In recent weeks, the game for the Federal Reserve Chairmanship has started to heat up. The US Q3 GDP annualized growth rate released on December 23rd reached 4.3%, exceeding market expectations, and the S&P 500 index has risen for four consecutive days, hitting a new all-time high. Logically, this should be a positive signal, but the market did not follow the usual pattern—there was no traditional "good news = bad news" reaction.

Where is the controversy focused? On interest rates. The current Federal Reserve benchmark rate is stuck between 3.5% and 3.75%, having been slightly lowered for the third consecutive month, but there are serious disagreements internally, with three officials voting against the rate cut and uncertainty about further easing. The decision-makers are hinting that the new Fed Chair needs to strengthen communication with the White House, and some voices have explicitly suggested that the benchmark rate should be lowered to around 1% or even lower.

The logic behind this is very pragmatic: the housing market needs support, and the living costs for ordinary people also need relief. Regarding candidates, the pool has narrowed to 3-4 individuals, and the list is expected to be announced in the coming weeks. Leading contenders include Kevin Hasset, Director of the National Economic Council; Kevin Waugh, a former Federal Reserve Board member; and Christopher Waller, a current Federal Reserve Board member.

Interestingly, institutional analysts believe that the so-called "good news = bad news" paradox has existed for a long time. However, they also point out that economic fundamentals and corporate profits will ultimately remain the core drivers of market interpretation. In other words, how this round of policy game-playing will affect the market depends on whether specific data and earnings can meet expectations.