00:00Welcome, everyone. My guest today is lead analyst Logan Motoshami to talk about Trump's pick of
00:15Kevin Warsh for the next Fed chair and what that means for mortgage rates. As always, I want to
00:20thank our sponsor, Trust in Will, for making this episode possible. Logan, welcome back to this
00:25special episode of the Housing War Daily podcast, especially with this big announcement. And I know
00:31that you're sick, too. So thank you for joining us. Kevin Warsh 2.0. That's kind of what I'm saying.
00:37It's last night, we had a lot of drama because the 10 year yield was at 423. And then it shot up higher,
00:44went up to 428. Now it's back down to 425. So only a little bit higher after the news.
00:49Just for everyone, Kevin Warsh is one of the more hawkish Fed people this century. So for all
00:59of us that have known Kevin, this would literally be the most opposite pick from what Trump wants. Like
01:06you cannot get any more to the other side of what Trump wants today. But Kevin Warsh 2.0, and everyone
01:15has to realize, Kevin's family and Trump's family have known each other for decades. So that's not,
01:20he married himself into the Estee Lauder family. So the ties go all the way back to Wharton.
01:27Kevin Warsh, as soon as Trump was in power, has changed his tune 100%. So I am, I understand with
01:35all my financial friends who are listening to this, I totally get it. I was hashtag anyone but Warsh.
01:41There's a lot of things that we and the financial community do not think he's, you know, would be a
01:47legit person. But as long as Trump is president, he will do what Trump wants. So 2.0, Kevin Warsh will be
02:01more dovish, will sound more dovish. We'll talk about AI productivity. We'll try to get the housing
02:07market back. So it's the same premise as before. Whoever the next Fed chairman is, is going to be
02:11more dovish in that sense. When Trump leaves, it'll be a whole different story. He'll go back to old
02:18Kevin. What is the term, how long do they serve as Fed chair? Oh, I mean, they could go for a while.
02:25It really depends on how, you know, whoever the president wants to reappoint him, you know, so he
02:31could be here for a long time. So that's, we'll cross that bridge when Trump leaves. And that,
02:38I don't want to lose focus on to what it is this year, this week. As always, I'm not a bond
02:47vigilante guy that thinks that the bond market is going to always show Fed policy is less strict. Now,
02:54we have a lot of rate cuts in the system. The spreads are better. So in regards to the housing
02:59market, which this audience is for, Kevin Warsh 2.0 will try to make everything better for Trump.
03:09So I know it's just really weird, you know, for me to say this, but this is just the world we operate
03:16in. And in no other crazy, bizarro circumstance would Kevin Warsh be even nominated for something like
03:23this, but his ties with Trump and the way he presented himself and his change of tune on a
03:31lot of things. So we'll take it from there. But there's a lot of like, you know, going back in
03:39time and reading what he's said during the great financial crisis and how wrong he's been on a lot
03:44of things. And he hates the Fed and he bashes them and nobody, the Fed likes, you know, so,
03:48so this was obviously not a, you know, uh, uh, what I talked about before that Trump might be waiting
03:55for, um, the Supreme court to see if, you know, he could fire governors. Um, this is a more dovish
04:05Warsh for now. And that's how we should all look at it. And we'll take it from there.
04:10That's really helpful because everything I saw this morning was like, why, why this pick? Because
04:15we all know that, uh, Trump's whole goal here is to get mortgage rates lower to do that. He needs
04:21interest rates lower to do that. He needs a Fed governor, a Fed chairman who's going to listen
04:25to him on this, or at least that's what he thinks. So, um, I think that that's, that's why people
04:30were so confused. It's like, we know what the, what the goal is. And this guy doesn't seem like he
04:34would be fitting that goal. But to your point, he's like, he has already pledged that or he wouldn't
04:39be picked. Yeah. I mean, he, he would not be, and we have to always remember the, the market is
04:46pricing in as much as neutral policy already. You know, again, it's, it's really hard for the 10 year
04:54yield to go below three 80 with neutral policy. Um, if the labor data gets better, you know, this is one
05:01of the reasons why I had four 40 and four 60 on the tech on the 10 year yield on the upside. If job
05:06market re-accelerates and wages go up and unemployment goes down, but for now, all this
05:13is, is you're going to have a new Fed chairman. That's going to be dovish where Jerome Powell
05:20wasn't, um, in that life. So, uh, there's going to be a lot of stories about this today, tomorrow
05:27and going out. But as long as everyone understands, this is Kevin Walsh 2.0. And it pains me to say
05:34this, that he's going to do what Trump wants. And, um, we probably don't have to worry about the old
05:42Kevin Walsh, even up to mid 2024, uh, uh, out there. And if all of us kind of know the financial
05:49community that he's got ties with Trump's family. So this is just kind of, you know, loyalty pick,
05:55as we've always said, uh, uh, out there and, uh, uh, and the Fed pressers will be much different,
06:02uh, going out in the future once, uh, Jerome Powell is gone.
