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  • Trump Pushes for Lower Mortgage Rates, but Fed Pick Kevin Warsh Could Tighten Policy

    Trump Pushes for Lower Mortgage Rates, but Fed Pick Kevin Warsh Could Tighten Policy

    WASHINGTON, D.C. — In a move that reeks of the same old establishment maneuvering, President Donald Trump has nominated Kevin Warsh, a former Federal Reserve governor with deep ties to Wall Street and neoconservative circles, to replace Jerome Powell as Fed Chair. Trump, ever the populist showman, has been pounding the drum for lower mortgage rates to ease the burden on everyday Americans squeezed by skyrocketing housing costs. Yet, his pick—Warsh, a vocal critic of the Fed’s bloated $6.6 trillion balance sheet—could very well steer policy in the opposite direction, tightening the screws on borrowers and inflating risks for the broader economy. This nomination, announced Friday amid Trump’s ongoing feud with Powell, highlights the president’s contradictory impulses: championing the working class while cozying up to financial elites whose agendas often prioritize globalist interests over Main Street relief.

    Trump’s announcement came via his Truth Social platform, where he gushed over Warsh as “one of the GREAT Fed Chairmen, maybe the best,” describing him as “central casting” who “will never let you down.” It’s classic Trump hyperbole, but beneath the bluster lies a potential policy clash. The president has made housing affordability a cornerstone of his economic agenda, repeatedly vowing to slash interest rates to make homeownership accessible again. “We can drop interest rates to a level, and that’s one thing we do want to do,” Trump declared last month. “That’s natural. That’s good for everybody.” Mortgage rates, which hovered above 7% in early 2025, have become a political lightning rod, locking out first-time buyers and fueling resentment toward the elite-driven housing bubble.

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    But Warsh, with his history of hawkish stances on inflation and skepticism toward easy money policies, isn’t the dovish ally Trump might imagine. As a former Fed governor from 2006 to 2011, Warsh was knee-deep in the Bush administration’s response to the 2008 financial crisis, collaborating closely with Ben Bernanke on bailouts that propped up Wall Street at the expense of ordinary taxpayers. Critics, including those wary of neoconservative overreach, argue that era’s interventions—rooted in endless wars and deficit spending—set the stage for today’s economic distortions. Warsh has lambasted the Fed’s quantitative easing programs, which ballooned the balance sheet from $900 billion in 2008 to a peak of $9 trillion by 2022, before a modest rollback to $6.6 trillion today. In an April speech, he warned that such expansions “encroach further on other macroeconomic domains,” leading to “more debt accumulated… more capital misallocated… risks of future shocks magnified.”

    Shrinking that balance sheet—holding $4.3 trillion in Treasuries and $2 trillion in mortgage-backed securities—could directly counteract Trump’s rate-cutting dreams. By unloading these assets or letting them mature without reinvestment, the Fed would flood the market with supply, pushing up long-term yields and, consequently, mortgage rates. As Yale professor and former Fed official Bill English noted, “If all he does is move to a smaller Fed balance sheet, it’s hard to see how that would be consistent with lower mortgage rates, and that creates some tension with the president.” This isn’t just academic jargon; it’s a recipe for higher borrowing costs that could exacerbate the housing crisis Trump claims to fight.

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    Market reactions were telling: The dollar surged while gold and silver prices tumbled, signaling traders’ bets against aggressive rate cuts under Warsh. Investors see him as a bulwark against political meddling, but skeptics view this as code for preserving the status quo favored by global financial powers. Warsh’s recent pivot toward openness on rate cuts—after criticizing the Fed’s September 2024 reduction—smacks of opportunism, aligning with Trump’s demands while masking his deeper reservations. As Harvard economist Jason Furman quipped, Warsh’s desire to trim the balance sheet might “collide with reality,” leading to gradual changes at best. Yet, in a Trump administration eager to project economic wins, such caution could frustrate the president’s base.

