Davos vs. Data: Bessent Promises 5% Growth as Trump Narrows Fed Chair List

A stark contrast emerged Tuesday between the jubilant economic projections presented at the World Economic Forum in Davos and the political maneuvering in Washington regarding the future of the Federal Reserve.

US Treasury Secretary Scott Bessent, leading the largest-ever US delegation to Davos, struck a decisively bullish tone, asserting that “this year we will see a very, very strong economy.”

The Race for the Fed

News has broken that President Trump narrowed the shortlist for the next Federal Reserve Chair to four candidates, with a decision expected as early as next week:

• Kevin Hassett: Current Director of the National Economic Council.
• Kevin Warsh: Former Fed Governor, currently the favorite in prediction markets.
• Christopher Waller: Current Fed Governor known for a balanced approach.
• Rick Rieder: BlackRock's CIO of Global Fixed Income, gaining traction as a dark horse.

Forex Implications & Technicals

A divergence has formed between the DXY Index and the softer reality of recent data. While Bessent forecasts aggressive growth, the underlying metrics suggest caution, potentially weakening the Greenback.

• Forecasted Growth: 4% to 5% (real terms)
• ADP Employment: 8,000 (weekly average)
• Risk: Political replacement of Powell could trigger a sell-off in the US Dollar.