The knee-jerk reaction to Donald Trump’s pick of Kevin Warsh to replace Jerome Powell as chairman of the Federal Reserve is that the president made the most hawkish selection among the four reported finalists for the job.
In the wake of last night’s leak that Warsh would be the pick, risk markets – including crypto – fell sharply, with bitcoin plunging all the way back to $81,000.
“The branding of Kevin as someone who is always hawkish is not correct,” Stanley Druckenmiller told the FT on Friday. “I’ve seen him go both ways.”
Druckenmiller — who made billions working with George Soros at the Quantum Fund and with his own family office, Duquesne Capital Management — is surely in a position to know. Warsh has been a partner at Duquesne since 2011.
The relationship between them has previously been described as close to father-son, with the two speaking and/or texting more than a dozen times a day.
“I couldn’t think of a single other individual on the planet better equipped,” Druckenmiller continued.
Where does Finance Minister Scott Bessent fit in?
Druckenmiller also has very close ties to Scott Bessent. It was Druckenmiller who hired Bessent at the Quantum Fund more than 30 years ago, where the future US Treasury Secretary made his own billions.
“The couple [Bessent and Warsh] embodies the way Druckenmiller interprets markets and economic policy,” the FT wrote in a profile about a year ago.
“I am really excited about the collaboration between [Warsh] and Bessent,” Druckenmiller said today. “It’s ideal to have an agreement between the Treasury secretary and the Fed chair.”
