Salient to Investors:

Matthew Benjamin at Medley Global Advisors said there is a perception that there is a difference between Yellen and Summers” in their approach to monetary stimulus.

Leo Grohowski at BNY Mellon Wealth Mgmt said the market was comfortable with a Yellen appointment and is now needing to grow comfortable with a Larry Summers appointment.

Krishna Memani at Oppenheimer Funds said the possibility of a Summers chairmanship has contributed to the increase in borrowing costs because he is seen as likely to end QE sooner than Yellen would – tapering and the prospect of a Summers Fed clearly are the 2 big drivers of rates rising and the yield curve steepening. Memani said we know with Yellen that she will continue with their current program, but with Summers it is a lot less certain.

Laura Rosner at BNP Paribas said the increase in borrowing costs weakens the Fed’s message when there’s a question about continuity, just when the Fed is moving to rely more on that particular tool of rate guidance. Rosner, Julia Coronado et al at BNP Paribas estimate that the yield on the 10-yr Treasury note would rise 50 basis points if Summers were nominated instead of Yellen, and lower GDP growth over the next 2 years by 0.5 to 0.75 percent and lose 350,000 to 500,000 jobs.

25 percent of economists see Summers at the Fed versus 65 percent for Yellen. 10 percent believe Summers is the best pick, versus 53 percent for Yellen.

Tony Fratto at Hamilton Place Strategies said Summers is an impressive economist and can be a successful Fed chair, but may arouse opposition from both parties, with some Democrats viewing him as a proponent of financial deregulation. Frattos said many Republicans are concerned about his independence from the White House.

Norman Ornstein at the American Enterprise Institute said Summers would get confirmed in the Senate.

Joseph Engelhard at Capital Alpha Partners said few, if any, Senate Democrats would vote against Obama’s eventual nominee.

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