#How has the DOJ investigation impacted Kevin Warsh’s confirmation?
The Department of Justice has concluded its investigation into Federal Reserve Chair Jerome Powell. This development eliminates a key hurdle for Kevin Warsh, who is positioned to succeed Powell. Current predictions suggest that there is now an 85% chance Warsh will be confirmed by May 15, a significant increase from just 29% a day earlier.
The sharp rise in the probability reflects the Senate's newfound opportunity to proceed with the confirmation process following the closure of the investigation. For the June 30 contract, confidence is nearly absolute, with a 98.2% probability of Warsh's eventual confirmation due to less immediate pressure. In contrast, the May 1 contract shows only a 1.7% chance for immediate confirmation, indicating that the timeline for a decision is shifting.
#What does the confirmation process look like?
The increased likelihood of Warsh's confirmation is supported by substantial trading volume of nearly $17,756 in USDC. This activity has created a market condition requiring $1,590 to shift the probability by just 5 percentage points, underscoring solid confidence rather than mere speculative trading. The most significant movement came in the form of a 20-point surge, possibly triggered by the DOJ's announcement.
Senator Thom Tillis had previously stalled the vote due to the investigation into Powell, but with this obstacle now removed, Warsh's pathway to the Fed Chair position appears much clearer. Warsh is known for his favorable stance on cryptocurrencies, which could influence future Federal Reserve policy regarding digital assets. However, his strong focus on controlling inflation may limit the extent to which he can integrate crypto-friendly policies.
#What should investors watch for next?
Currently, shares at 85 cents imply a return of $1, indicating a potential 1.18x return if the confirmation goes smoothly over the next three weeks. Investors should look for updates from the Senate Banking Committee and any announcements from Tillis to confirm that his hold on the vote has been lifted. A scheduled confirmation hearing for Warsh would serve as a positive indication for those bullish on his appointment.