Fed's New Leadership Outlook: Hassett, Coinbase Holdings and Trump's "Loyal Doves"

Written by: Frank, MSX Research Institute

On Tuesday, after the White House cabinet meeting, there was a sense of "the big picture is set" in the air.

Trump jokingly remarked, "I guess there's a potential Fed Chair here too… I can tell you, he's a respected person. Thank you, Kevin."

And this Kevin is none other than Kevin Hassett, the Director of the White House Council of Economic Advisers, who was present at the time.

Meanwhile, Nick Timiraos, a journalist from The Wall Street Journal, known as the "new Fed press agency," revealed that the Trump administration has canceled a series of interviews for Fed Chair candidates originally scheduled to begin this week, indicating that Trump seems inclined to choose Hassett for the position.

1. A New Fed Chair, Ready to Emerge?

On the prediction market Polymarket, funds have already cast their votes.

As of December 3, the total betting amount in the pool "Who will Trump nominate as Fed Chair?" has exceeded $13 million, with Hassett leading the pack with an approximately 84% chance of winning.

In contrast, other previously high-profile competitors seem to have become "also-rans":

• Former Fed Governor Kevin Warsh was once a popular candidate, but now has only a 7% chance;
• Current Treasury Secretary Scott Bessent, although favored by Trump, has privately expressed no intention to run;
• Other establishment candidates, such as BlackRock executive Rick Rieder, current Fed governors Christopher Waller and Michelle Bowman, all have less than a 3% chance;

It can be said that Trump's near "implicit" endorsement and Polymarket's "one-sided" betting both seem to point to the same name—Kevin Hassett.

According to insiders, Hassett meets Trump's two most critical criteria for selecting a Fed Chair: absolute loyalty to the president and professional credibility in the market.

After all, Hassett is not a political novice; during Trump's first term (2017-2019), he served as the Chairman of the Council of Economic Advisers (CEA), leading the research on the tax cuts at that time. After the outbreak of the COVID-19 pandemic in 2020, he briefly returned as a senior advisor, and when Trump returned to the White House in January this year, he naturally took over as the Director of the National Economic Council (NEC).

In a sense, he has always been an "important think tank" and "key minority" in Trump's economic decision-making agenda.

In the field of academic research, as an economist deeply engaged in the market, Hassett's research spans tax policy, energy issues, and stock market investment, having published numerous papers on capital taxes, dividend taxes, and tax reform—this "fiscal-heavy, market-savvy" academic background allows him to be more flexible in dealing with economic issues than traditional academic circles.

Of course, although Hassett seems to be "crowned," uncertainties still exist.

According to sources cited by The Wall Street Journal, the only candidate who could potentially interrupt Hassett's ascension is the current Treasury Secretary Bessent. Although Bessent has repeatedly stated he will not run, Trump recently privately told allies that he still greatly appreciates Bessent and remains willing to consider him as a potential Fed Chair candidate.

However, this slight variable seems unable to stop the overwhelming momentum behind Hassett's 84% chance.

2. Hassett's Background: A Radical Dove with "Absolute Loyalty" to Trump

If one were to summarize Hassett in one sentence, it would be a radical dove with "absolute loyalty" to Trump.

It is well known that in recent years, current Fed Chair Powell has often emphasized phrases like "data-dependent" and "decisions made at each meeting," and has thus been mocked as a "data-dependent" chair. If Hassett takes over, we may very well welcome a "White House-dependent" chair.

Objectively speaking, during Trump's first term, even as the Chairman of the Council of Economic Advisers, Hassett was a staunch defender of the Fed's independence, but by 2024, in order to align with Trump's campaign rhythm, he transformed into Powell's sharpest critic.

