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A relief rally for markets on Monday- relief that a contentious Fed Chairman confirmation process would be avoided now that ...
former Treasury Secretary Larry Summers had taken his name out of the running for the nomination. That means it would likely go to Fed Vice Chairman Janet Yellen- but while it may seem the job is hers to lose politics could get in the way.
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A relief rally for markets on Monday- relief that a contentious Fed Chairman confirmation process would be avoided now that former Treasury Secretary Larry Summers had taken his name out of the running for the nomination. That means it would likely go to Fed Vice Chairman Janet Yellen- but while it may seem the job is hers to lose politics could get in the way. She is seen as a favorite among Senate Democrats- and President Obama who may want to gain some favor with Republicans for other issues - might not nominate Yellen, says Macquarie Group's Thierry Wizman: SOUNDBITE: THIERRY WIZMAN, GLOBAL INTEREST RATES AND CURRENCIES STRATEGIST, MACQUARIE GROUP (ENGLISH) SAYING: "In some sense it could be a sign of weakness and an overly aggressive concession to the Senate Democrats who did not want Summers but wanted Yellen. If that is the case, then maybe an in-between nominee could pass muster here- would be the right one here for Obama in part to save face." Wizman and others say former Fed Vice Chairman Donald Kohn's name is also in play. But he believes Yellen is still the strongest candidate- as does BNP Paribas U.S. Economist Yelena Shulyatyeva: SOUNDBITE: YELENA SHULYATYEVA, U.S. ECONOMIST, BNP PARIBAS (ENGLISH) SAYING: "I think the Summers withdrawal actually tells us that the Obama administration miscalculated a lot of support that they have within their own party. We think that it just shows you, it's not the first time they did it. After Syria, and that was not getting enough support either, so we think that the president needs to concede on that, accept that Ms. Yellen is the most qualified person and we just need to go ahead, especially because we are entering a really hard season for budget battles." Whomever the nominee is, the markets are betting they will be more in favor of the easing strategy embraced by the Bernanke Fed, increasing the odds of a Fed tightening further out.