OIL: US OIL: December 24 - Americas End of Day Oil Summary: Crude Flat

• RES 4: 1.3368 50.0% retracement of the Sep 17 - Nov 4 bear leg    
• RES 3: 1.3284 38.2% retracement of the Sep 17 - Nov 4 bear leg   
• RES 2: 1.3272 50-day EMA
• RES 1: 1.3167/3216 20-day EMA / High Nov 13
• PRICE: 1.3102 @ 16:07 GMT Nov 24
• SUP 1: 1.3038/10 Low Nov 20 / Low Nov 4 & 5 and the bear trigger 
• SUP 2: 1.2971 1.382 proj of the Sep 17 - 25 - Oct 1 price swing
• SUP 3: 1.2945 50.0% retracement of the Jan 13 - Jul 1 bull leg
• SUP 4: 1.2877 1.618 proj of the Sep 17 - 25 - Oct 1 price swing          

The trend condition in GBPUSD remains bearish and short-term gains are considered corrective. Moving average studies are in a bear-mode condition and this continues to highlight a dominant downtrend. Clearance of the bear trigger at 1.3010, the Nov 4 / 5 low, would confirm a resumption of the downtrend. Key short-term resistance is at the 20-day EMA, at 1.3167. A clear break of it would signal a stronger corrective cycle.

• Ex-Fed Gov Kevin Warsh (18%): Close to Waller in the running is ex-Fed Gov Warsh, who was reportedly a finalist to succeed Janet Yellen as Chair in 2018 but was passed over by Trump in favor of Powell (a decision that Trump suggested in 2020 he had second thoughts about in retrospect). He is both an insider (Fed governor, 2006-2011) and an outspoken critic of the institution, arguing from his position as a fellow at Stanford's Hoover Institution that the Fed should reform everything from its communications policy to the role of regional Fed banks to its macroeconomic forecasting models. As such he'd probably be the most "radical" choice in terms of changing the structure of the institution. He said this year “I think what we need is regime change at the Fed, and that’s not just about the Chairman, it’s about a range of people...it’s about breaking some heads, because the way they’ve been doing business is not working.”
  • He unconventionally has said that the Fed should reduce the size of its balance sheet in order to bring down interest rates, contrary to the conventional wisdom of the impact of QE vs QT.
  • A possible argument against Warsh's candidacy from the White House's perspective is that he was a monetary policy hawk during his time as Governor, and indeed critiqued the Fed's decision to ease last year amid elevated inflation.
  • Market reaction if Warsh is appointed: More difficult to predict than most, but his outspoken stance on lower rates would probably suggest a market reaction similar to Hassett: steeper yield curve and weaker dollar.

• Outside of the perceived Top 3 are:
• Blackrock's Rick Rieder (10%): The only finalist not to have a background in public service, Rieder - who runs Blackrock's fixed income business - is probably the biggest wild-card and least "conventional" candidate to succeed Powell. He has burnished his dovish credentials, calling for a 50bp cut in September, with his analyst note following the October cut saying "we think the Fed is right in lowering interest rates again". And Bloomberg cited sources in reporting that Bessent "was impressed with Rieder’s long career in markets running large groups and his deep understanding of micro- and macro-contributors to the economy".
• Fed Vice Chair for Supervision Michelle Bowman (2%): First named to the Fed Board in the 1st Trump administration in 2018, Bowman has been one of the FOMC's main and earliest advocates for rate cuts this year, perhaps helping elevate her profile for the White House's consideration. Indeed the Trump administration named her Vice Chair for Supervision in June, and she has advocated for a broad-based holistic review of the US capital framework in line with the White House's broader deregulatory drive.  That said, her job in that financial regulatory role isn't quite done yet, which is perhaps one reason there is a perception that the White House may want to keep her where she is and appoint somebody else as Chair.

Going down the list in terms from highest to lowest implied % probability per prediction markets (Polymarket):

• NEC Director Kevin Hassett (39%): Current director of the National Economic Council (aka the White House's chief economist), Hassett is the perceived favorite to be named as the next Chair. He's got Federal Reserve experience, having previously been a senior economist there. And key is that he is well known and well-liked within the administration having also served in Trump's first term, and has been an outspoken advocate of rate cuts, aligning himself to the President's outspoken views on monetary policy.
  • He also has been critical of the Federal Reserve's decision-making transparency and lack of public acknowledgement of previous forecast/policy errors, echoing Bessent's harsh criticism of the Fed. It should also be noted that he's been critical of federal statistics agencies too, suggesting that some of the BLS's payrolls reporting has been "partisan".
  • Market reaction if Hassett is appointed: Clearest case for a steeper yield curve and weaker US dollar among the 5 candidates; while his appointment is partly priced he would be seen as the most amenable to lower short-end rates, while longer-end breakeven yields could rise if the next Fed Chair was seen to be so closely aligned with the White House. Bessent will be aware of this and it's for this reason we are a little more doubtful that he should be considered such an overwhelming favorite despite his close White House ties.

• Fed Gov Christopher Waller (24%): Probably the most "conventional" candidate for Chair, Waller (like Powell when he was appointed) has years of experience on the current Board (since 2020). He is a PhD economist who was previously head of research at the St. Louis Fed.

  • Factors in favor of his nomination from Trump's perspective: his appointment as an "insider" would reassure markets that policy wouldn't be taken in radical direction; he's been one of the FOMC's champions of rate cuts this year; and he's been blunt and outspoken in some areas of Fed policy (his statement on the Fed's decision to withdraw its principles for climate-related financial risk management was two words: "Good riddance").
  • And perhaps an underappreciated "plus" for the White House: if he takes the job then the Trump administration will be able to appoint an additional ally to the Board than it otherwise would if it needed the next Chair to take Gov Miran's expiring slot in January.
  • Going against his candidacy however is that he is an "insider" when the Trump administration has been calling for reforms to the Fed, and he's been flexibly-minded enough on rate policy over the last few years that there would be no guarantee he'd advocate for an unduly low-rate stance.
  • He told Fox Business today that he had a "great meeting" with Tsy Sec Bessent about 10 days ago. “He and I seem to hit it off very well, talking about economics, the economy, financial markets. [...] They’ve never been political. They’re straight about economics, and that’s just been a great time, for me to sit and talk with him.” He added that it's very important to continue press conferences.
  • Market reaction if Waller is appointed: Slight curve flattening with some USD strength - Waller's currently a dove but not unreasonably so, and a "conventional candidate" would shore up concerns about longer-term inflation. If we were looking at the nomination from Bessent's perspective, this (and the increased potential for Trump to stack the Board) would make him a desirable candidate even if he's not a radical departure from the Fed orthodoxy.