DiMartino Booth: Fed Chair Kevin Warsh Gets A '9 Out of 10', But One Thing Could Derail Everything

Summary

Danielle DiMartino Booth gives the Fed's new chair Kevin Warsh a 9/10 for his first FOMC meeting, praising the elimination of the dot plot and forward guidance, creation of five task forces, and a fresh approach to data and inflation. She warns that markets may test Warsh's resolve, pointing to surging bankruptcies and frozen junk bond issuance, and advises watching credit spreads and the MOVE index for signs of liquidity stress that could force a Fed pivot.

• Danielle rates Warsh's first Fed meeting 9/10, citing elimination of dot plot and forward guidance, and five task forces.
• She applauds revisiting the 2% inflation target and moving away from core PCE toward trim mean inflation.
• Warsh called NFP data 'echoes of history' and slammed the NBER for not calling a recession despite job losses.
• Bankruptcies are up 38% YoY with personal filings up 8%, signaling deep credit stress.
• No junk bonds have been sold in 41 days, echoing the 2018 credit freeze that forced a Powell pivot.
• Key tells to monitor: credit spreads widening and the MOVE index spiking would indicate a potential Fed emergency response.
• She remains 'wait and see' but expects markets to test Warsh's commitment, potentially triggering rate cuts.