As I’ve said before, markets don’t like uncertainty — and plenty of it is swirling around the Fed right now.

We’ve got an eagerly awaited rate decision coming up December 10, but right now that issue is taking a back seat to the president’s short list for Fed chair. 

The fact is, whatever Trump decides could carry even more weight than the rate move itself.

The president is reportedly down to five finalists, with National Economic Council Director Kevin Hassett apparently in the lead. 

But more on Hassett and the others in a minute.  

Trump’s big decision is coming at a time when the Federal Reserve’s reputation is on shaky ground. 

One of its own, Adriana Kugler, abruptly resigned as an FOMC governor in August for what we just learned were stock-trading violations. 

That alone raises serious questions about ethics, timing, and what kind of oversight actually exists inside the central bank. 

The optics aren’t great, and the current Fed chair, Jerome Powell, is cycling out of his role in May. 

Markets are watching how Trump handles this appointment as a signal of what the next four years of monetary policy might look like.

Here’s what you need to know, in a nutshell.

Context Is Key

It’s no secret that Trump and the Fed have a rocky history. 

During his first term, the president bashed Powell regularly for being too slow to cut rates. 

Trump wanted easy money to juice the market and help with growth. 

And since he took office in January, he’s cranked up the pressure even more. 

Trump’s also made no secret of the fact that he wants a Fed chair who’s more of a team player. 

So, who are the five finalists? And what might they bring to the chair if Trump taps them?

First Up: Bowman

Michelle Bowman is a current Fed governor, but with a slightly different angle. 

As vice chair for supervision, she’s been more focused on regulatory oversight: how banks behave, how they’re capitalized, and how they manage risk. 

She’s not flashy, but she understands the plumbing of the financial system.

If she gets the nod, it could be a signal that Trump wants someone who can tighten the leash on Wall Street while still pushing pro-growth policy. 

Next: Hassett

Kevin Hassett is a wild card with serious political chops. 

He’s an economist who served as chairman of the Council of Economic Advisers under Trump and is now director of the National Economic Council. 

Hassett has been a strong advocate for pro-growth policies and tax reform. He understands the link between policy and market reaction. 

He’d also likely echo Trump’s push for lower rates and looser conditions to juice growth. 

For traders, Hassett’s appointment would probably mean a short-term boost in equities and risk appetite. 

Rieder

Rick Rieder is the chief investment officer of global fixed income at BlackRock, the world’s largest asset manager. 

Rieder’s got serious market credentials and knows how capital flows move through the system. 

He’s spoken often about the Fed, and while he’s not a typical central banker, he understands the impact of policy better than most. 

A Rieder appointment would shake things up, but probably in a way markets would like. 

The Street would likely cheer this pick, at least initially, expecting someone who gets it from a trader’s perspective.

Waller

Christopher Waller is the closest to the current establishment. He’s already a Fed governor and has leaned dovish, generally backing Powell’s stance. 

If Trump is looking for a steady hand who won’t rattle markets and could get confirmed easily, Waller would be the guy. 

But it’s unclear whether Trump wants steady. Most of all, he’s after loyalty. 

Warsh

Kevin Warsh has been in the mix before — he interviewed for the top Fed job back in 2017. 

Warsh is a former Fed governor with ties to Wall Street and has an academic streak. He’s seen as someone who could bring credibility back to the institution. 

But he’s also known for being hawkish on inflation and skeptical of the Fed’s post-crisis stimulus binge. 

Traders might not love that stance, especially if Warsh leans into rate hikes too early, but he’d likely push for a more disciplined, rule-based approach. 

If you’re a long-term investor, you might appreciate the stability that comes with that. 

If you’re an options trader, you’d better be watching the dot plot and playing the volume around his pressers.

Musical Chairs

Each of these names represents a different flavor of central banking. And that’s what traders need to focus on here. 

The Fed chair shapes everything from risk appetite to credit markets to global currency flows. 

If you trade options, the implied volatility on rate-sensitive names and sectors is already starting to tell the story.

Trump’s pick won’t just shape rates, he or she will shape the tone. 

Above all, the market wants clarity. It wants a Fed that will communicate clearly, act decisively, and not flip-flop every other meeting. 

Whether Trump delivers that — or installs someone who’ll follow his cues more than the data — is what we’re all watching.

The December 10 rate decision is the appetizer. 

The main course is who gets the chair.

Stay Street Smart,
Jeff Zananiri