Fed outlook under new Chair Warsh (with David Gura, Christina Ruffini)

What are you expecting to hear from Warsh on Wednesday? Is he in a no-win situation?

Christina Ruffini

Ira Jersey

Warsh is in a no-win situation because it's very difficult for the Fed to reduce rates, and Trump wants him to. Warsh is only one member of the FOMC. Key things to listen for: his relationship with fellow FOMC members and the committee's outlook for rates. If the Iran war concludes, oil prices could fall, reducing the chance of a rate hike later this year.

The market priced some of that in on Friday.

How does the committee think through the recent data (strong jobs, inflation) with a new chair asserting control?

David Gura

Ira Jersey

There are three camps in the Fed: hawks worried about inflation (wanting a hike), those worried about stagflation from higher energy prices, and a middle group. Warsh is relatively neutral. In a vacuum, he would likely say 'sit on our hands' until there is clarity on inflation and jobs, as job market strength is concentrated in only two sectors.

The Fed has a dual mandate (jobs and inflation), unlike the ECB which only targets inflation.

How critical is Warsh's first press conference for signaling the direction of his Fed?

David Gura

Ira Jersey

Very critical. He has to speak for the whole committee and then give his personal view. He wants less communication from the Fed, but the cat is out of the bag. He might go back to quarterly press conferences instead of after every meeting. We'll also see if he posts a dot on the dot plot.

Keeping a lid on regional Fed presidents will be exceptionally difficult for him.

Trump keeps calling it 'nuclear dust.' What form is the nuclear material in? Reports say Iran is burying it further.

Christina Ruffini

Jon Finer

Trump is not a nuclear physicist. The material is 60% enriched uranium (90% is weapons-grade). Going from 60% to 90% is a small technical step. There is roughly 1,000 pounds buried in tunnels under a bomb facility. Trump demands it be shipped out; Iran hasn't agreed. An alternative is diluting it to a lower level, which leaves it in a condition Iran could re-enrich. It looks like the material will stay in Iran.

The Obama team had an MIT nuclear physicist as Secretary of Energy; it's not clear this team has true nuclear experts.

How are you following this? Who should we listen to for indication of progress?

David Gura

Jon Finer

You now get 3-4 versions of events: White House view, Iranian news agencies, Israeli interpretation, Gulf countries. You used to be able to rely on the US government to publish the entire deal. We haven't seen a physical document. Given the tendency to traffic in disinformation, we should wait until we see what is actually in the deal if they publish it.

If it's a short document punting hard issues, we won't know how this ends for another 30-60 days.

Josh Wingrove

The hopes are on the other side. Trump has washed his hands of the conflict. He wants an end but doesn't want to put capital into it. The Europeans hope to remind him of the Ukrainian perspective and hope he doesn't give explicit blessing to continuation of the conflict.

Trump has been pretty disinterested in Ukraine for months and just doesn't talk about it.

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