In July, rumor had it that National Economic Council director Gary Cohn was a shoo-in to replace Yellen.

That belief vanished when Cohn criticized Trump’s response to racial violence in Charlottesville.

The smart money now believes former Federal Reserve governor Kevin Warsh is the favorite. Warsh met with Trump today.

CNBC reports As Fed chief, Kevin Warsh Would ‘Break With the Old Playbook’.

Should President Donald Trump choose Kevin Warsh to run the Federal Reserve, he’ll be getting someone who doesn’t exactly fit the mold for the position and could bring significant changes to the way the central bank operates.

In fact, Warsh might be just different enough from current Chair Janet Yellen to please Trump while still maintaining loose enough policy not to tank the economy.

“He has the conservative credentials,” said Christopher Whalen, head of Whalen Global Advisors and a respected voice in the world of finance and central banking. “He’s a very good choice because he’s not an economist. He has the conservative and intellectual credentials to carry it off. … He would be a relatively noncontroversial pick.”

Warsh vaulted to the front of the pack Friday when reports emerged that he has met with Trump and Treasury Secretary Steven Mnuchin, apparently to talk about taking over as Fed chair after Yellen’s term expires in February.

In addition to his conservative and intellectual credentials, he also has a vital personal connection — his wife is Jane Lauder, daughter of Ronald Lauder, a longtime Trump pal and heir to the Estee Lauder cosmetics giant.

“Kevin Warsh frankly in intellectual sense is going to be willing to break with the old playbook,” Whalen said. “He would be very balanced and the Street would have no problem with Warsh. The problem with Yellen is she has done too much with no effect.”

New Playbook?

I see a clear break in the trend of lower and lower heights.

Interest rates?

A return to zero once again would not be surprising. Regardless, there is little that Warsh can possibly do.

Mike “Mish” Shedlock