1 00:00:01,800 --> 00:00:06,440 Speaker 1: This is a breaking news update from Bloomberg Instant reaction 2 00:00:06,680 --> 00:00:10,560 Speaker 1: and analysis from our three thousand journalists and analysts around 3 00:00:10,560 --> 00:00:14,840 Speaker 1: the world. Breaking news now official a red headline crossing 4 00:00:14,880 --> 00:00:18,480 Speaker 1: the Bloomberg terminal as President Trump has announced via his 5 00:00:18,600 --> 00:00:22,760 Speaker 1: truth social account that he is nominating former Fed Governor 6 00:00:23,120 --> 00:00:27,240 Speaker 1: Kevin Walsh to succeed J. Powell as Chairman of the 7 00:00:27,280 --> 00:00:31,560 Speaker 1: Federal Reserve when Chairman Powell's term expires in May. And 8 00:00:31,600 --> 00:00:35,320 Speaker 1: we are joined by Bloomberg International Economics and Policy correspondent 9 00:00:35,680 --> 00:00:39,920 Speaker 1: Michael McKee. Mike, good morning. This was an expected announcement. 10 00:00:39,960 --> 00:00:43,760 Speaker 1: Our reporting was that the President had settled on Kevin Walsh, 11 00:00:43,800 --> 00:00:45,959 Speaker 1: but of course this was a figure that the President 12 00:00:46,240 --> 00:00:49,680 Speaker 1: had passed over the last time around when he nominated 13 00:00:49,840 --> 00:00:50,600 Speaker 1: Chairman Powell. 14 00:00:51,440 --> 00:00:54,440 Speaker 2: Yes, but Walsh has stayed in close contact with the 15 00:00:54,480 --> 00:00:58,880 Speaker 2: President ever since, and of course his family not him 16 00:00:58,920 --> 00:01:01,480 Speaker 2: as much, but his family has been a big donators 17 00:01:01,520 --> 00:01:05,000 Speaker 2: to the Republican Party, so Warsh and the President have 18 00:01:05,080 --> 00:01:09,720 Speaker 2: a relationship. The biggest issue has been whether worsh would 19 00:01:09,760 --> 00:01:12,600 Speaker 2: be too hawkish given that the President wants extremely low 20 00:01:12,640 --> 00:01:15,720 Speaker 2: interest rates. Walsh has made some comments recently to the 21 00:01:15,720 --> 00:01:18,720 Speaker 2: effect that AI and the massive capital spend we've seen, 22 00:01:19,280 --> 00:01:22,760 Speaker 2: and the deregulation of the Trump administration would mean faster 23 00:01:22,840 --> 00:01:26,040 Speaker 2: growth with lower inflation, so that may have made him 24 00:01:26,080 --> 00:01:28,119 Speaker 2: acceptable as a final choice. 25 00:01:28,360 --> 00:01:32,320 Speaker 1: And of course we have seen a market reaction in 26 00:01:32,360 --> 00:01:38,560 Speaker 1: the lead up to this official announcement, stocks falling, treasury 27 00:01:38,600 --> 00:01:41,959 Speaker 1: yields rising just a bit. What do you make of 28 00:01:41,959 --> 00:01:43,720 Speaker 1: that market reaction, Mike Well. 29 00:01:43,600 --> 00:01:46,200 Speaker 2: I think the bond market and the dollar are telling 30 00:01:46,240 --> 00:01:48,559 Speaker 2: you what the markets think at the moment. They're going 31 00:01:48,600 --> 00:01:51,280 Speaker 2: on the fact that Walsh has been a hawk when 32 00:01:51,280 --> 00:01:53,800 Speaker 2: he was on the Fed. He was very reluctant to 33 00:01:53,800 --> 00:01:57,360 Speaker 2: cut interest rates even during the Great Financial Crisis, and 34 00:01:57,400 --> 00:02:00,920 Speaker 2: so that's driving a steeper yield curve and the dollar 35 00:02:01,000 --> 00:02:03,600 Speaker 2: