On Yellen at Jackson Hole

https://trendmacro.com/system/files/reports/20170825TrendMacroLuskin-CE.pdf
Donald L. Luskin
Friday, August 25, 2017
By bucking Trump’s deregulatory crusade, she just lowered her chances of reappointment.
Federal Reserve
US Macro
Yellen’s chances for reappointment as Fed chair just got worse. By coming out as an opponent of relaxing financial regulation, she is signaling she would be a poor partner for Trump’s deregulatory crusade. But if he appoints someone else, there is the risk it will be a permahawk like Taylor or Goodfriend, preferred by the GOP establishment. Cohn is an unknown on policy, but there is no reason to think he is a permahawk, and he would likely champion a rollback of regulations. The speech is, at the margin, a negative for growth because it creates these uncertainties. Meanwhile, the market is correct – under current inflation and growth assumptions – to see only two more rate hikes over three years. We see no risk from the onset of a gradual and tightly-capped balance sheet normalization program.