    Warsh’s nomination caps a tumultuous saga with Powell, whom Trump appointed in his first term but later branded a “moron” for resisting deeper cuts. The feud escalated when the Department of Justice launched criminal investigations into Powell, an unprecedented assault on Fed independence that has alarmed even some Republicans. Senator Thom Tillis vowed not to confirm any nominee until the probe ends, calling it essential to protect the central bank from “political interference or legal intimidation.” Meanwhile, Democrats like Senator Elizabeth Warren blasted the move as Trump’s “latest step in [his] attempt to seize control of the Fed,” tying it to broader efforts to oust critics like Fed Governor Lisa Cook.

    But let’s peel back the layers on Warsh himself. At 55, he’s a product of the elite circuit: A Morgan Stanley mergers-and-acquisitions banker turned Bush White House economic adviser, then the youngest Fed governor ever at 35. Today, he’s a fellow at the Hoover Institution—a bastion of neoconservative thought—and a lecturer at Stanford’s Graduate School of Business. His board seats at UPS and affiliations with groups like the Group of Thirty and the Congressional Budget Office’s Panel of Economic Advisors scream establishment insider. More intriguingly, Warsh’s personal connections raise eyebrows among those questioning undue influences in U.S. policy.

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    Warsh is married to Jane Lauder, granddaughter of cosmetics mogul Estée Lauder, whose Eastern European Jewish immigrant roots built a billion-dollar empire. Warsh himself identifies as Jewish, and his father-in-law, Ronald Lauder—president of the World Jewish Congress and a fervent Zionist—has been a longtime Trump confidant since their Wharton School days. Lauder’s influence extends beyond cosmetics; he’s pushed Trump on issues like acquiring Greenland, where he has investments in development and bottled water. The World Jewish Congress, under Lauder, aggressively advocates for Israeli interests, often lobbying U.S. policymakers to prioritize Zionism amid global conflicts. Critics argue this network exemplifies how a small cadre of influential Jewish figures—tied to finance, media, and politics—wields outsized power, sometimes at the expense of American sovereignty. Warsh’s ascent, facilitated by these ties, fuels suspicions that Fed policy could subtly favor internationalist agendas over domestic relief, echoing neoconservative priorities that have dragged the U.S. into endless Middle East entanglements.

    This isn’t to say Warsh lacks credentials; he was a key communicator during the 2008 crisis, bridging policymakers and markets. But his “hawkish” reputation—favoring tighter policy to combat inflation—clashes with Trump’s push for stimulus. Some economists speculate Warsh might invoke offbeat theories, like a productivity boom from AI justifying cuts, or even the fiscal theory of the price level, where lower rates reduce deficits and curb inflation. Yet, with labor force growth stalled by immigration crackdowns and aging demographics, the standard model warns against it. As one analyst put it, Warsh is “hamstrung” on multiple fronts, including the balance sheet.

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    Trump edged out other contenders like Fed Governor Christopher Waller, BlackRock’s Rick Rieder, and adviser Kevin Hassett, reportedly because Warsh signaled willingness to cut rates. In a Fox Business interview last year, Warsh backed easing to boost growth, critiquing the Fed for straying into “political areas” like climate change—areas outside its mandate, he argued. But his past objections to low rates during crises, including downplaying unemployment in 2008 as it neared 10%, paint him as a “chameleon,” per policy expert Skanda Amarnath. “His track record speaks to someone who is pretty partisan and political,” Amarnath said, noting Warsh’s shifts depending on who’s in power.

    If confirmed—facing a Senate grilling over Trump’s Fed assaults—Warsh could assume the role by mid-May, when Powell’s term expires. Speculation swirls on whether Powell would step down early or dig in. Economists like Robert Rogowsky call Warsh a “solid pick” but warn of his potential as a “political opportunist”—hawk under Democrats, dove for Trump. Rachel Ziemba of the Center for a New American Security adds that Trump’s trade wars and immigration policies could stifle growth, making rate cuts ineffective anyway.