fall equities. I think you have to kind of also 36 00:02:03,680 --> 00:02:05,680 Speaker 2: balance that out with the idea that we've got a 37 00:02:05,680 --> 00:02:08,359 Speaker 2: potential war with Iran, we've got the blockade of Cuba, 38 00:02:08,360 --> 00:02:11,080 Speaker 2: we've got tariffs on Canada, all kinds of things coming 39 00:02:11,080 --> 00:02:13,119 Speaker 2: out of the White House in the last twenty four 40 00:02:13,160 --> 00:02:16,079 Speaker 2: hours that you have to try to figure into your 41 00:02:16,400 --> 00:02:17,520 Speaker 2: equity allocations. 42 00:02:17,880 --> 00:02:20,720 Speaker 1: I want to bring in Tom Keen and Paul Sweeney 43 00:02:20,720 --> 00:02:23,880 Speaker 1: co Ankers of Bloomberg surveillance coming up in just about 44 00:02:23,919 --> 00:02:26,040 Speaker 1: eight minutes. Of course, we're going to have much more 45 00:02:26,160 --> 00:02:30,239 Speaker 1: coverage on this official announcement of Kevin Warsh, the President's 46 00:02:30,280 --> 00:02:33,840 Speaker 1: nominee to succeed Jay Powell, Tom and Paul your reaction 47 00:02:33,919 --> 00:02:34,720 Speaker 1: this morning. 48 00:02:34,639 --> 00:02:37,919 Speaker 3: My reactions go to Mike McKee. This is the realities. 49 00:02:37,960 --> 00:02:40,679 Speaker 3: You never know. Mike, You're the only ones sold enough 50 00:02:40,680 --> 00:02:44,720 Speaker 3: to remember this. June second, nineteen eighty seven. Paul Volker, 51 00:02:46,160 --> 00:02:49,640 Speaker 3: excuse me, nominees green Span to succeed Paul Volker, and 52 00:02:49,680 --> 00:02:53,000 Speaker 3: we're like, does he play clarinet? Do we know when 53 00:02:53,040 --> 00:02:55,399 Speaker 3: these people are picked who they really are. 54 00:02:56,120 --> 00:03:00,359 Speaker 2: Well, you don't, because they react to the circumstances in 55 00:03:00,400 --> 00:03:03,080 Speaker 2: which they find themselves. Now, the FED has had a 56 00:03:03,120 --> 00:03:08,360 Speaker 2: remarkable run, with green Span being the one who basically 57 00:03:08,400 --> 00:03:12,000 Speaker 2: thought we would have this tech revolution that would hold 58 00:03:12,040 --> 00:03:15,880 Speaker 2: down inflation, and instead of raising rates, he let it ride. 59 00:03:16,840 --> 00:03:20,680 Speaker 2: Then we had Ben Burdanke, who was the serious scholar 60 00:03:20,840 --> 00:03:23,080 Speaker 2: of the depression, and the mistakes that were made at 61 00:03:23,080 --> 00:03:25,720 Speaker 2: the FED come along just when we have the Great 62 00:03:25,720 --> 00:03:29,919 Speaker 2: financial crisis. Janet Yell and calm as they got out 63 00:03:29,919 --> 00:03:33,840 Speaker 2: of the financial crisis, and Powell has managed his way 64 00:03:33,919 --> 00:03:37,480 Speaker 2: through a political minefield. So we'll see what Kevin Warsh 65 00:03:37,560 --> 00:03:38,120 Speaker 2: ends up doing. 66 00:03:38,200 --> 00:03:41,800 Speaker 3: What to you is the distinction between two quote unquote 67 00:03:41,840 --> 00:03:46,400 Speaker 3: investment bankers, smooth guys like Jerown Powell and Kevin Warsh. 68 00:03:46,480 --> 00:03:47,320 Speaker 3: How are they different? 