The departure of Federal Reserve chair, Jerome Powell, could “wreak havoc” on markets and is not being adequately considered by investors, according to Munro Partners.
Powell was appointed by former US President Donald Trump in 2018 but his four-year term would end in February 2022. While he could have a second term, he had not yet been reappointed by President Joe Biden.
Chief investment officer, Nick Griffin, said the departure of Powell if he was not re-elected could lead to discussion about independence of the central bank.
In a webinar, he said: “There is one issue out there that I don’t think a lot of people are paying attention to and it’s not inflation, it’s not supply chain issues, it’s not China, what we are worried about and what could wreak havoc is the Fed.
“We are perplexed about why Jerome Powell has not been re-nominated.
“We are hopeful that Powell now gets nominated as we would not like to see the Democrats try and push their progressive agenda through the Fed. This is something that comes up every four years and we’re going to know the answer in a few weeks.”
Powell had faced criticism from Republicans for his accommodative monetary policies and for using central bank policies to address broader issues like climate change.
On the Democrat side, it was expected President Biden would look to nominate a chair who favoured tougher bank oversight and stricter policing of capital requirements.
Meanwhile, in the Munro Global Growth fund, he said he was exploring the “fascinating” area of digital payments, which made up 60% of global transactions and was likely to grow to 100% in the future. PayPal, in particular, was described as a “next-gen winner” because of the sizeable opportunity available.
“It is a fascinating area at the moment, we’ve had Square’s purchase of Afterpay and PayPal potentially buying Pinterest. We are moving towards cash disappearing altogether.
“We think it looks super exciting. It’s a lot like internet advertising a decade ago.”
