Who wants to be a Fed chair?

Katie Martin (0:06)

Pushkin. What a time to be alive when the president of the USA is dropping bombs, both real bombs and F bombs. Today, and it's Tuesday, by the time you hear this, it may be Wednesday, and everything might be different. But today, Donald Trump says he's very unhappy with both Iran and Israel for disregarding the ceasefire and lasting peace he had broken the day before, saying the two sides have been fighting so long and so hard that they don't know what the flip they're talking about. No potty mouth here. I've taken out the swearing listeners. We'll leave that to the president. Now, with all that going on, all that uncertainty and confusion, who on earth would want the responsibility of running the US Central Bank, the Federal Reserve, when the top job comes up next spring? Not me, but lots of people do, and they're not all called Kevin, but it helps. Today, on the show, we're looking at who is jostling for position.

This is Unhedged, the markets and finance podcast from the Financial Times and Pushkin. I'm Katie Martin, a markets columnist here at FT Towers in lovely, sunny, but overly dry London. And I'm joined down the line by that fellow who invented the taco train, and let's not let him forget it, Robert Armstrong, off of the Unhedged newsletter. Rob, how are you going?

Robert Armstrong (1:25)

In New York today, it is approximately the temperature of the surface of the sun. I soaked through my shirt twice on my commute.

Katie Martin (1:36)

Yuck.

Robert Armstrong (1:36)

Yeah, you put a cup of water outside, it just spontaneously starts to boil here.

Katie Martin (1:44)

Now, Rob, I have a bone to pick with you regarding your Reddit AMA that you did yesterday.

Robert Armstrong (1:50)

Yes, I thought you might have noticed that.

Katie Martin (1:51)

Would you like to make any small confessions about that?

Robert Armstrong (1:55)

I did tell some stories about your superpowers.

Katie Martin (1:59)

Somebody said to Rob on this Reddit, ask me anything, please tell us something about Katie Martin that nobody knows. To which I only realized like an hour ago, he replied, Katie kills wild animals with a single glance. She can mix a martini blindfolded. She does Black Shoals options pricing calculations in her head. She is a pub chain heiress who has renounced her inheritance for political reasons.

Robert Armstrong (2:25)

Every word true. Don't be modest, Katie.

Katie Martin (2:30)

Like, you've got to stop trying to make people think that I am the daughter of Tim Martin from the Wetherspoons pub chain. Like the rest of it I can live with, but I am not Tim Martin's daughter.

Robert Armstrong (2:43)

Okay, so you say, fair enough.

Katie Martin (2:45)

Look, I'm going to get my own back one of these days. But let's get to the Fed, Fed, Fed, Fed. Now, where are we? Trump called Jay Powell, who's the current chair of the Fed and who is leaving next spring. The other day, Trump called him a numbskull and said, maybe he, as in Trump, will have to force something on rates. So force the Fed to cut interest rates.

Robert Armstrong (3:08)

So Chair Powell is testifying before the US Congress today. And ahead of that testimony, the president said the following, I hope Congress really works this very dumb, hard headed person over. We will be paying for his incompetence for many years to come. So he's really laying into him. And I actually have a somewhat unconventional view of this, that this particular president mouthing off in this way about the chair of the Fed is actually fine.

And I'll tell you why. Because Powell is the perfect guy to handle this. Right?

Katie Martin (3:47)

He appointed Powell. Trump appointed Powell.

Robert Armstrong (3:50)

First of all, he appointed Powell. So it makes the president look slightly silly. And Powell has been so cool and so measured and so consistent in his communication that the whole back and forth just actually underlines the independence of the Fed under Powell rather than undermining that independence. How's that for a theory?

Katie Martin (4:11)

It's not a terrible one.

Robert Armstrong (4:12)

Yeah.

Katie Martin (4:13)

But the convention is that presidents don't get involved in monetary policy at all.

Robert Armstrong (4:18)

The convention is often violated in small or large ways.

Katie Martin (4:22)

Yeah. Convention shmanvention.

Robert Armstrong (4:24)

Correct.

Katie Martin (4:25)

But Jay Powell is very good at this. He's very good at absorbing the volleys that come from the president and simply not rising to it and just sticking to his mandate, sticking to his script. But if you know that you can be appointed by Trump and you can still get hung out to dry by him in a public forum and called an idiot on live on television, why would you want this job?