Apollo Chief Economist Torsten Slok Talks Fed Chair Kevin Warsh

Torsten Slok discusses the potential for a major shift in Fed communication under new Chair Kevin Warsh, including possible removal of forward guidance and the dot plot. He argues this would effectively tighten policy even without rate hikes. While lower energy prices help, persistent core inflation and a strong labor market (AI boom, consumer spending) argue for a more hawkish stance. The key challenge is Warsh building consensus among FOMC members.

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Apollo Chief Economist Torsten Slok Talks Fed Chair Kevin Warsh | Bloomberg Talks

US 10y; DXY

dxy

A more hawkish Fed stance (implicit tightening) relative to other central banks would typically support the US dollar. The geopolitical risk easing (Iran deal) also reduces safe-haven demand for other currencies.

ndx

Slok mentions the AI boom as a tailwind for the economy, which supports tech stocks. However, the prospect of tighter monetary policy (implicit tightening from communication changes) creates a headwind. The net effect is likely sideways in the short term.

wti

We have energy prices coming down.

5 calls

+31

reliable positive edge across multiple calls

6/4/2026 9:00:32 PM	short term cautious up	5 days later	-0.56%	-0.28%
3/27/2026 7:30:29 PM	long term cautious down	60 days later	-15.09%	+7.54%
3/27/2026 1:02:36 AM	short term up	7 days later	+9.26%	+9.26%
3/3/2026 6:19:39 PM	short term up	5 days later	+26.94%	+26.94%
1/8/2026 11:05:50 PM	short term cautious down	5 days later	+4.91%	-2.45%

Show all 5 wti results

yields

Slok argues that removing forward guidance and shrinking the balance sheet is implicitly tightening policy. Combined with persistent inflation and a strong labor market, this points to upward pressure on yields in the near term.

Danny

Asks whether the FOMC statement needs to be read first or just a quick word count is sufficient, given the focus on communication style.
Torsten Slok

The key issue is the style of communication and whether there will be any forward guidance. It remains unclear what Kevin Warsh will do regarding the press conference and communication approach.
Danny

Notes that former Fed Governor Betsy Duke suggested a complete rewrite of the statement, not just a tweak of the easing bias.
Torsten Slok

A complete rewrite is a possible outcome. The market is used to anchored expectations from the dot plot and SEP, but the debate is whether an anchor is good (clarity) or bad (inflexibility when the world changes).
Danny

Asks if removing forward guidance makes the Fed more hawkish by removing the residual easing bias.
Torsten Slok

Yes, and importantly, Warsh is also focused on shrinking the balance sheet. A compromise could be not changing rate communication much but signaling a smaller balance sheet, which is implicitly tightening.
Danny

Asks if Warsh will try to galvanize a consensus like Powell did, and how challenging that would be given his desire for a regime change.
Torsten Slok

Warsh knows what he's doing, but his key challenge is getting the other 11 voting FOMC members on board with any changes. The number of dissents will be important.
Danny

Asks if there will be less Fed speak under Warsh.
Torsten Slok

Telling regional Fed presidents or governors not to talk is not possible. The market will continue to put most weight on the Fed chair.
Danny

Notes that robust debate increased under Trump appointee Steve Miron, so it would be odd for Warsh to tell everyone to stop talking.
Torsten Slok

The dot plot can create confusion because the standard deviation of expectations (divergent views) gets attention, and we don't know which dot is the chair's. This raises questions about whether the dots anchor expectations or highlight disagreement.
Danny

Notes there is a debate whether Warsh will put a dot on the plot.
Torsten Slok

Warsh could decide not to put in a dot or not to submit his SEP forecast, which would be dramatic. The most important job for the Fed chair is to create consensus by calling all FOMC members and finding a path to a majority.
Danny

Asks if the Iran deal (MOU signed on Friday) makes things less complicated for Warsh.
Torsten Slok

Yes, because inflation is still at roughly 3% (core PCE and CPI) vs the 2% target. Lower energy prices are good news, but the economy is still strong with tailwinds from the AI boom and fiscal spending, plus upward pressure from tariffs.
Danny

Asks what parts of the economy Warsh can point to if he wants to lean dovish and deliver a cut this year, given inflation from other parts of the economy.
Torsten Slok

The double-edged sword is that lower energy prices free up spending elsewhere. All high-frequency indicators (TSA, Redbook, hotel demand) are still very strong. There are no signs of the economy slowing down. Too high inflation and a strong labor market argue for a more hawkish stance.

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