What preset notions is Kevin Warsh coming into the job with? We know he thought the Bernanke monetary experiments went on way too long. Is that something we'll see evidence of today?

The market expects Warsh to push back against the amount of Fed communication and the size of the balance sheet. However, the market is overpricing his ability to make wholesale changes on day one. Getting rid of the dot plot on his first meeting is unlikely; such changes will take several meetings or quarters.

He'll want to come out strong and show he can gather a committee around him. He might want to signal changes now.

A lot comes out in the press conference—how he responds to questions about the balance sheet, the dot plot. That will set the tone. I anticipate a unanimous vote, in part because he will probably drop the slight dovish lean in the statement, and we've lost the dissenter on the committee.

Who does he most align with on the committee? Who will be his allies for reducing the balance sheet or changing communication?

He'll have an ally in Williams (New York Fed), who is very markets-oriented. That's a good place to start for consensus building. I wouldn't be surprised if more members align with him.

I would have thought Williams leans more dovish than someone like Kevin Warsh.

We are operating under the assumption that the Warsh Fed chair is the same as the Warsh governor. I would caution against that. It's not entirely clear he will be hawkish. He received the nomination from Trump, so there is an assumption he will make the case for lower rates over time, possibly accompanied by a smaller balance sheet. That is less accommodative on one side but not necessarily hawkish. It's more about being less involved in the markets, allowing price discovery without too much guidance.

How will the Fed speak about the decline in oil prices and its impact on inflation?

That's the most relevant conversation piece within the Fed. We've spent three months with energy prices running higher, gasoline contributing to headline CPI. If lower oil flows through to lower gasoline prices, what was a pillar of inflation becomes a drag over the next 3-4 months. That reinforces the prudence of waiting. Core goods were negative last month, buying the Fed plenty of time. The energy shock remains extremely topical and will probably drive the tone from Warsh.

If he threads the needle and doesn't give away whether the next move is a hike or cut, does the market reprice, particularly the front end?

Two-year yields are around 4% because we've priced in a very low probability of a rate hike over the next 6-8 months. The market is comfortable with symmetry around the current policy rate. I wouldn't be surprised if we shrug off a slightly hawkish tone. The bigger risk is that we are all poised for a hawkish, ready-to-fight-inflation Warsh, but if he comes out more dovish, that's not priced in. That could get two-year yields to 3.85% quickly.

If front-end yields come down, is there also potential for a market event if he talks about reducing the balance sheet? Several guests said the economy can't handle that, at least not immediately.

The argument for a smaller balance sheet over time makes sense. It would be run-off of maturing holdings, not selling bonds outright. What I'm more worried about is what it does to risk assets. There was a very strong correlation between QE and equity market performance. If you take away some of that support, do we start to see a repricing in equity valuations? That is one of the wild cards.

What was your reaction to the appetite for Nvidia's offering?

I wasn't that surprised. The sector has been performing well, there's money on the sidelines, and cash to be put to work. There will continue to be strong demand on the corporate side.