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With Summers Out, Yellen Becomes Fed Chair Frontrunner

  +Follow September 16, 2013 10:50AM
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While investors had already braced for some tapering of the $85 billion a month quantitative easing program, fears that QE would be reduced drastically were abated on Sept 16 when Larry Summers withdrew from his bid to become the new Federal Reserve Chairman. On the news of Summers’ withdraw, the Dow, the Treasury, and financials all rallied.

While Summers’ exact plans were he to become the Fed Chair were uncertain, investor perception was that he would aggressively curtail government stimulus at a much faster rate than current chair Ben Bernanke, who is set to step down in Jan. 2014.

With Summers out of the picture, current Vice Chair of the Board of Governors of the Federal Reserve Janet Yellen is now the clear frontrunner for the position. Yellen was a vocal proponent of government stimulus, and is widely expected to continue Bernanke’s programs more or less as he would have.

As opposed to the intellectual, liberal Yellen, Summers is much more hawkish and has a reputation as a wildcard prone to “outside-the-box thinking” which tends to make investors skittish.

The Fed is expected to meet on Sept 18, where it is believed they will announce they are scaling back quantitative easing. However, the market has already prepared for a tapering in the neighborhood of $10 to $15 billion a month, and that “the tapering is (already) widely discounted,” wrote strategists at KBC Bank in Brussels.

The markets, both domestically and internationally, rallied on the news of Summers’ withdraw and the presumptive maintaining of the status quo. US Treasuries were up significantly, and the Dow neared a new all time, rising over 150 points in early trading.

Investment banks Morgan Stanley (MS) and Goldman Sachs Group (GS) were both up on the day, as the majority of the financial sector rose with the good tidings. Morgan Stanley gained 2.4 percent to hit $28.81 a share. Goldman was up 2.07 percent to hit $167.40 a share.

 

(image of Larry Summers courtesy of WIkimedia Commons)