06:06So of course, uh, Walsh still has to get confirmed by the Senate and, you know, several senators,
06:11even a Republican have said, Hey, they're going to hold that up. As long as the DOJ still has an
06:16investigation into a still subpoenaing, uh, the federal reserve and Jerome Powell, but that could,
06:21that could end tomorrow. If, uh, if the white house wants to do that, he could just,
06:26all Trump has to do is say one word and that, that investigation will go away. So, uh, so this is
06:32just, uh, a lot of this is theater out here. And, um, this is the world we live in. You know, I don't,
06:40uh, uh, uh, have to really understand everything. I just have to be able to operate in it. And, uh,
06:46we're operating with kind of new rules in this and we just got to go with it. But, uh, I, I,
06:52I have all people know the old Kevin Walsh would not be in this position with Trump, unless he made
06:59a pledge, a loyalty pledge to Trump. And as 2.0, Kevin Walsh will be much different than
07:05his historical background. I mean, everyone's going back and reading all the things he's said
07:10and done and people are scratching their heads, but I get it. But you have to understand this is
07:15not that guy. That guy will come back at some point, uh, in the future. But for now, as long
07:22as Trump is president, he'll do what he wants. Okay. So, um, 10 year old immediate reaction,
07:30as you said, was to go, go higher. It's moderated a little bit. Of course, Trump wants to, you know,
07:36see massive rate cuts, um, to the fed funds rate. That's not going to happen, right? It just because
07:42he has a new, uh, president once Powell leaves, that doesn't mean that that's going to happen.
07:47But in the short term, what do you think the 10 year old does? 10 year old just stays in its channel.
07:53I mean, it's just, you know, the nothing really, nothing really check. I mean, I, I don't change my
08:00view at all with a wash pick or on your, on your, uh, mortgage rate forecast. Yeah. Or Waller or
08:06anything. All, I mean, the fed chairman cannot unilaterally do anything, but there'll be more
08:13of a duffish theme. So when we do these live events now in 2026, I think we're 15 of them already. Um,
08:21this'll be a more duffish sounding fed presser, uh, out there. So in that context, uh, uh, it's a
08:29positive, right? You're not going to have Jerome Powell saying this or that you're, you're going
08:34to have a different kind of fed chairman. The interesting aspect of Trump, Trump always talks
08:39about, he wants like the lowest, we're like, we're the wealthiest country. We should have the
08:43lowest rates. That's not how the fed funds rate works. You know, a home buyer that has a seven 60
08:49FICO score and 50% down. Yeah. He'll get the lowest rate in the market. I could give it to him, but
08:54it's really hard again, going back all the way to 2022 to get under neutral policy, you need the
09:02labor market to break. Now, one thing that is going to be more apparent now, if the labor data gets
09:08weaker, Kevin Warsh, Trump and everyone will full blitz the Beth hammocks and the Lori Logans, uh,
09:17those types of people that are, you know, wanting to stay, no more rate cuts, possibly hike rates,
09:24stuff like that. So, so I, I know it's confusing and you know, we, we, we talked about this on
09:30Instagram live. This is, this is a very odd choice, but one of the things I've said is hypothetically,
09:35if the bond market goes against Warsh and that's a big if, but if it does, let's say the 10 year
09:43yield goes to 445, 455 on its own, without any data warranting it. I do believe Warsh will just
09:50withdraw himself out here from the procedures. As long as Powell is there, uh, the legal ramification
09:57of just withdrawing yourself can, can happen. So, so we'll cross that bridge if that ever gets there,
10:04but for now, kind of just as crazy as the sound, just think of this as a dovish, more dovish fed
10:11that will do Trump's kind of bidding and we'll just take it from there. Uh, uh, and, um, kind of
10:20don't get into the real crazy talks that, you know, now this is, you know, the dollar is really
10:26going to collapse now because the fed has been bought off or stuff like that. Just always remember
10:31the economic data runs a show there. All the fed is doing is trying to get to neutral policy. Uh,
10:37this might make it a little bit easier to get there faster, but it's really hard again,
10:42to get mortgage rates below 5.75% with neutral policy, uh, out there. The spreads are much
10:49better. Now the volatility is not much. I hope everyone could see that with mortgage pricing,
10:53not much is going on. I mean, look at all these crazy, we had these 24 show headlines,
10:58you know, lately. And, um, we had fed meetings, all these things and mortgage pricing has been very,
11:04the ball. When I talk about volatility compressing and things just, you know, not moving as much,
11:10this is it. Uh, so the spreads again have done their job, uh, this year, but, uh, I it's, it's,
11:17it's confusing out there. I totally get it. I mean, some of us, this is all we do in our lives. So
11:22we know where all the players and what they are for normal people, they see all these really hawkish
11:27things that Kevin Warsh has talked about over time. I mean, Kevin Warsh is like a free trader. He hates
11:32tariffs. It's just rates were too, you know, low in 2024. So I get it, but this is the world we
11:39operate and Trump likes loyalty. This is Kevin Warsh 2.0. He does. Okay. Well, I will say
11:46incredible timing for our housing economic summit. My gosh, we could not have better timing. Uh,
11:51that's February 10th. You guys, if you're not signed up, you should be there. We have so much
11:56to talk about and we have gathered the best economists, housing economists in the country there.
12:01It's going to be incredible. Logan, of course, but also Barry Habib, um, tons of amazing speakers,
12:07um, to talk about all of these things. And that's just in like 10 days. So Logan, thanks for jumping
12:12on. Yes. Yes. We're very fruit to this time before everything. And we always said 2026 is going to be
12:17crazy. And we just got a lot of crazy headlines in just the first month. So it is what it is.
12:22All right. We'll talk to you again very soon.
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