So long, Larry. Hello Janet, Tim or Donald. Sell the dollar, buy stocks. Markets’ reaction to the nuanced politics of choosing a new Federal Reserve chair can look like a Caesar-style thumbs up or down. Mr Summers’ withdrawal leaves Ms Yellen the apparent frontrunner, with Tim Geithner and Donald Kohn in the wings should the politics shift. But does it really matter?
Judging by market moves, the appointment of the world’s most powerful banker is of paramount importance. The will-he-won’t-he drama of Mr Summers’ candidacy has caused sharp swings in Treasuries, the dollar and emerging markets.
Yet in the long term, the head of the Fed is only one person. It is not as if Ben Bernanke woke up on May 22 and spoke to Congress about the tapering of quantitative easing without talking to anyone else first.