Join institutional investors, analysts and strategists from the world's largest banks: Subscribe today
Already have an account? log in
‘Volatility Would Return With A Vengeance’: Kocic Warns On Warsh And The Rebuilding Of The Fourth Wall
Earlier this week, in a piece for DealBreaker, I suggested that if we can take Kevin Warsh at his word when it comes to his explicitly stated desire to break the reflexive relationship between markets and the Fed, his nomination would set the stage for a rebuilding of the "fourth wall" (get it? "set the stage", "fourth wall", etc.)
Regular readers will immediately recognize that as a reference to the Street's best strategist, Aleksandar Kocic, who described the Fed's explicit acknowledgement of
It’s ironic, no? Kocic’s and this article are clearly aimed at influencing Warsh to rebuild that wall with careful deliberation, perhaps even slowly, and to not just let the curtain to drop quickly. I’d assume that he’s savvy enough to get the message (if not see it clearly on his own first) and act accordingly, assuming that he gets the job.
As unsophisticated as the Dotard seems at times appointing Warsh could well play out as a “populist” move that extends far beyond his narrow base and plays a hand every front-running Presidential Campaign of the future must have–the ammunition to slam one group off another
and co-opt the moral high ground of being for the regular person..
Trump is not going to appoint anyone to Fed Chair who doesn’t clearly understand what he wants and delivers. Warsh has two three bullets he can use…Interest Rates…Balance Sheet Sales and (if needed) Fed institution of a new program that shovels money directly (thru the Treasury) into taxpayer and non-taxpayer hands as necessary….and it will be necessary.
My take is Warsh will go VERY slow on the interest rate hikes because they are the most visible
and trade them off for Balance Sheet reductions which are, in my mind, potentially much more troublesome…but nobody but markets understand. When trouble arrives he can hand the political ball of handouts over to Trump who’ll can then co-op the integrity of many who hate him by giving them what they cherish most….money.
Of course..none of this will pan out because only a true, ass kicking rebalancing can cure a decades long grift.