Yesterday, DoubleLine's Jeff Gundlach, who correctly predicted the election of Donald Trump, unveiled a new surprise forecast: Neel Kashkari would be the next chairman of the Federal Reserve. Speaking Tuesday at a Vanity Fair summit in Los Angeles, Gundlach said Kashkari, president of the Minneapolis Fed, was a strong advocate of easy money. He was envisioning Kashkari's latest essay from Monday, in which the former Goldmanite uber dove, who was instrumental in putting together the TARP bank rescue package, said the Fed shouldn’t raise interest rates again until inflation hits 2% or there’s a large drop in unemployment.
"I actually have a very non-consensus point of view. I think it's going to be Neel Kashkari," Gundlach said, adding that "he happens to be the most easy money guy that's in the Federal Reserve system today and that's why he may win."
“There’s no chance the president wants Janet Yellen to continue" as Fed chair Gundlach also said and predicted that Gary Cohn, Trump's chief economic advisor, would not get the nod, due to his background as president of Goldman Sachs.
And while Kashkari hadn't been floated as a potential candidate for the job previously, and wasn't even on the list of potential Fed candidates tracked by online betting site PredictIt as of Tuesday evening...
... perhaps demonstrating Gundlach's influence on the investing public, this morning Kashkari's odds of replacing Yellen soared, rising as high as 25%, and overtaking both Powell, Yellen and Cohn:
It was not meant to be, though, and anyone who bought the Kashkari contract at 25 is probably not very happy right now, because just as the speculation over Kashkari's candidacy was the walk on Wall Street, CNBC's Steve Liesman tweeted that an administration source tells me @MinneapolisFed prez @neelkashkari is not being considered for the fed chair job"
The result: an immediate crash in Kashkari's odds who as of this moment is back to just 2% odds, plunging from 25% just moments earlier.
And while Neel's 15 minutes are now gone, what some have wondered is whether Gundlach bought up the Kashkari contracts last night, and whether he dumped them this morning as they soared from 1 to 25, before crashing right back, or perhaps whether Gundlach himself was the market - in what is otherwise a rather illiquid wager - and could singlehandedly shape the Fed's "reaction function" to an online betting website.
That said, at least there have been no accusations of Russian manipulation in this particular online vote which according to most, is far more important to the world's capital markets than who currently resides in the White House. At least not yet.