Someone Bet on Kevin Warsh as Fed Chair 9 Days Ago — Before Everyone Else Started Paying Attention

A new trader operating under the pseudonym 'quant42' on Polymarket, the world's largest prediction market, has been quietly betting on Kevin Warsh becoming the next US Federal Reserve chair. Rather than placing a single order, the trader executed multiple trades nine days ago, and the position is now valued at nearly $150,000 (£109,104).

The odds of Kevin Warsh securing the role have soared to 88%, according to Polymarket, following reports that US President Donald Trump might announce Warsh as the new Fed chair as early as today.

Social media users were quick to react to the trades placed by 'quant42', with many alleging insider trading and claiming that 'this administration is just openly criminal.' The timing of these trades has sparked suspicion, given the pattern of political figures engaging in stock trading prior to market corrections. A notable example was the crash during the so-called 'Liberation Day' early last year, when politicians made substantial stock purchases for sizeable profits within a short period.

Traditionally, the appointment of a new Fed chair is a highly transparent process. At one point, over 10 candidates were under consideration, including Kevin Hassett, director of the White House National Economic Council, and Christopher Waller, a current Federal Reserve governor. Even Rick Rieder, a BlackRock executive, was among the finalists.

Who is Kevin Warsh?

Trump met Warsh at the White House on Thursday, and shortly after, the President told reporters he would select someone 'known to everybody in the financial world.'

'A lot of people think that this is somebody that could've been there a few years ago,' Trump remarked. It appears he was referring to Warsh, who was nearly appointed during Trump's first term. Instead, Jerome Powell was chosen, a decision Trump later criticised, especially as Powell refused to cut borrowing costs as the President had desired.

Warsh served as a Federal Reserve governor from 2006 to 2011, appointed by President George W. Bush. He is known for advocating lower interest rates and has called for 'regime change' at the central bank. Additionally, Warsh has close ties to Wall Street and currently collaborates with billionaire investor Stanley Druckenmiller. Interestingly, Druckenmiller maintains a close relationship with Treasury Secretary Scott Bessent, who led the search for the next Fed chair.

Economists, Analysts Support Trump's Move

Economist Stephen Brown considers Warsh a 'relatively safe choice' for the role of Fed chair.

'If officially announced later today, President Trump's apparent pick of Kevin Warsh would arguably be one of the better outcomes for investors compared to other contenders,' Brown said. He added that Warsh's hawkish stance should help counter concerns that he might become a 'Trump stooge'.

Brown also pointed out that Warsh's belief that AI and the Trump administration's regulatory policies could help contain inflation, combined with his long-standing view that the Fed should operate with a significantly smaller balance sheet, might exert upward pressure on long-term bond yields.

Even analysts at ING believe Warsh's appointment could diminish the risk of another substantial decline in the dollar.

'The dollar has been waiting for a catalyst for a recovery, and the news that Kevin Warsh is likely to be announced as the new Federal Reserve Chair today offers exactly that,' analysts stated. They noted Warsh's history as a market-friendly candidate, with hawkish views, particularly regarding balance sheet reduction.