Lots More With Skanda Amarnath on the Risks of Kevin Warsh

Trump has announced that former Fed Governor Kevin Warsh is going to be his nominee to succeed Jerome Powell. The responses to the news are split among some interesting lines. People like Neil Dutta have been highly critical, while at the same time, the pick has earned praise from Jason Furman, who was the Chair of President Obama's Council of Economic Advisers. So who is Kevin Warsh? And why is this pick particularly controversial? On this episode, we talk with Skanda Amarnath, Executive Director of Employ America, who walks us through Warsh's history of commenting on and executing monetary policy. He argues that in addition to having gotten some big calls wrong (particularly in the years surrounding the GFC), Warsh has a history of aligning his policy views with partisan consideration. We also talk about the challenges Warsh will have establishing credibility within the FOMC, as well as challenges that may arise the next time the Fed has to step in during a period of crisis. Read more:Fed’s Musalem Says It Would Be ‘Unadvisable’ to Lower RatesCarney, Macklem Congratulate Warsh on Federal Reserve Nomination Only Bloomberg subscribers can get the Odd Lots newsletter in their inbox each week, plus unlimited access to the site and app. Subscribe at bloomberg.com/subscriptions/oddlots Subscribe to the Odd Lots NewsletterJoin the conversation: discord.gg/oddlotsSee omnystudio.com/listener for privacy information.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Joe Weisenthal?

  There are some market stories where you want every detail. Tracy and I have made quite a few podcasts on that basis, but sometimes you've only got 10 minutes and need to know what's moving markets and why. That's the Barclays Brief Podcast. Every week, experts from Barclays Markets and research get you up to speed on what matters and what to watch next. About the time it takes to grab a coffee, so search Barclays Brief wherever you get your podcasts.

• 0:26Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs, and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw, innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting

• 1:07Speaker 01

  and hiring practices, but according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company, and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at chatgpt.com.

• 1:51Speaker 01

  Bloomberg Audio Studios, podcasts, radio, news.

• 1:56Tracy Alloway?

  Oh, Joe, this is cutting. This is from Neil Duddup, friend of the pod.

• 2:01Joe Weisenthal?

  Oh, yeah. All right, read it out, read it out.

• 2:03Tracy Alloway?

  President Trump has picked everyone's least favorite candidate, Kevin Warsh, for the next Fed Reserve chief. I tip my hat to Warsh, who has managed to get selected after being passed over time and again. That's a remarkable achievement for him.

• 2:20Tracy Alloway?

  Joe, I want a T-shirt that says ruthless utility maximizer.

• 2:24Joe Weisenthal?

  Black Gold.

• 2:25Tracy Alloway?

  Let's talk about losers.

• 2:26Joe Weisenthal?

  Who cares?

• 2:27Tracy Alloway?

  I've decided I'm going to base my entire personality going forward on campaigning for a strategic pork reserve in the US.

• 2:33Joe Weisenthal?

  Skulls Unlimited.

• 2:34Tracy Alloway?

  Ooh, what's the ticker for that?

• 2:35Joe Weisenthal?

  No, I think that like, in a couple of years, the AI will do a really good job of making the Odd Lots podcast.

• 2:42Tracy Alloway?

  How do I get more popular and successful?

• 2:44Joe Weisenthal?

  One day, that person will have the mandate of heaven. We do have the perfect guest.

• 2:51Tracy Alloway?

  You're listening to Lots More, where we catch up with friends about what's going on right now.

• 2:55Joe Weisenthal?

  Because even when Odd Lots is over, there's always lots more.

• 2:59Tracy Alloway?

  And we really do have the perfect guest.

• 3:07Joe Weisenthal?

  I'm just going to say, what I find interesting right now is that, you know, like, Trump announces someone, and you expect a bunch of liberal ninnies in the media to shake their fists. It's like, oh, this isn't good. You know, it's like, there's a lot of predictable response. But it is interesting, to my mind, to hear someone like Neil, who is, I do not associate him with liberal media, groupthink, or anything like that, as well as many others who are like, huh, interesting pick here.

