Episode summary
Trump Administration Prepares for Warsh Fed Chair Nod; Government Shutdown Averted | Bloomberg...
Bloomberg Daybreak: US Edition
· · 26 min
Summary
Markets opened with a sharp reaction to reports that Kevin Warsh is the Trump administration’s likely pick for Federal Reserve chair. The host said investors read Warsh as less supportive of deep rate cuts, with Treasury yields rising, the dollar firmer and gold weaker. A guest later argued Warsh’s Fed experience and long-standing criticism of the central bank make him attractive to Trump, though Senate confirmation could be difficult if key Republicans refuse to move ahead while disputes with the Fed remain unresolved.
The show also covered Washington’s attempt to avert a government shutdown. Trump said a tentative deal was in place with Senate Democrats, but House leaders said there may not be enough time to pass it before funding expires. The agreement would temporarily fund DHS while Democrats seek limits on immigration raids and more oversight measures. The administration is simultaneously scaling back the federal presence in Minneapolis after tensions over immigration enforcement.
On markets, Apple’s record quarter was met with a muted stock reaction, while Microsoft’s plunge after AI spending and slower cloud growth underscored investor scrutiny of Big Tech capex. The program also noted reports that SpaceX is weighing a merger with Tesla or xAI ahead of a planned IPO.
Key takeaways
- The host said traders cut easing bets after reports that Warsh is Trump’s Fed pick, pushing Treasury yields higher and gold lower.
- A guest said Warsh could reshape the Fed because he opposes mission creep, favors a smaller balance sheet and wants less bank supervision.
- The host said a shutdown deal is still in doubt because House leaders lack time and Senator Lindsey Graham has placed a hold on the bill.
- The host said Apple’s blowout quarter did not move the stock much, while Microsoft’s 10% drop showed how sharply investors are punishing weak AI monetization signals.
- A guest said a SpaceX merger with Tesla or xAI would be “very bullish” for Tesla and could fit Musk’s strategy ahead of a June IPO.
Notable quotes
“Well, Kevin Worsh is the Trump administration's pick to be the next chairman of the Federal Reserve”
“stocks fell, the Treasury yields, they pushed higher, the dollar rose, gold slid, traders dialing back bets on policy easing under Worsh”
“He thinks the Fed could probably give up bank supervision”
“The agreement would fund the Department of Homeland Security for 2 weeks to allow time to negotiate on Democrats demands”
“SpaceX is considering a potential merger with Musk's Tesla or his artificial intelligence firm XAI”
How the episode opens
Bloomberg Audio Studios, podcasts, radio, news. — Good morning. I'm Nathan Hager — And I'm Karen Moscow. Here are the stories we're following today. — Karen, we begin with President Donald Trump's choice to lead the Federal Reserve. The announcement is expected later this morning. Bloomberg's John Tucker joins us with the very latest. John, what do we know? Well, Kevin Worsh is the Trump administration's pick to be the next chairman of the Federal Reserve. At least according to our sources, Nathan, without mentioning Worsh, the president last night said an announcement would come this morning.
Just an outstanding person and a person that uh won't be too surprising to people.
The 55-year-old war served on the Central Bank's board of governors from 2006 to 2011 and has advised Trump on economic policy. This would mark a comeback for Worse, whom the president passed over for the job back in 2017 when he selected Jerome Powell. Now, for the moment, investors see Worse as less supportive of deep interest rate cuts.
In the past, he's warned of inflation risk and also delivered more recent calls for the Fed to reduce its balance sheet. And the confirmation that's not uh necessarily going to be smooth sailing. A key senator, Tom Tillis, the North Carolina Republican who sits on the banking committee, has vowed to block any of the president's Fed nominees until the Justice Department resolves an investigation into the central bank's renovation of its Washington headquarters.
In New York, I'm John Tucker, Bloomberg Radio.
Well, John, what's the market reaction to our reporting? — This is the uh almost the knee-jerk reaction, Nathan. As a result, uh, stocks fell, the Treasury yields, they pushed higher, the dollar rose, gold slid, traders dialing back bets on policy easing under Worsh.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- fed chair nomination
- government shutdown talks
- immigration raids limits
- border enforcement staffing reduction
- trump administration nominees
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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