Trump to Appoint the Hawk

Despite his 'hawk' reputation from the QE2 era, Kevin Warsh's nomination for Fed Chair is likely a move to lower interest rates by leveraging his belief in an AI-driven productivity boom. His perceived hard-money stance gives him the institutional credibility to lead the FOMC toward a more accommodative policy stance.

Key Takeaways

• 1.Kevin Warsh's reputation as a 'hawk' is likely a strategic cover; his current views suggest he will be dovish to accommodate a perceived productivity boom.
• 2.Warsh believes Artificial Intelligence (AI) will drive a massive disinflationary productivity wave, allowing the Fed to cut rates despite sticky short-term inflation.
• 3.The nomination fits the criteria of seeking someone with the 'gravitas' to persuade the FOMC to follow a Greenspan-style accommodation of growth.

Table of Contents

• Macro Picture - Chart Story
• TRUMP TO APPOINT THE "HAWK"?
• QE placebo produced deflationary policy mix
• Warsh's recent views on productivity
• Dietrologia
• Is Warsh going to shrink the Fed's balance sheet?
• Disclaimer

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