The latest market odds changes on December 16th are quite interesting. The initial optimism about Haskett succeeding as Federal Reserve Chair has waned, and instead, Waller, a former Fed governor, has seen a surge in popularity and is now the most favored candidate in the market for the next chair.

The key is that Waller's policy stance could introduce significant uncertainties to the market. Deutsche Bank's analysis suggests that if Waller takes office, he is likely to support interest rate cuts and push for balance sheet reduction. However, whether this combination can be smoothly implemented depends on regulatory reforms keeping pace—especially in reducing banks' reserve requirements, which still faces considerable short-term uncertainties.

Waller has his own theory about inflation—he believes inflation is mainly caused by the Fed itself, not supply chain issues or geopolitical factors. This guy even proposed the view that "inflation is a choice" this year, advocating that central banks should return to their fundamental responsibility of price stability while letting the Treasury Department handle its own affairs. Based on his outlook on the economy, Waller remains quite optimistic, thinking that AI and deregulation could spark a productivity revolution similar to that of the 1980s.

Regarding Waller's background, he is a lawyer by training and served at the Federal Reserve Board from 2006 to 2011, playing a key role in communication during the financial crisis. He is well known for criticizing the past 15 years of quantitative easing, believing it deviated from the central bank's core functions. Currently, he is doing well in investment, academia, and regulation—holding multiple roles as a Duquesne partner, Hoover Institution visiting scholar, and lecturer at Stanford Graduate School of Business.