A key question in the White House's search for the next Federal Reserve chief is who "the market" will trust. The issue there, of course, is that there's no number you can call to ask the market a question. You kind of have to guess.
So far, the guessing game has come out in Larry Summers's favor. Janet Yellen's dovish reputation is considered a liability in convincing the markets that the Fed will be able to tighten when it needs to tighten. It doesn't hurt that some of the key people the White House polls when wondering what the markets are thinking are longtime friends and even colleagues of Summers, like Robert Rubin and Larry Fink.
Well, now we have something that is ever-so-slightly closer to data about who the market -- or at least the parts of the market that focus on the Fed -- wants, and the answer appears to be...Yellen.
CNBC has a monthly Fed survey in which they poll "economists, traders and strategists" on Fed issues. In July, they asked who President Obama will pick to replace Ben Bernanke. Seventy percent of the respondents said Yellen, while 25 percent said Summers.
Then they asked who Obama should nominate to replace Bernanke. Here, 50 percent said Yellen, and only 2.5 percent -- yes, with the decimal point -- said Summers.
The poll asked respondents to judge Yellen and Summers across 10 qualities, including monetary policy expertise, ability to manage a financial crisis, communication skills, concern about inflation, and respect for financial markets. Yellen won in seven of 10. The most important qualification, according to the respondents, was monetary policy expertise -- Yellen's strongest suit.
On some level, I wouldn't take any of this too seriously. First, it's a relatively opaque poll with a small number of respondents. There's no guarantee this group speaks for "the market" either. Second, what matters here isn't who the market says it wants, but who actually does a good job. Whatever the market says in advance, if the chair bobbles a big call they're going to lose market confidence real quick.
Still, since impressionistic takes on the whims of the market are part of the decision making process, it's a useful data point in Yellen's favor.