Citic Securities: Waller may eventually take over the Fed and may trigger a "independence" reversal trade

According to the CITIC Securities Research Report, the current Trump administration is in the process of selecting the next Federal Reserve chairperson. We believe that the core competition is between Waller and Hassett. For Trump, the two are the comparison between "the most suitable" and "the most obedient". The current market probability shows Hassett leading the way, but Trump has high confidence in Bescent, suggesting that he should pay attention to the expectations that Bescent, who protects the independence of the Federal Reserve, may lead the interview. Add to that the precedent of the market's "foot vote" and the resistance in the Senate when Trump appointed Milan to the board of governors, and we think Hassett will not be elected, Waller will eventually win, and may trigger a reversal trade of "Fed's loss of independence": bullish overall dollar assets, bearish gold, and the market may cut interest rate cuts expected for next year. If Hassett wins, we expect to trigger the market's "muscle memory" of "Fed's loss of independence": bearish overall dollar assets, bullish gold, the market may raise interest rate cuts expected for next year.