Trump Administration Preparing to Nominate Warsh as Fed Chair

Summary

Bloomberg's Michael McKee discusses President Trump's expected nomination of Kevin Warsh as the next Federal Reserve chair. McKee outlines Warsh's background, his hawkish and anti-QE views, and his desire to reduce the Fed's regulatory role. The report notes that Warsh is a known quantity to Wall Street but leaves open questions about how markets will react. One specific market implication is to watch bank stocks because Warsh may push the Fed to exit bank regulation.

• Trump plans to announce his Fed chair pick on Friday, with Kevin Warsh expected to be nominated.
• Warsh previously served as a Fed governor from 2006 to 2011 and left over objections to quantitative easing.
• McKee says Warsh is a known figure on Wall Street but also a harsh Fed critic and hawk.
• Warsh favors a smaller Fed balance sheet, less mission creep, and less Fed communication.
• McKee says Warsh may want the Fed to get out of bank regulation.
• Bank stocks are flagged as an area to watch because of that potential deregulatory shift.
• Markets are already reacting to the prospect of a more hawkish Fed chair.