• 3:35Tracy Alloway?

  Well, I will say, opinion's kind of divided. So Mohamed El-Erian tweeted earlier that he thinks Kevin's going to be a great Fed Chair, and he's observed, and this is a quote, "Having observed and interacted with Kevin during his prior tenure as Fed Governor in academia and as a fellow member of the Group of 30, I believe he brings a strong mix of deep expertise, broad experience, and sharp communication skills." So...

• 4:05Joe Weisenthal?

  By the way, Jason Furman, too. He tweeted, "Kevin Warsh is well above the bar on both substance and independence to be Chair of the Federal Reserve. The Senate should ask tough questions about his independence, and President Trump should reduce the threat to it. Hopefully, that will make it clear Warsh should be confirmed." So it is a mix on both sides. It is not dividing in obvious, easy ways. Anyway, Skanda, what's up?

• 4:27Speaker 03

  Glad to be part of this momentous Day.

• 4:29Joe Weisenthal?

  It is a moment.

• 4:30Speaker 03

  I guess we see that, yeah, Kevin Warsh is right now the successor in waiting if he gets confirmed by the Senate. It is funny how he's part of this group of 30, which is a form of former central bankers, former finance ministers, the movers and shakers. So you see Mohamed El-Erian, Jason Furman, George Osborne, I believe, Mark Carney. Certainly not exactly the most America first kind of grouping, maybe more globalist in flavor. Has definitely kind of rallied around Kevin Warsh because I think they've probably conversed with him a bunch of times and take him to be a very serious person. I myself am much more sympathetic to what our friend Neil has pointed out.

• 5:10Joe Weisenthal?

  By the way, we are talking, of course, to longtime friend of the pod, Skanda Emmerath, co-founder and executive of Employee America. So when you see like, okay, so someone like Neil and someone like yourself and you have these reservations, like what is the origin of some of these anxieties?

• 5:27Speaker 03

  I think there are a few different anxieties and I think let's start with, this is obviously someone who's served on the Fed before, right? He was a Fed governor. So we have like a track record. We don't have to like rely on secondhand validation. We don't have to. If we didn't know anything about Kevin Warsh, then I think probably it's probably we're putting a little more emphasis on what Jason Furman and Mohamed El-Erian and all those people are saying. And they seem like respectable people, except he was Fed governor and he does have a pretty long body of work in terms of a public intellectual, giving remarks, being in the Wall Street Journal, opinion pages. And the trouble is, it kind of comes back to like, who do you want in a crisis? Right? So the Fed really tends to matter the most in periods of crisis.

• 6:12Speaker 03

  He was a Fed governor in the crisis and he often touts it as some.

• 6:16Joe Weisenthal?

  We're talking about the great financial crisis.

• 6:17Speaker 03

  Qualified purpose. Yes, the 2008 financial crisis.

• 6:21Speaker 03

  If you go through what his views were through that whole period, what you will find is this is someone who is very eager to tout how well the financial system was performing even as it was descending into crisis in 2007 and 2008. He was very eager to really upweight the importance of inflation in the summer and fall of 2008, until Lehman failed. So this is someone clearly who had his eye on, I'd say, the wrong ball at that time. Okay, mistakes happen, like people had different views. I don't think we should be like too precious about that specifically. And yet also, the moment that sort of we came into 2009, and let's say the absolute worst of the financial distress may have been behind us,

• 7:04Speaker 03

  but we had historically high and rising unemployment. He basically said this was not really a big problem, not something the Fed should be focused on, and that we actually should start to shift back towards focusing on, well, keeping interest rates more normal, not so low. I'm worried about inflation. And so he came with a lot of reasons why he thought inflation was going to explode, why QE was really bad, and that that would ultimately lead to first inflation, then maybe some version of asset price inflation, maybe bubbles, maybe it's backdoor fiscal policy. He gave a lot of different reasons at different times for why he really hated the fact that the Fed's balance sheet was so big. But one, those predictions weren't really true. I think they reflect a misunderstanding of what the Fed's balance sheet really does and is. And it's still like a big, it's a favorite hobby horse of his.