69 00:03:47,880 --> 00:03:50,920 Speaker 2: Well, they're very different in temperament, although they're both lawyers, 70 00:03:50,920 --> 00:03:54,960 Speaker 2: and that's going to be the interesting thing is Warsh 71 00:03:55,000 --> 00:03:57,320 Speaker 2: has taken economic class, has spent a lot of time 72 00:03:57,560 --> 00:04:00,440 Speaker 2: studying the economy, but he is a lawyer by training, 73 00:04:00,560 --> 00:04:04,040 Speaker 2: as is Jay Powell. And so it's a different kind 74 00:04:04,040 --> 00:04:07,320 Speaker 2: of leadership for the FED for the last eight years 75 00:04:07,320 --> 00:04:10,720 Speaker 2: and now it looks like twelve years. But Worsh is 76 00:04:10,840 --> 00:04:14,040 Speaker 2: very confident in himself and has very strong views about 77 00:04:14,080 --> 00:04:17,320 Speaker 2: what the Fed should do. Poll is much more soft 78 00:04:17,320 --> 00:04:21,440 Speaker 2: spoken and very good at lobbying up on Capitol Hill. 79 00:04:21,680 --> 00:04:24,800 Speaker 2: It'll be interesting to see if Worsh follows that model, which, 80 00:04:24,800 --> 00:04:27,960 Speaker 2: of course Poll suggested the next chair do at the 81 00:04:28,000 --> 00:04:29,000 Speaker 2: News Coverence this week. 82 00:04:29,040 --> 00:04:31,279 Speaker 4: Mike, do we know what's the timeline here? When is 83 00:04:31,520 --> 00:04:33,920 Speaker 4: mister Warsh assume his position? And then what does j 84 00:04:34,120 --> 00:04:34,560 Speaker 4: Poll do? 85 00:04:35,520 --> 00:04:38,400 Speaker 2: Those are the big questions. Well, Pile's term is up 86 00:04:38,440 --> 00:04:41,080 Speaker 2: on May twenty third, there's still plenty of time to 87 00:04:41,080 --> 00:04:45,400 Speaker 2: get him confirmed. And while the Justice Department subpoena of 88 00:04:45,800 --> 00:04:49,000 Speaker 2: FED records and Jay Pile's records is a problem for 89 00:04:49,080 --> 00:04:52,600 Speaker 2: Tom Tillis and the Senate and Lisa Murkowski, you have 90 00:04:52,680 --> 00:04:54,400 Speaker 2: to think that the President could just pick up the 91 00:04:54,440 --> 00:04:57,280 Speaker 2: phone and call the US Attorney in Washington, d c. 92 00:04:57,440 --> 00:05:01,360 Speaker 2: And say make that go away. No charges there yet, 93 00:05:01,440 --> 00:05:03,680 Speaker 2: so it's not something that would be too hard to 94 00:05:03,720 --> 00:05:06,720 Speaker 2: get out of. And then the Senate has shown, as 95 00:05:06,720 --> 00:05:10,680 Speaker 2: they did with Myron, Stephen Myron, that they can move 96 00:05:10,760 --> 00:05:12,360 Speaker 2: very quickly to get somebody confirmed. 97 00:05:12,760 --> 00:05:16,080 Speaker 1: All right, Bloomberg's Mike McKee along with Tom Keen and 98 00:05:16,120 --> 00:05:18,800 Speaker 1: Paul Sweeney with Bloomberg's surveillance, we want to bring in 99 00:05:18,800 --> 00:05:21,880 Speaker 1: Bloomberg's Dan Curtis now to take a look at some 100 00:05:21,920 --> 00:05:23,479 Speaker 1: of the market reaction to this. 101 00:05:23,680 --> 00:05:23,840 Speaker 3: Dan. 102 00:05:23,920 --> 00:05:27,159 Speaker 1: Of course, we had been seeing stocks fall, bonds rise, 103 00:05:27,240 --> 00:05:30,719 Speaker 1: the dollars strengthening a bit ahead of Kevin Warsh's announcement. 104 00:05:30,760 --> 00:05:32,200 Speaker 1: What stands out to you this morning? 105 00:05:32,680 --> 00:05:33,440 Speaker 3: Yeah, good morning. 