By Jon Faust   There is much to unpack in Kevin Warsh’s choices of people to lead his 5 task forces, but one name on the inflation frameworks task force jumped off the page and warrants much more attention than it seems to be getting. William White, like the CFE’s own Bob Barbera, is a long-time […]

Robert J. Barbera Turns out that May’s U.S. trade deficit soared, producing a plunge for estimates of U.S. real GDP growth for 2026:Q2.  If those estimates prove correct, they will raise serious questions about the productivity boom that many have claimed started last year. We have long held that the surging gains for U.S. output […]

By Jon Faust.   After sifting through the gleeful bravado and slogans (“inflation is a choice”) of Kevin Warsh’s first press conference, we are left with more questions than answers.  Literally.  He recycled 2 answers repeatedly in response to several questions about policy: to paraphrase, “Sorry, I don’t do forward guidance,” and “I’ve got a task […]

By Jon Faust.   Kevin Warsh has made no secret of his desire to remain silent about where monetary policy is headed.  Indeed, this is the main thing about the day-to-day conduct of policy that he has been transparent about.  So those of us interested in the likely course of policy may be left to the […]

By Jon Faust On Friday, Kevin Warsh will bring two agendas to the Fed, regime change and lowering interest rates.  To be fair, Trump assigned that second one, and unless the outlook changes materially, the FOMC won’t be lowering interest rates any time soon.  As I argued in my previous post, Warsh will likely go […]

by Bob Barbera Consider the chart, directly below. It depicts quarterly readings on consumer sentiment and the equity risk premium. In general, the happier are consumers, the smaller the premium investors get for bearing risk. Conversely, when despair is in the air, stocks are cheap, and accordingly, the risk premium is high. Except for the […]

By Jon Faust With all the news about the Gulf last week you may have missed some remarkable Fed news.  Going against Trump’s demand for lower interest rates, Treasury Secretary Bessent said that Fed rate cuts should come eventually but, “if they want to wait for some clarity, I understand that.”  Fed Governor Stephen Miran […]

By Bob Barbera and Jon Faust Fed Chair William McChesney Martin famously said that the Fed’s job was to remove the punchbowl just when the party was warming up.  That always struck us as astute to a point, but following that advice too strictly would surely ruin what might otherwise be some wonderful parties.  Of […]

By Jon Faust In light of recent events and today’s front pages, I have an update to something I said last April: “Trump seems to want all the significant sources of authority in this world to bend to his whims: courts, elite universities, foreigners—both friend and foe. It strikes me as quite unlikely that the […]

By Jon Faust This is the second in a series of posts on my (perhaps quixotic) quest to clarify the Fed’s balance sheet function. The first post is QE Eternity? The Fed’s currently conducts monetary policy in what is called an ample reserves regime in which banks hold roughly $3 trillion in reserves.  The banks […]

By Jon Faust The Fed’s balance sheet is much in the news these days and will probably remain so for a considerable period.  Perhaps the most insightful commentary I’ve seen on this topic came from Treasury Secretary Scott Bessent who recently said, “Now there’s a balance sheet function which I can tell you no one […]

By Jon Faust For the last several months, many analysts (including me) have warned about the growing threat to Fed independence.  But some people that I respect have pushed back. Bond market vigilantes, they assert, will protect us–these vigilantes are market players who cause sufficient turmoil in financial markets in the face of bad monetary […]