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Here’s a secret decoder ring for reading stories about the next Fed chair

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There are two articles in this morning's papers that contain useful information for predicting who will be the next chairman of the Federal Reserve, one a Wall Street Journal article about Larry Summers's potential interest in the job, the other a Financial Times article about Tim Geithner's six-figure lecture fees. But parsing those stories isn't as obvious as it might seem. The headline on the Journal story, for example, is "Summers Circles as Fed Opening Looms." You are forgiven if it seems unclear to you what that actually means.

So here is a guide to the dark art of interpreting media coverage of the president's selection of the next Fed chair, from a reporter who has chased and written these types of stories.

Ben Bernanke's term as chair ends Jan. 31, and if he follows recent precedent, President Obama will nominate a successor in late summer or fall. The most important thing to know at this stage is this: The people who know aren't talking, and the people who are talking don't know.

For a decision of this much importance and sensitivity, the president is likely to rely on a very small number of senior advisers to come up with a short list of candidates and advise him on their strengths and weaknesses. For the Fed chairmanship, the process is reportedly being led by treasury secretary Jack Lew, and likely also includes Denis McDonough, the chief of staff. It probably includes Gene Sperling, the top economic adviser in the White House, and possibly Jason Furman, who has been nominated to lead the Council of Economic Advisers. Perhaps a close Obama adviser like Valerie Jarrett gets a seat at the table, and somebody from the ever-discreet presidential personnel office in the White House.

Whoever makes that exact list, those are the only people who actually know the state of play on the decision — who's up, who's down, what attributes the president really cares about. The details of the decision-making will remain closely held even within the White House until an announcement is imminent. And those on that short list of people actually in the know will reliably clam up and reveal absolutely nothing when the topic comes up, whether it is with a former colleague outside government or a reporter, even when off the record.

But you can see the problem: The world is hungry for information about the identity of the next Fed chair. We in the media want very much to give it to them. So in the absence of any information from the four or five people truly in the know, we report around the question. When the inner circle is quiet, we go to the next rung out.

We talk to former Obama administration staffers or others close to the White House, people who have a sense of how the president thinks, his rapport with various individuals, and the sorts of factors he might weigh. We talk to people in the Senate who might have been briefed on the White House's plans; that seems to be the origin of this Journal story last month with the shocking revelation that the administration is preparing a short list of candidates for the job.

We let what we hear from those conversations guide our coverage — what candidates we list as contenders, for example, and whom we should profile.

When I published this rundown of my best guess of the odds in April, many argued that the 17 percent odds I put on Summers, the former Treasury secretary and Obama economic adviser, were way too high. Since then, Ed Luce, the FT columnist  (and former Summers speechwriter) wrote a piece headlined "Larry Summers has an edge in the race to head the Federal Reserve." And this morning's piece from Damian Paletta, as well-sourced an economic policy writer as you will find, takes seriously the possibility of Summers as Fed chair.

Here's how I interpret that: In the universe of second-rung sources who can offer insight on what the president might do, a number of them are likely telling all three of us things along the lines of "don't count Larry out, he's very much a contender." The Summers coverage boomlet doesn't necessarily have anything specific or concrete behind it, just a vague sense that people have been underestimating the likelihood that he gets the nod.

So is that actually the case? It could be. Or maybe it's just that the sources shaping this coverage are Summers fans and want it to be the case. It is hard for reporters to know for sure. We just apply our best instincts, based on what those sources tell us and how reliable we judge them to be.

Then there is the second category of evidence, which is more concrete factually but more circumstantial. In my oddsmaking piece in April, some argued that I placed the odds of a Geithner nomination to the Fed chair job too low (I had them at 8 percent). Indeed, Al Hunt, the uber-connected Bloomberg columnist, wrote in May that "some people close to the president say his top personal choice" is Geithner. That may well be, but there is lots of circumstantial evidence that lead me to put low odds on the former Treasury secretary.

He sold his house in Bethesda this year to move back to New York. He signed a book contract. And, via today's FT, he has been taking lucrative speaking engagements that would be highly problematic if he were up for the Fed chair job. The paper reports, for example, that Deutsche Bank paid him $200,000 to speak. As Fed chair he would be involved in setting capital requirements for Deutsche Bank and other global megabanks.

Geithner has said repeatedly that he does not want to be the next Fed chair, but talk is cheap. Six-figure paydays from banks aren't. So I take some of those pieces of circumstantial evidence as stronger signs of Geithner's non-interest than his own public comments.

So as all of us in the financial media cover the selection of the Fed chair, keep these facts in mind. Until an announcement is imminent, most of what you will read falls more in the category of educated guesswork than concrete facts. And those concrete facts that do exist can contain more useful information than the vague sense of who's up and who's down that makes its way through the gossip chain.