• 7:49Speaker 03

  But that's itself like, he kind of missed the whole financial crisis in a way, right? Like, aside from like the absolute worst of it, everyone got on the same page in October 2008. But that's like, kind of like not, like, that's not a great badge of like, of honor that you actually figured out that you had to sort of support the financial system at that time. I think that's the first dimension that probably is of concern. But let's say, like, okay, people have gone through various episodes and missed a lot of things. And you'd hope coming out of that, people kind of have learned something, expressed some humility. Okay, I missed this part of this problem, the scale of it, the duration of it, and I'll do better next time. We haven't really heard that, but okay, let's leave those like, missing neocultus aside.

• 8:31Speaker 03

  The two things that are more concerning that come out of that, though, is we see now a growing pattern of both obsequiousness and partisanship in how he orients his macro and monetary policy views. So let's, let's fast forward to 2024, right? Where we had For a while, obviously, there was a sense of like the Fed's going to cut rates, but are they going to cut rates soon enough? Or are they going to wait longer because they want to see more progress on inflation? Kevin Warsh for most of that year, he was pretty clearly in the camp of the Fed is risking not keeping interest rates high enough for long enough to kill inflation. But when do you think that his policy views changed? They've happened to change in November 2024, basically.

• 9:16Speaker 03

  And he basically did a big 180 on what were probably considered pretty hawkish views. But actually, they turned dovish the moment the election changes. Now, obviously, like everyone does a version of inflicting their policy views with some level of politics and partisanship, whether they can help it or not. Not here to say it's like anyone's immune. But there is a tendency, if you look through his track record, of basically worrying about inflation and worrying about sort of fiscal excesses during periods when it's a Democrat that's in the White House. And then it tends to flip towards deregulation and productivity growth are going to be disinflationary. And that's, that's why we can afford to keep rates lower when it's a Republican that's in the White House.

• 9:59Speaker 03

  I think that's been dialed up even further in this, this, this last, call it 18 to 24 months, where you've seen that sort of 180 take place.

• 10:07Joe Weisenthal?

  Yeah.

• 10:08Speaker 03

  And I think that kind of speaks to exactly what did he have to promise to President Trump to get the job?

• 10:13Tracy Alloway?

  It's funny, you mentioned writing op-eds in the Wall Street Journal, and this is also a Duda line. He says, and all he's done in the years since his time at the Fed is critique QE and the Fed itself, making a bunch of bad economic calls along the way and writing the same op-ed in the Wall Street Journal every year. So one thing I was reading, you know, I read some of those op-eds, but I also read a speech that Warsh made last year, and he was criticizing the Fed for being too dependent on data or focusing on data dependency, too much near-term forecasting. And it kind of, you know, it made me think like, well, if you're not looking at the data, what are you going to be looking at?

• 10:58Tracy Alloway?

  Do we have any sense of what he actually? Prioritizes when it comes to making policy?

• 11:03Speaker 03

  Yeah, I mean, maybe it's vibes, maybe it's presidential preferences, but I obviously like sort of half kidding there. But I think it's like, what do we have if we don't have data, right? What do we have if we don't have a language that you can talk about facts? Like, obviously, data has flaws. We all know that there's like limitations to what macroeconomic data releases can tell us, what various points of information tell us. We're all trying to triangulate around this like fuzzy reality of macroeconomics. But it's a useful language for being able to like get people from different policy preferences, different political orientations to get on something of the same page. Right? It's a way of saying, OK, this is a fact about the data. We can tell it, say, this is the reason why it's too high, it's too low, it's biased this way.