    In the end, this nomination underscores the rot in Washington’s financial corridors: A president railing against elites while appointing one with Zionist and neoconservative baggage, potentially sabotaging his own pro-worker promises. Americans deserve a Fed that prioritizes domestic stability over global distortions, not another insider perpetuating the cycle of debt and inequality.

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  • What economists and CEOs are saying about Trump’s tariffs

    What economists and CEOs are saying about Trump’s tariffs

    President Donald Trump’s trade policies are roiling financial markets and escalating recession fears.

    Some executives are using terms such as “disastrous” and “economic nuclear winter” to describe White House plans, unveiled last week, to impose 10 percent levies on all imported goods, as well as higher, country-specific rates on about 60 countries.

    At least one professor praised the idea of tariffs, and one investor, noting the nation’s need to bring down borrowing, called tariffs better than higher taxes. But both of them had qualms with certain aspects of Trump’s plans.

    Here’s what an array of business and economic leaders are saying Trump’s tariffs could mean for the economy.

    Jamie Dimon

    The chief executive of JPMorgan Chase, the nation’s biggest bank, warned Monday that Trump’s tariff policies could be “disastrous in the long run” in his annual shareholder letter. The trade policies will drive up inflation on imported goods and domestic prices, he wrote.

    The damage tariffs could cause to consumer confidence, investments, corporate profits and the U.S. dollar would be “hard to reverse,” and uncertainty over how the trade moves will play out must get resolved quickly, Dimon wrote.

    “Whether or not the menu of tariffs causes a recession remains in question, but it will slow down growth,” he said.

    Dimon’s attitude toward tariffs has evolved as Trump’s plans have become clearer. In January at the World Economic Forum in Davos, Switzerland, Dimon told CNBC that people should “get over it” if tariffs were inflationary but good for national security. In Monday’s shareholder letter, he said that industrial policies such as tariffs “should be done right or not at all.”

    “Economics is the longtime glue, and America First is fine, as long as it doesn’t end up being America alone.”

    Stan Druckenmiller

    The billionaire investor and lifelong Republican, who mentored Treasury Secretary Scott Bessent at George Soros’s hedge fund, affirmed his opposition to Trump’s tariffs in a Sunday post on X: “I do not support tariffs exceeding 10%.”

    In a January interview with CNBC, Druckenmiller said tariffs were the “the lesser of two evils” when compared to an income tax hike. The risks associated with tariffs “in the 10 percent range” were overblown compared to the rewards, he said at the time.

    “Because we have a fiscal problem, we need revenues,” he said. “Tariffs will generate revenues.”

    Oren Cass

    The chief economist at American Compass, a conservative economic think tank, wrote in a New York Times op-ed published Tuesday that Trump’s 10 percent global tariff is the right starting point for a “desperately needed” reordering of the global economic system. Cass equated last week’s “Liberation Day” to D-Day, emphasizing that the World War II campaign was “just the start” of a campaign that was ultimately victorious.

    “With the tariffs, too, success or failure depends on what happens next, and the nation will have to bear real costs while the outcome hangs in the balance,” he wrote. “… But there are simple steps the administration could take now to correct course and move from its embattled beachhead into a sustainable forward position.”

    The administration should scale up its country-specific tariffs more gradually to give markets and trading partners time to adapt, Cass wrote. Trump should also better articulate the concessions he expects from allies and common policies toward China that all trading partners should adopt, he wrote.

    “The president should want to minimize the short- and medium-term harm to businesses and supply chains that must survive disruption if they are to thrive in the long run,” he wrote.

    Aaron Levie

    The chief executive of Box, a cloud company, shared an analysis over the weekend from Wedbush Securities analyst Dan Ives that cautioned that tariffs would set the tech sector back a decade and severely hinder its ability to compete with China.

    “CEOs with large global supply chains can’t be outspoken on this topic publicly because they need to cut deals,” Levie wrote Saturday on X. “But this is the tone of the convos happening right now.”

    In a separate X post on Monday, he emphasized how “the goal posts can just keep moving” when tariff policy hinges upon “funny math.” Economists have overwhelmingly lambasted the formula Trump used to calculate tariff rates for each country as “arbitrary” and “indefensible.”

