(AFP) – The emergence of BlackRock’s Rick Rieder as a Federal Reserve frontrunner means the US central bank could be led by a financial markets master less academically credentialed than other recent chairs. Rieder vaulted to the top of betting markets this week after President Donald Trump spoke effusively of the bond market expert, who makes frequent appearances as a commentator on CNBC and other business news broadcasts.
Rieder, whom Trump described as “very impressive,” manages some $2.4 trillion as BlackRock’s chief investment officer of global fixed income. The post demands deep understanding of myriad securities and digitalized investment platforms. Rieder studied business as an undergraduate at Emory University and earned a Master of Business Administration at the Wharton School of the University of Pennsylvania. But unlike past Fed chairs Alan Greenspan, Janet Yellen, and Ben Bernanke — who won a Nobel prize after his Fed service — Rieder has no PhD. He has served on government panels, but never worked for the US central bank.
That lack of government experience was viewed as a “big positive,” according to a Fox Business report on Rieder’s January 15 interview at the Oval Office. Besides Trump, the interview included Treasury Secretary Scott Bessent, who in July likened the Fed’s personnel management to “universal basic income for academic economists.” In a 2023 interview with the Goldman Sachs podcast “Exchanges,” Rieder described trading as a thrilling challenge of navigating constantly changing dynamics and discovering when you need to pivot.
“I always say this in managing money, we’re not in the business of being right,” said Rieder, who famously begins his daily research ritual at 3:30 am. “We’re in the business of generating return for our clients.” Trading is about “risk management and your perception of where the world is and how people think the world is,” he said. Rieder worked at Lehman Brothers from 1987 to 2008 before starting R3 Capital Partners in 2008, months before the Lehman bankruptcy. In 2009, BlackRock acquired R3. BlackRock declined to comment.
Ironically, the Fed chair from recent years whose profile most closely resembles Rieder’s is probably Jerome Powell, the current central bank head, whom Trump has criticized relentlessly. Trump in 2017 named Powell as chairman, an attorney who had worked in private equity in between stints at the US Treasury Department and the Fed. Trump’s interest in Rieder reflects “MAGA’s critique of the Fed as being excessively technocratic,” said Mark Blyth, a professor in international economics at Brown University. Blyth also called Rieder a bit of a “dark horse” on whether his decisions would shift from Powell’s.
“It’s not automatically clear that Rieder is a very low-interest rates guy,” Blyth said. Rieder’s political donations suggest an independent streak. In the 2024 cycle, he backed Trump’s Republican primary challenger Nikki Haley over Trump and some Democrats. In a January 2 BlackRock column, Rieder said the inflation “storm has passed,” characterizing labor market weakness as the bigger priority. That position is in line with pronouncements by Powell at recent meetings. The Fed is expected to leave rates unchanged this week at between 3.50 percent and 3.75 percent after three straight cuts.
Rieder told CNBC on January 12 that the “Fed’s got to get the rate down” to about three percent. His appearance on CNBC came the day after Powell hit out at a criminal probe of the Fed launched by Trump’s Justice Department as a “pretext” for the president’s opposition to the Fed’s cautious approach to cutting rates. Rieder declined to comment directly on Powell’s remarks, but backed Fed independence, insisting that whomever leads the Fed is “going to make the right decisions… for maximum employment and price stability,” he told CNBC.
Besides Rieder, the other leading candidates are White House National Economic Council director Kevin Hassett; former Fed official Kevin Warsh; and Fed governor Christopher Waller.
– John BIERS
© 2024 AFP
