- 2 hours ago
On today’s special episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about Trump’s pick of Kevin Warsh for the next Fed chair and what that means for mortgage rates.
Related to this episode:
Trump nominates Kevin Warsh to replace Powell as Fed chair
https://www.housingwire.com/articles/trump-nominates-kevin-warsh-to-replace-powell-as-fed-chair/
The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate.
Related to this episode:
Trump nominates Kevin Warsh to replace Powell as Fed chair
https://www.housingwire.com/articles/trump-nominates-kevin-warsh-to-replace-powell-as-fed-chair/
The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate.
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NewsTranscript
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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