• 11:45Speaker 03

  You can have a discussion about it, but at least it's a way to make sure we're talking about something other than politics, something other than policy. That's like outside of the ambit of the Fed. I think what you actually hear from Kevin Warsh on the data dependence side is pretty worrisome because it kind of speaks to a disinterest in being perceived as objective and a lack of interest in actually doing something that can broaden legitimacy around the Fed. So that people will understand, OK, the Fed made this decision because indicators moved in this direction, or they think indicators are moving this direction. And at the same time, we obviously have a situation where like there's a lot of risk of eroding trust in the Fed when Trump has been saying

• 12:28Speaker 03

  that he wants his guy in who's going to do what he wants and that he really felt burned by picking Jerome Powell. So basically that Jerome Powell was not pliant enough to what Trump was looking for. I think that that just raises a lot of risks going forward. And just to bring it back to the issue of crises, the Fed has been such an important actor in periods of crisis and divided government. Right? When we think about 2008 and 2020, when periods when the White House was controlled by a Republican and there was a pretty vociferous opposition from Congress in terms of, obviously, there was a Democratic House in 2020, and both chambers were Democratic in 2008.

• 13:07Speaker 03

  How did you get to like policies that actually started to take up, like, address the scale of the crises in front of them? You got there because there was some agreement and trust that the Fed could be a reliable kind of crisis broker of sorts. I think that's going to be a lot harder this time around because Kevin Morris, just like track record, obviously, there's a certain obsequiousness that kind of has been very obvious from how he's done these policy 180s. He goes from hawk at one point, and then the moment Trump wins office, he starts to shift towards being more dovish. He did a version of this in 2017, though less exaggerated. So that's something that like is concerning. Layer it on to his tenure as Fed governor, has this like, features a lot of speeches

• 13:49Speaker 03

  in which he's like, really going off script in terms of what he's talking about. He doesn't just talk about monetary policy or just financial regulation. He started to give kind of these like bigger concerns about, hey, I don't really like the way the trade policy is going under the Obama administration. I don't really like how like we risked going down the wrong path on broader regulatory policy, things that really shouldn't have been under his domain itself to focus on. And yet he kind of veered into the political and probably was speaking to a more partisan audience at that time. I think everything you've seen since 2005, six kind of speaks to someone who wants to talk to one side of the partisan aisle, but it may be very different in a crisis when you need relationships across the spectrum.

• 14:41Tracy Alloway?

  There are some market stories where you want every detail. Joe and I have made quite a few podcasts on that basis, but sometimes you've only got 10 minutes and just want to know what's moving markets fast. That's the Barclays Brief Podcast. Every week, experts from Barclays Markets and Research get you up to speed on what's happening and what to watch next. Concise, focused, and brief. Search Barclays Brief wherever you get your podcasts.

• 15:08Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting

• 15:50Speaker 01

  and hiring practices, but according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at ChatGPT.com.

• 16:31Joe Weisenthal?

  You know, regardless of what people thought about Bernanke or Powell, et cetera, both of them, you know, were reasonably well-respected across both sides of the aisle, which probably was very helpful during the crisis. I have a question. I've never actually quite known the answer to this, but even going back to 2009, 2010, et cetera, like, a lot of people really liked Worsch. And you mentioned that he's in a select community of like some pretty like heavy hitters, et cetera. And I think Bernanke liked Worsch quite a bit, if I recall. What is the sort of like Worsch origin story of like how he got to be in the circles of some of the most elite, you know, monetary policy minds?

• 17:11Speaker 03

  So he was one of the youngest people selected to be a Fed governor. And there was a lot of consternation even about whether he was qualified at that time. There's some, some good background about how there were a lot of critics, former Fed Vice Chairman, people who served under Ronald Reagan, expressing reservations about picking someone so young who was, had no real track record. He was like an investment banker at Morgan Stanley and technology, media, telecom for a brief period. He's kind of known in these circles primarily in like, I don't know how much to ascribe to this, I'm not, but I do think like it matters that probably his father-in-law is one of the big donors to the Republican Party and has been a big donor to Trump. So Ron Lauder of Estee Lauder fame.