106 00:05:33,720 --> 00:05:35,480 Speaker 5: What's standing out to me is the dollars found a 107 00:05:35,520 --> 00:05:37,400 Speaker 5: little bit of a bid just off the back of 108 00:05:37,440 --> 00:05:41,560 Speaker 5: this news. It's gotten a little bit it's been all 109 00:05:41,600 --> 00:05:43,360 Speaker 5: over the place, but you know, kind of with worsh 110 00:05:43,400 --> 00:05:44,800 Speaker 5: coming in, he's seen as a little bit more of 111 00:05:44,800 --> 00:05:47,479 Speaker 5: a hawkman who could have been named. Overnight, we did 112 00:05:47,480 --> 00:05:51,120 Speaker 5: see some bids coming into the dollar that was at 113 00:05:51,120 --> 00:05:52,920 Speaker 5: a session high a little bit earlier this morning. It's 114 00:05:52,920 --> 00:05:56,200 Speaker 5: come down since that has started to derail the gold rally. 115 00:05:56,400 --> 00:05:59,480 Speaker 5: A lot of the gold movement was around this debasement trade, 116 00:05:59,640 --> 00:06:02,279 Speaker 5: and so so a higher dollar could potentially hurt some 117 00:06:02,320 --> 00:06:04,600 Speaker 5: of those hopes of gold. So what had been absolutely 118 00:06:04,760 --> 00:06:08,599 Speaker 5: stellar spree within the gold buying that has come back. 119 00:06:08,800 --> 00:06:11,359 Speaker 5: This dollar weakness has put a little bit more, a 120 00:06:11,360 --> 00:06:14,760 Speaker 5: little bit of legs into gold, which is off the 121 00:06:15,120 --> 00:06:17,960 Speaker 5: lows of the morning. But in general that's kind of 122 00:06:17,800 --> 00:06:20,640 Speaker 5: the main area that I'm watching. In terms of equities, 123 00:06:20,680 --> 00:06:23,279 Speaker 5: we do see S and B futures off the session 124 00:06:23,360 --> 00:06:25,599 Speaker 5: loads that have been climbing for a few hours. Nothing 125 00:06:25,640 --> 00:06:27,880 Speaker 5: too much off this news. We have the two year 126 00:06:27,960 --> 00:06:30,680 Speaker 5: down coming in a little bit again. We were expecting. 127 00:06:30,320 --> 00:06:33,400 Speaker 6: Hawkish, kind of a hawkish move from Worsh that's been 128 00:06:33,440 --> 00:06:36,839 Speaker 6: a generally more hawkish than what would have been expected 129 00:06:37,480 --> 00:06:40,000 Speaker 6: market sentiment. So this is kind of countering that a 130 00:06:40,000 --> 00:06:42,400 Speaker 6: little bit. You know, you would expect the two year 131 00:06:42,440 --> 00:06:44,320 Speaker 6: yield to be up on a more hawkish move. It's 132 00:06:44,320 --> 00:06:46,679 Speaker 6: been pretty range bound for a few months, but again 133 00:06:46,800 --> 00:06:49,400 Speaker 6: it's down one bit. We're seeing a little lifted equities 134 00:06:49,600 --> 00:06:52,040 Speaker 6: market's generally taking this in stride. I think this was 135 00:06:52,080 --> 00:06:55,000 Speaker 6: pretty well seen, so markets had time to position overnight, 136 00:06:55,080 --> 00:06:57,080 Speaker 6: and right now it's kind of just playing out. 137 00:06:57,320 --> 00:06:59,360 Speaker 1: Yeah, so it's kind of a cell the rumor repair 138 00:06:59,400 --> 00:07:03,680 Speaker 1: back the news event maybe as we get this announcement. 