The knee-jerk reaction to Donald Trump’s choice of Kevin Warsh to replace Jerome Powell as head of the Federal Reserve is that the president made the most hawkish selection of the four announced finalists for the job.
Following last night’s leak that Warsh was to be the pick, venture markets – crypto among them – fell sharply, with bitcoin plunging as low as $81,000.
“It is not correct to present Kevin as someone who is always hawkish,” Stanley Druckenmiller told the FT on Friday. “I’ve seen it go both ways.”
Druckenmiller – who made billions working alongside George Soros at Quantum Fund and with his own family office, Duquesne Capital Management – is surely in a position to know that. 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 talking and/or texting each other more than a dozen times a day.
“I don’t know a single person on the planet who is better equipped,” Druckenmiller continued.
Where does Treasury Secretary Scott Bessent fit in?
Druckenmiller also has very close ties with Scott Bessent. It was Druckenmiller who hired Bessent at the Quantum Fund more than 30 years ago, where the future U.S. Treasury secretary made his own billions.
“The couple [Bessent and Warsh] embody Druckenmiller’s way of interpreting markets and economic policy,” the FT wrote in an article about a year ago.
“I am really excited about the partnership between [Warsh] and Bessent,” Druckenmiller said today. “The ideal is to have an agreement between the Treasury secretary and the Fed chairman.”