    “It’s hard to overstate the negative impact of these tariffs if they go through,” Levie wrote in another post. “It will require broad price changes that the market likely won’t bear. That means companies have to reassess every aspect of their business on a dime. The ripple effects of this are vast.”

    Michael Gregory

    The U.S. economy stands to take a “huge hit” from Trump’s trade policies, even if many country-specific rates get renegotiated, the deputy chief economist at BMO Capital Markets told investors Monday. Businesses need to make decisions based on the tariff information they have now, and the impact of the White House’s unsophisticated, uncertain policies create a losing environment for businesses, he said.

    The administration’s tariff calculation was supposed to offset the global effects of tariff and nontariff barriers on U.S. businesses, he said. But the formula was “far from what was intended to be.”

    BMO lowered its forecast for U.S. economic growth and raised its projection for core inflation in response to the trade moves last week, Gregory added.

    “One of the legacies of protectionism is you get sub-performance of the economy, lack of productivity growth and lack of innovation,” Gregory said. “We could be now on the cusp of such a profile.”

    Christopher Tang

    Before Trump unveiled his tariff plans, Tang, a professor at the UCLA Anderson School of Management, published an op-ed in Barron’s emphasizing that reciprocal tariffs could “initiate a transformative shift toward a fairer, universal tariff system” and revitalize U.S. manufacturing. Past U.S. trade and tariff policies were littered with issues and failed to incentivize reshoring, Tang wrote.

    But companies can’t expand their U.S. manufacturing capabilities without more policy clarity from the administration, Tang subsequently wrote Sunday on LinkedIn, after Trump’s announcement. Tang called the Trump plan “comprehensive” but also “fluid and fickle.”

    “Without a long-term clear commitment, firms cannot afford to make billions of dollars in investments on a lurch,” Tang wrote.

    David Ricks

    Trump’s so-called “reciprocal” tariff plans exempted pharmaceuticals imported to the U.S., but the administration’s strategy could still harm drug research and development, the Eli Lilly chief executive said in a Friday interview with the BBC.

    Industry leaders are bracing for pharmaceutical-specific tariffs and should they materialize, Eli Lilly will have to “eat the cost and make trade-offs,” especially in its research, Ricks told the BBC. Most pharmaceutical development happens in the United States, but production is heavily centered in other countries, he said.

    “I think it’s a pivot in U.S. policy and it feels like it’ll be hard to come back from here,” Ricks said.

    Dan Loeb

    The founder of New York-based Third Point echoed concerns from fellow hedge fund managers when he highlighted potential “conceptual” and “practical” errors with the administration’s tariff announcement and calculations in a Saturday post on X.

    “It will be a test of the administration’s judgment versus ideology how they resolve this,” he wrote.

    Elon Musk

    One of Trump’s most ardent supporters and a key member of his administration, the world’s richest man said during a virtual appearance Saturday at an Italian political rally that he wants a “free trade zone” between Europe and the U.S. The comments came the same day Trump’s 10 percent levies on all imports went into effect. “I hope it is agreed that both Europe and the United States should move, ideally, in my view, to a zero tariff situation,” Musk said.

    He also took a shots at one of the main architects of Trump’s tariff policies, fellow White House adviser Peter Navarro, in a post on X over the weekend, saying, “A PhD in Econ from Harvard is a bad thing, not a good thing.”

    Tesla, the source of much of Musk’s wealth, now faces 25 percent tariffs on all auto imports, which the White House implemented Thursday. The electric-vehicle maker’s sales have recently dragged amid growing backlash to Musk’s role within the administration, and tariff pressures have already weighed on competitors such as General Motors and Stellantis.

    Bill Ackman

    The hedge fund billionaire, who endorsed Trump’s 2024 presidential campaign, warned over the weekend that the president’s sweeping tariff plan would cause irreparable damage to the U.S. economy.

    The U.S. is “heading for a self-induced, economic nuclear winter, and we should start hunkering down,” Ackman wrote in a Sunday post on X.