Following Trump's statement in the early hours that Hasset w...

Following Trump's statement in the early hours that Hasset will remain in his current position and market expectations shifting towards Warsh, Bessent delivered a speech addressing issues related to the subsequent nomination of a new Federal Reserve Chair.

He expressed that Trump's view on Hasset is the president’s privilege and he will not intervene, emphasizing that the list of candidates for the new Federal Reserve Chair will be announced around the time of the Davos Forum, approximately around January 25th.

And indicated that whether Powell will remain in office after May depends on Powell himself, but there is significant concern about the emergence of a 'shadow chair.'

Meanwhile, it was stated that Fed interim governor Milan can continue to serve as a governor after January 31.

There are several details and key points in Bessent's statement that deserve attention:

1. When asked about Trump’s view on Hassett, he only expressed that it was the president’s prerogative and did not explicitly confirm that Hassett would not be a candidate. I believe Hassett may still have a chance to become the Fed chair, and Trump’s attitude early in the morning might be testing the market and reactions from all sides.

2. Concerns about the shadow chair: for Powell, whether he stays or leaves depends on himself. I think Bessent might have a chance to persuade Powell not to stay, but his confidence is low. Before the Department of Justice investigated Powell, Bessent never worried about this issue. The current concern indicates that he originally had confidence in making Powell leave, but now the escalating conflict has weakened his confidence.

3. Regarding Milan’s term, I think this is an important point. A new Fed chair must be nominated from among the governors, meaning that whether it is Hassett or Warsh, neither is currently an Fed governor. To nominate someone as Fed chair, they need to first be nominated as a governor, occupying one governor position.

Until 2026, there are only two possible vacancies for Fed governor positions: Milan's interim governor position and Lisa Cook's governor position currently under investigation. Nominating Hassett and Warsh requires a governor slot.

Either Milan steps down and a new chair comes in, or Cook steps down and a new chair takes over. Bessent’s remarks here are very interesting. If Milan’s position is to remain unchanged, then there are only three possibilities.

1. Confidence in removing Cook and reserving a governor position for the new chair.

2. Confidence in persuading another governor to resign early, freeing up a governor position.

3. If the nominee is selected from the current board members, then Waller seems to be the most suitable candidate on the list.

As the announcement date for the new Fed Chair approaches, the fog in the markets thickens, especially after Bessent's recent comments. The position held by Milan, combined with the requirements for the nomination of the new Fed Chair, is making the situation increasingly complex.

If Wash is the market’s bet right now, who will he replace if nominated? Milan? Does Hassett really have no chance?

The situation remains uncertain, and we may yet see a dark horse emerge. Continued observation is needed, with the next 1-2 weeks being a critical phase.