139 00:07:03,680 --> 00:07:06,160 Speaker 1: Thank you for this. Bloomberg's Dan Curtis keeping an eye 140 00:07:06,200 --> 00:07:09,720 Speaker 1: on the market reaction. Tom Paul, there are still a 141 00:07:09,840 --> 00:07:12,760 Speaker 1: lot of questions that we need to get answered here. 142 00:07:12,840 --> 00:07:16,680 Speaker 1: Now that the one big question has been answered. Kevin 143 00:07:16,720 --> 00:07:19,720 Speaker 1: Walsh is a President Donald Trump's pick to succeed J. 144 00:07:19,920 --> 00:07:22,760 Speaker 1: Powell as the Chairman of the Federal Reserve. You know, 145 00:07:22,840 --> 00:07:25,520 Speaker 1: the President had talked about the two Kevins. They liked 146 00:07:25,560 --> 00:07:28,880 Speaker 1: them a lot. Now I guess we wonder, you know, 147 00:07:29,000 --> 00:07:33,200 Speaker 1: how dubvish is Kevin Walsh gonna be once he comes in. 148 00:07:33,440 --> 00:07:36,320 Speaker 3: Chris Cayle's in the Ft and Recalled. This article is 149 00:07:36,360 --> 00:07:39,920 Speaker 3: an April Paul of last year, and Chris wrote it 150 00:07:40,000 --> 00:07:42,720 Speaker 3: up and his first item, his first bullet point, if 151 00:07:42,760 --> 00:07:46,120 Speaker 3: you will, Nathan, was the idea of this guy's congenerally 152 00:07:46,160 --> 00:07:50,120 Speaker 3: against inflation. He has a real history basis going back 153 00:07:50,120 --> 00:07:52,280 Speaker 3: to his time on Wall Street of saying, you know, 154 00:07:52,400 --> 00:07:52,880 Speaker 3: let's do it. 155 00:07:53,040 --> 00:07:55,360 Speaker 2: Paul is old school the right first, I think so. 156 00:07:55,560 --> 00:07:58,680 Speaker 3: Yeah, I mean, it's old school let's fight inflation. And 157 00:07:58,760 --> 00:08:00,880 Speaker 3: I believe Nathan that's open to the President of the 158 00:08:01,000 --> 00:08:04,200 Speaker 3: United States. I'm not sure how that fits together, but 159 00:08:04,240 --> 00:08:06,800 Speaker 3: maybe we'll find out this morning with an announcement. 160 00:08:07,160 --> 00:08:11,120 Speaker 1: Yeah, we do will once we do get that formal announcement. 161 00:08:11,560 --> 00:08:15,600 Speaker 1: Outside of truth social the President does make some remarks, 162 00:08:15,600 --> 00:08:18,640 Speaker 1: of course you are going to hear them on Bloomberg Radio. 163 00:08:18,640 --> 00:08:22,480 Speaker 1: And another unanswered question, of course, is how much of 164 00:08:22,520 --> 00:08:26,080 Speaker 1: a fight is Kevin Walsh going to face in Senate 165 00:08:26,120 --> 00:08:29,680 Speaker 1: confirmation when we've heard from Tom tillis that unless the J. 166 00:08:29,920 --> 00:08:33,280 Speaker 1: Powell criminal investigation gets resolved, he's not going to vote 167 00:08:33,280 --> 00:08:33,840 Speaker 1: for anybody. 168 00:08:33,960 --> 00:08:35,560 Speaker 4: Yeah, I mean, I think Tom. That might go to 169 00:08:35,600 --> 00:08:38,480 Speaker 4: the issue of again, what role will the president have 170 00:08:38,600 --> 00:08:41,720 Speaker 4: here as it relates to this investigation. Michael McKee suggesting 171 00:08:41,760 --> 00:08:43,560 Speaker 4: that maybe a phone call could be made and that 172 00:08:43,600 --> 00:08:46,559 Speaker 4: can go away and we can get a clearer or 173 00:08:46,720 --> 00:08:48,479 Speaker 4: cleaner confirmation. 174 00:08:48,559 --> 00:08:51,079 Speaker 1: Here off to see Tom Paul, thank you for all this. 175 00:08:51,360 --> 00:08:55,200 Speaker 1: And ahead of the market open, ahead of the official 176 00:08:55,240 --> 00:08:58,960 Speaker 1: announcement of Kevin Walsh to be the next chairman of 177 00:08:59,040 --> 00:09:03,640 Speaker 1: the Federal Reserve, futures are falling. Nasdaq futures are down 178 00:09:04,080 --> 00:09:06,200 Speaker 1: one half of one percent.