This is also what has drawn the most attention from the market and pleased Trump the most: Hassett's drastic shift in stance regarding the Fed, and this shift is not merely verbal; for example, he has publicly accused the Fed's decisions of being "full of partisan bias":

• The Fed's reluctance to cut interest rates is because "the Democratic government wants to shift the blame for runaway inflation to external factors";
• The Fed's sudden rate cuts before the 2024 election are aimed at boosting Harris's chances of winning;
• In the summer of this year and just last November, he has repeatedly criticized the Fed for not cutting rates enough or quickly enough;

"I believe the American people can expect Trump to choose someone who can help them get lower auto loan rates and easier access to lower mortgage rates, and the market's reaction to the rumors about me reflects this," can be said that although these statements have been collectively rebutted by the Fed's decision-making body, they have deeply pleased Trump, and this unconditional political alignment has earned him loyalty that other competitors (like Warsh) cannot match.

However, Hassett's "compliance" has also raised concerns among former colleagues, including some who helped him garner support in Congress, feeling uneasy about his public politicization of the Fed. Wall Street is also concerned about whether Hassett will have the backbone to say "no" when inflation rises again and Trump demands further rate cuts.

As it stands, the answer seems to be negative.

But because of this, for the liquidity-hungry risk asset market, a "soft-eared" Fed Chair may be just the good news they have been dreaming of.

3. Who Will Benefit If He Is Elected?

Although the Fed does not directly regulate securities or commodities and cannot directly intervene in SEC regulatory affairs, it controls the "master switch" of global funding costs.

If Hassett takes office, it will not just be a simple matter of cutting interest rates; we may welcome the most friendly Fed Chair in the history of Crypto and U.S. stocks.

The most direct impact will undoubtedly be on interest rates.

It can be said that Hassett's ascension is "very favorable" for the market's expectations of rate cuts, as he has publicly criticized current rates as too high and advocated for larger and faster cuts, especially in response to Trump's economic expansion policies. Once he is in power, the Fed may tolerate higher short-term inflation in exchange for a looser liquidity environment.

This is precisely the script that risk assets desire the most. Lower interest rates typically mean a weaker dollar, lower funding costs, and a sharp increase in market risk appetite:

• For U.S. stocks: Low rates will directly boost the valuation models of tech stocks (especially in the AI sector), and the Nasdaq may enter a new expansion phase;
• For Crypto: As the most liquidity-sensitive asset, the flood of dollars has always been the foundation for Bitcoin's rise;

Secondly, Hassett can be considered a "true insider" in the Crypto industry.

As early as June of this year, Bloomberg reported that Hassett disclosed he holds at least $1 million (up to $5 million) in Coinbase shares and has received at least $50,000 in compensation for his role on the Coinbase Academic and Regulatory Advisory Committee.

Interestingly, the disclosed documents show that Hassett's total family assets are at least $7.6 million, which means that the Coinbase stock, valued between $1 million and $5 million, undoubtedly constitutes a significant portion of his personal wealth, indicating that he is a true stakeholder. This "interest binding" is rare for a potential Fed Chair.

Finally, Hassett's loyalty is reflected not only in verbal attacks but also in his absolute execution of Trump's new policies.

For example, shortly after Trump returned to the White House, he issued an executive order to establish a "Digital Asset Market Working Group" within the National Economic Council (NEC), with the core task of proposing regulatory and legislative recommendations to promote America's leadership in the digital asset (Crypto) and financial technology sectors. As the NEC Director, Hassett is a key driver of this agenda.

The group clearly recognizes that Crypto technology is an important variable in the future structure of the U.S. economy, which means that Hassett not only understands traditional finance but also integrates Crypto into the core execution of national economic strategy.

In Conclusion

In summary, if Polymarket's predictions come true, we are about to welcome a "non-typical" Fed Chair:

He holds millions of dollars in crypto assets, believes in the magic of low interest rates, and more importantly, he listens to the call of the White House.

For traditional economists who uphold "Fed independence," this may be a nightmare, but for liquidity-hungry Crypto and U.S. stock investors, Hassett's ascension may mean that the "master valve" of liquidity frenzy is about to be reopened.