Prediction Markets Show Warsh with Massive Lead to be Next Fed Chair
By Paul Lebowitz in Politics News
Published:
- The race to be the next Chairman of the Federal Reserve is ramping up with embattled current Fed Chair Jerome Powell under criminal investigation as the countdown continues to the end of his term in May
- Head of the National Economic Council (NEC) Kevin Hassett was viewed as the odds-on favorite, but Trump recently said he prefers Hassett to remain in that role than take over the Fed
- Trump’s unexpected statement has roiled prediction markets regarding his upcoming selection to run the Fed
The Federal Reserve rarely gets this level of attention beyond bankers, investors, and economic policy wonks. However, with President Trump pushing for Fed Chair Jerome Powell to depart even before his term ends in May (and he technically does not need to leave the Board of Governors for another two years), there has been rampant speculation over his replacement. Adding into the drama is that Powell is being criminally investigated due to his testimony before the Senate Banking Committee in June 2025.
Trump claims to have had no involvement in the investigation. Powell thinks otherwise.
Regardless, the president is still debating who he will select to replace Powell. In December, Kevin Hassett, Head of the NEC, was the overwhelming favorite. Since then, the race tightened between Hassett and Kevin Warsh. However, during a White House appearance, Trump praised Hassett for his work and, in characteristic Trump fashion, added a seemingly off-the-cuff remark that he would prefer Hassett remain in his current role as the president’s main economic advisor.
There and then, the perception that it was Hassett’s job to lose, came apart. Warsh is a past member of the Board of Governors having served from 2006 to 2011, and now appears to be the most likely candidate to get the nod.
The Candidate Pool for Fed Chair Has Flipped
The persistent question with Trump is how seriously to take what he says in those off-script moments. If, after this, Trump spins around and names Hassett anyway, then it was a meaningless aside. If he names Warsh or another candidate, then it was something to take seriously.
This is the challenge with Trump.
The key with prediction markets is to gauge who better suits the president with his economic objectives. Before becoming part of Trump’s orbit, Hassett was generally seen as a background player in conventional GOP politics having advised John McCain, Mitt Romney, and George W. Bush. Those men, while staunch believers in the free market, low taxes, and business-friendly policies, were not as extreme or aggressive as Trump. Trump’s past life as a businessman, primarily in real estate, has contributed to his worldview that lower rates and lower corporate taxes jumpstart the economy. Now, Hassett is generally in line with Trump.
Warsh is Stanford-educated in economics and statistics, has a law degree from Harvard, and studied at MIT’s Sloan School of Management and Harvard Business School.
In short, he has the credentials that Trump likes to tout and the real world experience to speak shorthand to the president. He believes in lower interest rates and thinks the Fed has been too reliant on what worked in the past rather than looking toward the future.
Christopher Waller is right behind the plummeting Hassett in the prediction markets. Waller is a member of the Board of Governors and was in management at the Federal Reserve Bank of St. Louis. He is also well-educated with an MA and PhD from Washington State University. If Trump wants someone who shares his enthusiasm for tariffs, Waller is the guy.
Current Markets Now Have Warsh Well Ahead
Prior to the President’s comments, Hassett and Warsh were trading at nearly 50/50 to be nominated as the next Fed Chair. After Trump’s recent statement (ad libbed or not), Warsh’s odds vaulted to the front at over 60%, while Hassett fell to under 20%, followed by Waller under 15%. Rick Rieder, a chief investment officer at BlackRock who attended Wharton, just as Trump did, is below 10%.
It is still unknown as to when Powell will leave the Fed. However, the prediction rules state that if Warsh or anyone else is the first person to be formally nominated prior to Trump leaving office on Jan. 20, 2029, then the market will resolve to Yes. The Library of Congress will verify the outcome.
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Was This Real or Another Trump Riff to Ignore?
Analyzing Trump is tricky. Even those who know him and have worked with him for decades can only speculate on what he will actually do when the time comes to make a decision. Just because he saw Hassett in the audience and blurted a stream of consciousness comment does not mean it’s set in stone that Hassett is not getting the nod or that Warsh will jump to the head of the line.
It’s also possible that Trump does the unexpected and names someone who is far down the list or isn’t even listed at all.
For now, it’s probably better to lean toward Warsh while keeping Hassett in mind as the next Fed Chair.
Paul Lebowitz is a novelist, columnist, social commentator, and the author of eight published books on baseball – one novel and seven baseball guide/previews. He covers sports, politics, and pop culture. Paul graduated from Hunter College with a degree in English. He lives in New York City.
