Powell Could Stay on Fed Long Enough to Complicate Things for Trump, Seif Says

"If the Democrats win the Senate, he might be able to resign after a few months and prevent Trump from at least nominating a successor and leave the seat vacant indefinitely or force a compromised candidate." A highly politicized Federal Reserve and potential gridlock over the Chairman's seat undermines institutional credibility. When the market prices in a direct clash between the Executive Branch and the Central Bank, or fears a prolonged vacancy at the helm of US monetary policy, institutional capital traditionally seeks non-sovereign safe havens to hedge against fiat volatility and policy paralysis. LONG GLD to capture the safe-haven premium generated by unprecedented political friction at the Federal Reserve. Powell resigns smoothly, a market-friendly successor is swiftly confirmed without Senate friction, and institutional volatility collapses.

"I do not think that they will be a constraint to Walsh being in practice, to Walsh being confirmed... in time for him to be on there for the June meeting." "Walsh" (referring to Kevin Warsh) is historically known as a sound-money, hawkish conservative. His impending confirmation by June, combined with Powell potentially staying on to resist political pressure, suggests the Fed will actively resist the Trump administration's demands for aggressive monetary easing. A central bank that remains tighter-for-longer to prove its independence, especially amidst high fiscal deficits, will drive long-end yields higher, which inversely crushes long-duration bond prices. SHORT TLT as the Fed's composition becomes more orthodox and resistant to political pressure for rate cuts. A sudden macroeconomic shock or deflationary data forces the Fed to cut rates aggressively regardless of political dynamics, causing long-duration bonds to rally.