Episode summary
Kevin Warsh's First FOMC Meeting as Fed Chair | Bloomberg Surveillance
Bloomberg Surveillance
· · Hosts: Tom Keene, Paul Sweeney, Lisa Mateo, Michael Barr · Guests: Robert Kaplan, Mike Wilson, Greg Peters, Raj Goyle
Summary
The episode centered on the first FOMC meeting under Kevin Warsh, with the guests framing it as a credibility test for the new Fed chair. One guest argued Warsh is likely to stress patience, robust internal debate, and less reliance on dot plots or forward prognostication, while still acknowledging that inflation remains sticky and that the Fed must be prepared to act if price pressures persist. Another theme was that today’s inflation story is being shaped by a capex-heavy AI buildout, labor constraints from tariffs and weaker immigration, and oil prices that have eased enough to support a wait-and-see approach.
The market discussion was also dominated by AI. One guest said the current cycle still resembles a classic capital-spending boom: funding remains available, companies are being rewarded for higher capex, and investors should expect both malinvestment and periodic 30% to 50% drawdowns without the long cycle necessarily ending. A credit-focused guest was more cautious on broad credit valuations, calling spreads rich at the index level, but said dispersion is creating unusually strong opportunities in structured finance and idiosyncratic names tied to the AI buildout.
The final segment shifted to politics and public finance, as a New York State Comptroller candidate criticized the current office for being too passive on investor protection, especially around SpaceX, data centers, utility bills, and pension-fund governance. He argued that state oversight should be more aggressive about affordability, utility costs, and index-fund exposure to large private companies.
Key takeaways
- A guest said Warsh’s first Fed meeting is likely to emphasize patience, internal debate, and less forecasting, even while acknowledging sticky inflation.
- The inflation backdrop was described as more structural than cyclical, driven by AI-related capex, labor constraints, and still-elevated resource demand.
- One analyst said the AI capex boom is still intact because capital markets continue to fund it, but investors should expect sharp cyclical resets.
- A credit strategist said broad credit looks expensive, with spreads near the richest decile of the last 25 years, though dispersion is creating selective opportunities.
- The New York State Comptroller candidate argued that public pension oversight should be more active on SpaceX, utility costs, and investor protection.
- The episode’s market consensus was that liquidity, not earnings alone, is becoming a key driver of volatility in 2026.
Notable quotes
“he wants to be patient to see the disinflationary impacts and he's going to have to though acknowledge that we're in an inflationary u sticky inflationary period right now”
“the capex part of AI, the infrastructure build, is going to make inflation stickier”
“There's 100% chance there's going to be malinvestment here”
“spreads are just calling the richest decile that we've seen over the past you know 25 years or so”
How the episode opens
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It is Fed Day, folks. Uh it is the first uh Fed meeting for Mr. Walsh, Kevin Walsh, the new chair of the Fed.
We want to break down kind of what we can expect later on today. We have Bloomberg's Michael McKe. He's down in DC.
He'll bring all the reporting to us this afternoon. Robert Kaplan right now joins us. He's the vice chairman at Goldman Sachs.
He's a former president of the Dallas Fed. Robert, thank you so much for joining us here. What do you expect to hear from Mr.
Walsh today? Uh, I think today it'll be a little bit of a uh a philosophical day and that he's going to um he's going to have to talk about what happened in the meeting. I would think he's gonna he's going to give his take on what the current situation is in the economy with employment inflation and I would think he's going to make a few points about his approach, his philosophical approach uh u in that um for example uh he's going to want to see robust debate and disagreement inside the room.
He's going to want to see less predicting by the Fed, less prognostication. He's gonna want to see though patience and that uh over the horizon some of the structural drivers AI adoption uh Chinese over capacity you know he wants to be patient to see the disinflationary impacts and he's going to have to though acknowledge that we're in an inflationary u sticky inflationary period right now.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- fed chair transition
- fomc meeting
- us equity strategy
- bond market moves
- state financial oversight
Companies and tickers mentioned
- GS
- MS
- Goldman Sachs
- Morgan Stanley
- PGIM Credit
Watch the episode
Watch “Kevin Warsh's First FOMC Meeting as Fed Chair | Bloomberg Surveillance” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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