration is considering Kevin Warsh, Kevin Hassett, and Christopher Waller as potential candidates for the next Federal Reserve Chair, all of whom are Republicans with economic backgrounds and prior experience at the Federal Reserve [1][3][4]. 2. **Divergent Economic Outlooks**: The three candidates have differing views on the U.S. economic outlook. Hassett is the most optimistic, believing Trump's policies will drive growth without rising inflation. Warsh sees the economy as fundamentally strong, while Waller aligns with Federal Reserve officials, indicating a moderate economic slowdown [5]. 3. **Policy Preferences on Interest Rates**: All three candidates generally favor continued interest rate cuts and balance sheet reduction. Hassett is the most dovish, advocating for rate cuts to stimulate growth, while Warsh takes a hawkish stance, suggesting that balance sheet reduction should precede rate cuts [6][7]. 4. **Impact of Fiscal Policy on Bond Yields**: U.S. fiscal issues, particularly the proposed tax cuts, are expected to significantly increase the net deficit by $2.8 trillion over the next decade, contributing to high U.S. Treasury yields [8]. 5. **Historical Concerns on Fiscal Expansion**: Past Federal Reserve Chairs have expressed concerns about fiscal sustainability, emphasizing the need for budget balance and prioritizing anti-inflation goals during non-crisis periods [9]. 6. **Candidates' Views on Fiscal Deficits**: Warsh and Waller believe that excessive fiscal expansion is unsustainable, but they assert that debt repayment is not the Federal Reserve's responsibility. Hassett, due to his current role in the White House, has been less vocal on monetary policy [10]. 7. **Upcoming Changes in Monetary Policy Framework**: The Federal Reserve is expected to revise its monetary policy framework in late summer 2025, potentially reverting to a 2% inflation target, which could influence future rate cuts [11][18]. 8. **Differences in Current Economic Environment**: The current economic environment differs from that of 2020, with higher interest rates and elevated long-term inflation expectations, which may affect the Federal Reserve's policy decisions [13][15]. Other Important but Possibly Overlooked Content 1. **Independence of the Federal Reserve**: Regardless of who becomes the next Chair, maintaining the independence of the Federal Reserve is likely to remain a priority for the candidates [10]. 2. **Potential Economic Consequences of Policy Decisions**: Continuing to follow an average inflation target could lead to unnecessary cooling of the job market, potentially increasing unemployment rates [14][17]. 3. **Flexibility in Monetary Policy Operations**: The current higher interest rate environment provides policymakers with greater flexibility in monetary policy operations compared to the previous low-rate environment [16].

Group 1 - The article discusses President Trump's frustration with the Federal Reserve's slow interest rate cuts, prompting him to consider an early nomination for the next Fed Chair to undermine the current Chair, Jerome Powell [1][2][3] - Potential candidates for the next Fed Chair include former Fed Governor Kevin Walsh, National Economic Council Director Kevin Hassett, Treasury Secretary Mnuchin, and Fed Governor Christopher Waller [2][3] - Trump has expressed his intention to announce a successor before Powell's term ends in 11 months, which could influence investor expectations regarding future interest rate movements [2][3] Group 2 - The Federal Reserve has proposed a plan to relax key capital rules for large banks, allowing them to release some of their capital to enhance the resilience of the U.S. Treasury market [5][6] - The proposed changes would lower the capital requirements for bank holding companies from 5% to a range of 3.5% to 4.5%, and for bank subsidiaries from 6% to the same range [5][7] - This adjustment is expected to reduce core capital held by large banks by approximately $13 billion at the holding company level and $210 billion at the subsidiary level, providing banks with greater flexibility in capital allocation [7]