Markets experienced sharp fluctuations following reports that US President Donald Trump has chosen Kevin Warsh to replace Jerome Powell as Federal Reserve Chairman.
Initially, the perception that Warsh was the “most hawkish” of the four candidates led to selling pressure on risk assets. The cryptocurrency market also felt the effects of this move. Bitcoin price has fallen to the $81,000 level.
But hedge fund billionaire Stan Druckenmiller argued that the “perennial hawk” label applied to Warsh was inaccurate. Mr. Druckenmiller, who made billions of dollars with George Soros at the Quantum Fund and later founded Duquesne Capital Management, knows Mr. Warsh well. Warsh has been a partner at Druckenmiller’s family office, Duquesne, since 2011.
“The idea that Kevin was always a hawk is not accurate. I’ve seen him move in both directions,” Druckenmiller said, suggesting that Warsh is taking a flexible, data-driven approach to monetary policy.
Druckenmiller went on to praise Warsh, saying, “I can’t think of anyone on the planet who is better equipped for this job.”
Meanwhile, another person with close ties to Druckenmiller is US Treasury Secretary Scott Bessent. Mr. Druckenmiller hired Mr. Bessent at Quantum Fund more than 30 years ago. A profile published in the Financial Times about a year ago said that Mr. Bessent and Mr. Warsh mirrored Mr. Druckenmiller’s understanding of markets and economic policy.
In today’s statement, Mr. Druckenmiller also highlighted the potential for cooperation between Mr. Warsh and Mr. Bessent, saying, “I am very excited about the partnership between Mr. Warsh and Mr. Bessent. It is an ideal fit between the Secretary of the Treasury and the Chairman of the Federal Reserve.”
However, there are concerns that the market continues to factor in the possibility that Mr. Warsh will take over as Fed chairman in the short term, which could signal a tightening of interest rate policy stance.
*This is not investment advice.
