The Fed Chair Sweepstakes: Markets See Hassett, Experts Want Someone Else

Wall Street Thinks It Knows the Winner
​The betting markets have basically already engraved the trophy: most investors expect Kevin Hassett to be President Trump’s pick as the next chair of the Federal Reserve. In a fresh CNBC Fed Survey, a whopping 84% of respondents said they believe Trump will tap Hassett, who currently runs the National Economic Council. The expectation is so strong it’s almost treated like a done deal.

But the Pros Are Not Voting for Him
Here’s the twist: the same survey shows Hassett is not who economists, strategists, and fund managers actually want steering the Fed. Only 11% said Trump should nominate him. The crowd’s favorite is Fed Governor Christopher Waller, who drew support from 47% of respondents. Former Fed official Kevin Warsh came in second at 23%. So: markets are predicting Hassett, but the expert class is rooting for Waller or Warsh.

The Real Anxiety: Independence vs. Loyalty
Why the cold shoulder to Hassett? It’s not personal — it’s institutional. Respondents are worried about whether he’d protect the Fed’s independence or tilt toward the White House’s preference for lower rates. Most expect the next Fed chair to be more dovish than Jerome Powell, meaning quicker to cut if jobs weaken and slower to hike if inflation heats up. A slim majority think the next chair is likely to align with Trump’s push for lower rates, rather than act fully independently. That perception alone is enough to make bond traders squirm.

A December Cut Looks Likely… But Not Everyone Loves It
Zooming into the immediate Fed meeting, the survey paints a divided room. Nearly 9 in 10 respondents think the Fed will cut rates this month — but fewer than half think it should. The dominant expectation is a “hawkish cut”: a quarter-point trim paired with a signal that the Fed may pause afterward. Two dissenting votes are expected, and only about a third foresee another cut in January. So yes, the cut is coming, but the unity isn’t.

Inflation Is Still the Villain of the Story
Even with rate cuts on the table, inflation refuses to exit stage left. Respondents now rank “continued high inflation” as the top risk to the economy, jumping from a middling concern just a couple months ago. The logic is straightforward: growth is holding up, financial conditions remain easy, and global supply chains are still reshuffling in ways that can keep prices sticky. Some survey voices warn that cutting too much, too soon could reignite inflation headaches the Fed hasn’t fully cured.

AI Hype Is a Secondary Worry — But It’s Rising
Right behind inflation risk sits another anxiety monster: an AI-stock bubble. The survey finds that about 90% of respondents consider AI stocks overvalued, with average overvaluation pegged around 21%. That doesn’t mean they expect a crash tomorrow, but it does mean the market’s biggest engine is also its biggest potential pothole.

Despite All That, the S&P Outlook Stays Sunny
Here’s the classic Wall Street contradiction: even while waving red flags about inflation and AI valuations, respondents still expect the S&P 500 to rise about 6% next year and another 6% the year after. In other words, the pros see risks everywhere — but they also think the market keeps climbing anyway.

Bottom Line: A Chair Pick That Could Shape the Next Cycle
​The survey turns the Fed chair race into a real political-economic drama. Hassett looks like the frontrunner in the prediction market, but not in the expert wish list. And the deeper issue isn’t just who gets the job — it’s what kind of Fed that person will run: fiercely independent, or quietly aligned with the White House. With rate cuts, inflation pressure, and AI froth all in play, the next chair won’t just inherit the economy — they’ll define its next chapter.