• 17:56Speaker 03

  So there's like certain levels of connections that have mattered. I think there's a pretty well documented fight between Randy Quarles, who was the head of supervision appointed by Trump in his first term. And Kevin Warsh were fighting over a particular job in the Bush Treasury Secretary Office, the Treasury Department. So he's been around in those circles. I think he's mostly been conversed with, let's call people who are like, he was a visiting fellow at the Hoover Institution, which is like an intellectual hub for obviously conservative economic thought. But he's also mostly been speaking to a specific crowd, like the Wall Street Journal op-ed page. It's mostly been with those who are of his persuasion. He has managed to do a remarkable job of shape shifting towards making sure he's heard

• 18:40Speaker 03

  well by President Trump. And so he has managed to kind of make that transition in a way that maybe other people have not. But that shape shifting itself has always been with an orientation towards, I'm really speaking to a Republican audience. And what I wonder about that is if we run into any sort of situation where you're going to need the Fed to kind of put out a fire, or you're going to need some institution to do that, play that role, as it was the case in the CARES Act, or was the case around TARP, or around any of the other sort of bailouts of 2008. How do you muster that together when this person has been pretty consistently partisan and ideological in some ways, ideological maybe more so when it's not Trump at the helm? But it's just something that comes very hard to trust.

• 19:25Speaker 03

  And we can't take that for granted in terms of macro and finance about how the Fed is supposed to step in when there's a crisis. But the Fed steps in in a crisis when they get the backing from both Congress and the White House. That may not exist.

• 19:37Tracy Alloway?

  Just going back to things that Warsh has said previously. So we talked about he's been very critical of the Fed's balance sheet, expanded balance sheet and QE and things like that. Assuming that he figures out a way to do what he wants at the Fed and somehow gets support of the Fed board or does something else. How dramatic could his tenure at the Fed actually be in terms of monetary policy? Because I'm thinking, you know, there's been some chat or some suggestion that Warsh would like to radically redesign the way monetary policy, interest rates are actually implemented.

• 20:16Speaker 03

  Yeah, that's always been a bit fuzzy to me because he's been very eager to criticize. But the nature of the criticism has always had to continuously adapt to what I'd call somewhat failed predictions. First, it was that there were a lot of people who said QE is going to increase the money supply and mechanically increase inflation. And that was the case, that people said this like 2009, 10. Didn't quite pan out that way. Then people kind of said like, it's going to lead to asset price inflation slash bubbles. Like, maybe there was asset price inflation, but there wasn't really like an obvious bubble that transpired from it. And then it's sort of that some of the criticisms shifted towards, well, it's actually doing something on fiscal policy. So I think you have to have a career and view of what you actually think the Fed balance sheet does. Like, if you ask me, ordinary vanilla Treasury QE is not really doing much.

• 20:59Speaker 03

  It's mostly an asset swap of two risk-free assets, which is a view, actually, that another person at Hoover Institution, John Cochrane, would probably abide by. So there's not really any distorting effects that people are really, the way people are saying. And yet he sort of has made this a big bugbear, that this is like the big thing that needs to shift. It comes at a very awkward time because what's been happening is that money markets have been basically giving the signal that actually the balance sheet is getting to a place where if you try to run it down from here and run it down too abruptly. You might get more dysfunction, kind of similar to what we saw in like September 2019. So we might get into a situation where repo rates spiked because there's just not a lot of, relative to the banking system and the financial system's needs.