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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John L. Bair
26 Mar 15 15:22:44
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Stock Rocket
26 Mar 15 15:19:11
$THCZ Has Become One Of The Hottest Penny Stocks Of The Year So Far! Check It Out: http://t.co/3wv3AMJ7Ni $MS $HART $LRDR
Josh Lipton
26 Mar 15 15:11:45
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Michail Shadkin
26 Mar 15 15:09:57
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Kevin Brock
26 Mar 15 15:07:47
“@MarathonWealth: .@kevinbrock @WSJ @NicoleFriedman Good point. Smart alecks on Wall Street, perhaps? $GS $MS $BAC $C”those were my guesses
Jeff Sandene, CFP®
26 Mar 15 15:01:53
.@kevinbrock @WSJ @NicoleFriedman Good point. Smart alecks on Wall Street, perhaps? $GS $MS $BAC $C
John L. Bair
26 Mar 15 14:32:35
#Faucette #Simona $GS $MS VS #Ninja #Chen #BlackBerry's Q4 Numbers In Focus As EZ Pass Program Winds Down http://t.co/Cqhx3BLbxZ via @forbes
#TurtlePack
26 Mar 15 14:21:58
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4-traders.com
26 Mar 15 14:18:24
#Morgan Stanley : Google's new CFO gets $70M for defecting from Morgan Stanley http://t.co/muIY2avZGg $MS
Breaking News Now
26 Mar 15 14:07:01
$MS $GOOGL: Google Agrees to Pay New CFO Ruth Porat $70 Million by 2016: http://t.co/V9bwFlfp7k
Breaking News Now
26 Mar 15 13:57:01
$GOOGL $MS: Google Details Pay for Incoming Financial Chief: http://t.co/y2inY9PBTJ
Ariel Wolberg
26 Mar 15 13:46:35
RT @gneffa: El ingreso por trading de los bancos norteamericanos seguramente vendrá lindo. Se vienen en semanas los reportes de $BAC $C $…
Lauren Holmes
26 Mar 15 13:45:41
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Quantpost Financial
26 Mar 15 13:37:51
$GS $MS $BAC $C News: "Pleasant surprise may in store in bank earnings in April…" http://t.co/JCY02orXSY Quote: https://t.co/YTjZX0eLi7
Financial Stocks
26 Mar 15 13:37:48
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SA Breaking News
26 Mar 15 13:37:47
Pleasant surprise may in store in bank earnings in April http://t.co/KGKgJWaHx5 $GS $MS $BAC $C
Gustavo Neffa
26 Mar 15 13:35:53
El ingreso por trading de los bancos norteamericanos seguramente vendrá lindo. Se vienen en semanas los reportes de $BAC $C $GS $JPM $MS.
ProTradersNews
26 Mar 15 13:35:04
$MS: New SEC Filing for MS: Form NO ACT (No. 9999999997-15-006991): http://t.co/Cghl8uE8fV
SEC Filings
26 Mar 15 13:34:06
NEW SEC Filing for $MS filed a moment ago: http://t.co/CGDVGDSSR2 http://t.co/NLqINXYGaM
ProVesting
26 Mar 15 13:32:02
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Justin Baer
26 Mar 15 13:30:28
RT @carney: Trading has blossomed once again on Wall Street. First quarter earnings should get a boost. http://t.co/pnOFxh7Iqx $GS $JPM $C …
Geoffrey Rogow
26 Mar 15 13:29:40
RT @carney: Trading has blossomed once again on Wall Street. First quarter earnings should get a boost. http://t.co/pnOFxh7Iqx $GS $JPM $C …
John Carney
26 Mar 15 13:29:31
Trading has blossomed once again on Wall Street. First quarter earnings should get a boost. http://t.co/pnOFxh7Iqx $GS $JPM $C $MS
bored2tears
26 Mar 15 13:29:29
WSJ: Bond market volatility likely to drive up Wall Street #banks trading revenue. http://t.co/LA6vPflCHX $BAC $C $GS $JPM $MS
ProVesting
26 Mar 15 13:27:03
$MS: Morgan Stanley Board Pushes Emerging Area of Tech Governance: http://t.co/1KIgWL7VEp
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26 Mar 15 13:18:39
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26 Mar 15 13:18:26
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Dusty
26 Mar 15 12:56:34
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A. Vespasian
26 Mar 15 12:56:08
RT @etfguide: ATTEND: Our next portfolio workshop for #FinancialAdvisors TODAY @ 1PM ET http://t.co/RyxvX9ACwG $SCHB $GLD $BND $MS $C $GS
Lauren Holmes
26 Mar 15 12:49:43
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TipRanks
26 Mar 15 12:27:53
2-star analyst Richard Ramsden from Goldman Sachs rated $MS w/a BUY. http://t.co/Y2Tzb3oG5n #NYSE #stocks #MS
Market Int Center
26 Mar 15 12:24:09
Morgan Stanley $MS Showing Bearish Technicals With Resistance At $36.54 ( http://t.co/eyPCiXlhHc )
Lauren Holmes
26 Mar 15 12:22:04
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26 Mar 15 12:09:03
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StockenheimerSchmidt
26 Mar 15 11:39:56
Our Penny Stock Picks Have Gained Over 1485% In The Past 4 Months! MASSIVE Update: http://t.co/Cu9lMFFRwA $MS $HART $LRDR
Lauren Holmes
26 Mar 15 11:11:35
Which is the best bank, $MS $C $JPM or $WFC? Check what we think here http://t.co/huaLsH8iDZ
Open Outcrier
26 Mar 15 10:58:46
$SNDK now being defended at $MS
Active Navigation
26 Mar 15 10:58:21
Mark Tango @baesystemsplc spks to @Computing_News on how he slashed $ms from storage costs with @activenav http://t.co/GrmtDa5ihm #infogov
Richard hale
26 Mar 15 10:58:21
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26 Mar 15 10:54:41
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26 Mar 15 10:51:54
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SNL Financial
26 Mar 15 10:45:46
Morgan Stanley's Jonathan Pruzan is just the latest to make the i-banker-to-CFO jump, @JoeMantone reports: http://t.co/3hub1sayve $MS
stockmarketlive.tv
26 Mar 15 10:31:18
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Cesar
26 Mar 15 10:28:48
@apppro1 @ScottWapnerCNBC @GuyAdami @jimiuorio Question is now how long can $GS $BAC n $MS stay w. $30 WTI call = straight to $55!!!
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26 Mar 15 10:28:23
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26 Mar 15 10:28:00
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NASDAQ
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26 Mar 15 10:19:07
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  +Follow September 16, 2013 10:50AM
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