Markets have become immune to Fed drama, says Jefferies' David Zervos

Summary

David Zervos, Jefferies chief market strategist, discusses the DOJ action against Fed Chair Jerome Powell and the Federal Reserve. He argues the market is treating the matter as political theater and discounting it heavily, with only a shallow initial selloff and low odds of a lasting market problem. He also discusses Fed independence, political pressure, and how the probe could slow new Fed appointments and affect FOMC composition.

• DOJ action against Powell and the Fed is the main topic.
• David Zervos says markets have become immune to Fed political drama.
• Initial market declines were shallow and reversed; he sees low odds of a major problem.
• Zervos views the investigation as more theater than substance and likely to fade.
• Zervos says Fed independence has long been questioned on both sides.
• The probe could slow new Fed chair/governor confirmations and affect FOMC composition into May.
• Brian Sullivan says the Fed kept rates too low too long but calls that irrelevant to the DOJ matter.