• 21:41Speaker 03

  You do need to have some amount of liquidity available and that amount of liquidity is meaningfully more than it was prior to the financial crisis. That's probably like one part regulation, one part supervision and one part bank risk management practices. But this stuff is kind of like actually hard to pin down how much of each. And so he's, he's big, this is like big concern. I suspect he's probably going to have to swallow his pride a bit and be more supportive of like gradual balance sheet expansion during this period. Because money market conditions are basically signaling that things have tightened up quite a bit in terms of if you look at where the Fed funds rate or money market interest rates are relative to the interest that the Fed pays on reserves or the interest rate that the Fed pays for money market funds, the reverse repo facility.

• 22:26Speaker 03

  Those have been converging, right? Those are basically even the, those money market interest rates have been kept going up relative to those rates set by the Fed. And that kind of is also a sign that like, yeah, you got to have more malleability and it's not exactly the case that like, oh my God, this Fed balance sheet is like this big problem or that it's, it's something that if you, if you lower the balance sheet, that's how you get lower interest rates. These views are all kind of incoherent, but I think that especially now that he might be in a position where he has to deal with those hard realities, I suspect his views may be forced to change.

• 22:56Joe Weisenthal?

  It'll be interesting to see what happens. Let's just talk, you know, so we know Trump wants lower rates. Kevin Warsh has talked about, we need lower rates. So there's alignment there. Other candidates who were like the sort of finalists also talking about that. So Christopher Waller, who I think, you know, many people would say perhaps has the best track record of the last five years of anyone having correctly identified the inflationary turn and then also recognizing when the inflationary turn was coming to an end. He also wants lower rates. So like there were presumably no matter who was going to come in was going to have this lower rates now view. That being said, you know, does the actual execution of lower rates in the short term,

• 23:39Joe Weisenthal?

  setting aside crisis, does it change at all the dynamics when he's just one of multiple voting members if that message is coming from Kevin Warsh versus if it were coming from a Christopher Waller?

• 23:51Speaker 03

  I think it definitely matters because at least with Chris Waller, honestly, with all of the frontrunners outside of Warsh, I can point to a tangible example where that person supported the case for lower interest rates outside of a very Trump-inflected electoral context. And I'm including even Kevin Hassett here. And so Rick Reader, Chris Waller are people who have made the case for rate cuts at various times, even when Trump was not in office, even when Trump wasn't clamoring for lower interest rates. In the case of Kevin Hassett, he went on the record in October 2024, I believe, basically defending the Fed's 50-basis-point rate cut in September, back when Kevin Warsh and Scott Besant and Steve Myron

• 24:35Speaker 03

  were up in arms about the idea that the Fed could cut rates and thought it was the most politically motivated decision ever. So you get people who have actually pre-registered their views and can show an ability to make judgments outside of that presidential context will come with more credibility. Because in the end, as you rightly point out, the FOMC, which is made up of seven Fed governors and a set of regional Fed presidents, they are not just presidential appointees, certainly not of this current president. And even those who were appointed by the president in the previous administration, I think to a large extent, I'm talking about Michelle Bowman or Chris Waller or Jay Powell, have shown a capacity for independent judgment and assessment.

• 25:20Speaker 03

  Will someone like Kevin Warsh be able to bring more people on board? Is going to be a real challenge, right? Can he be persuasive? Can he be persuasive? And especially if he's someone who doesn't really take a lot of stock in data. Like, one of the nice ways that you can be persuasive is being able to point to an indicator and saying, "I think this is going to happen in this way." Then if it does happen this way, you get more credibility in the next meeting to say, "Things are going the way I suspected, and therefore, we really need to take policy in the direction I think is right." Like, that's kind of... Data has a way of helping keep people accountable in discussions. Not always, but it's better than nothing at all, or better than the substitute. And so I think regardless of who was going to be the Fed chair, there was going to be a persuasive constraint. We're kind of seeing from the Supreme Court

• 26:04Speaker 03

  that Trump can't just fire everyone on the Fed that he wants. At least, those are the tea leaves we're getting. And so you're gonna have to work with the people who are already on the Fed, on the FOMC. And if that's the case, like persuasive power matters. And like, what's the reason you're really like expressing this view? Are you expressing this view because you believe it? Or because you think it satisfies what the president wants? Unfortunately, over the course of the last, I'd say, two decades, Kevin Warsh's views kind of have like a strong like political correlation to them. Look, everyone's got some political correlation in their views, I suspect, but uh, his more predominantly. And especially if he wasn't making arguments rooted primarily in data. I think he may find it harder to persuade his fellow colleagues and there will be a high level of suspicion about just how,

• 26:47Speaker 03

  what exactly are the true intentions behind his agenda?

• 26:51Tracy Alloway?

  Just going back to the speech that Warsh made last year, he talked about the need for regime change at the Fed and he said that would involve, quote, "breaking some heads." So I imagine the first FOMC meeting might be a little, a little awkward.

• 27:08Joe Weisenthal?

  He's gotta come in and the first thing he says is he's like, "Guys, I didn't mean that literally." Like, he's like, you know, he's gotta, he's gotta come in and say, "I wrote that, but I don't want you guys to mean I said it literally." He's gotta say that.

• 27:17Tracy Alloway?

  Real quickly, Skanda, if you were at that meeting, what would be the one question or the first question that you asked Mr. Warsh?

• 27:26Speaker 03

  Oh, I, I, I think it's, it would be good to get a sense of just like what he's uh, what he even thinks about where interest rates should be right now. Because I think part of what he doesn't quite, he talks a lot about Fed policy in the abstract, the need for regime change, we need reform, this, we need more credibility, more, fewer mandates or something along those lines. It's all kind of vague and can kind of sound substantive, but I kind of think it's a little substance free because it ends up blurring exactly what he thinks about the macro economy right now. Like inflation right now is about a percentage point above the Fed's target. Now, that might be freezes that are temporary, that might be freezes that are more persistent. It'd be good to understand like what, what he thinks will happen, why. And we don't really know much about that beyond just thinking like, okay, this person's probably going to be for lowering rates because he got the job from Trump.

• 28:11Speaker 03

  The reasoning seems very light at this point. I think it's a, there's good reasons to be dovish, there's maybe good reasons to be hawkish. But can he identify those, like as a? Someone who will be on the FOMC or Fed staffer. Like, we're actually, there's more of a black box here. Because maybe you could have told yourself a story of how he was actually a very hawkish person, especially 2009, 2010, and some of his Wall Street Journal columns afterwards. But especially ever since we've had Trump in office, like, his views have definitely shifted more dovishly. And you just wonder like, how much, what is he putting a high weight on? And if that's something that can be trusted. Ultimately, he's gonna have to figure out how to build up more persuasive power and trust among the committee to actually

• 28:55Speaker 03

  be an effective Fed Chair. I think it'll be remains to be seen.

• 28:59Joe Weisenthal?

  Skonda, we're gonna let you go, but this is not gonna be the last time we talk about Kevin Worsch with you and many others. So I appreciate your time.

• 29:08Speaker 03

  Thanks. Thanks for having me.

• 29:10Joe Weisenthal?

  Lots More is produced by Dashil Bennett, Kermit Rodriguez, and Cale Brooks.

• 29:14Tracy Alloway?

  Please rate, review, and subscribe to Odd Lots and Lots More on your favorite podcast platforms.

• 29:19Joe Weisenthal?

  And for even more beyond lots more, go to Bloomberg.com/oddlots and chat with fellow listeners in our Discord, discord.gg/oddlots.

• 29:28Tracy Alloway?

  And don't forget that Bloomberg subscribers can listen to all of our podcasts absolutely ad-free. All you have to do is find the Bloomberg channel on Apple Podcasts and follow the instructions there. Thanks for listening.

• 29:41Speaker 04

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• 30:12Speaker 05

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• 30:48Speaker 06

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