Omalley Wealth Management Group, Llc

06/23/2026

First Trust
Monday Morning Outlook
New Leadership, New Direction

Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 6/22/2026

The results of Kevin Warsh’s first official set of meetings on monetary policy as the Chairman of the Federal Reserve were like a breath of fresh air.

It wasn’t so much what he said, as what the Fed did not say, in particular in the official statement at the conclusion of the meetings, which was extremely short and to the point compared to the statements issued in recent decades under the leadership of Ben Bernanke, Janet Yellen, and Jerome Powell. Warsh’s philosophy on Fed communication seems to more closely resemble that of former long-time Chairman Alan Greenspan, who unfortunately passed away earlier today. Not Greenspan’s elegant and winding prose, but Greenspan’s unwillingness to hint strongly about what the Fed would do next.

Warsh doesn’t like the intense form of “forward guidance” that’s evolved at the Fed, where it treats the markets and the economy like some sort of young child that is always on the verge of a tantrum and needs to be placated, as if every shift must be communicated well ahead of time, and the Fed needs to ask for permission (“Please clean-up your room later today, is that OK?”) Instead, Warsh wants the Fed to make it clear it will pursue its definition of price stability, which we believe is the 2% inflation goal, and that’s that.

Warsh says he wants the financial markets to think about what’s going on in the economy, not how the Fed will react to what’s going on in the economy, which ought to be a secondary issue if the Fed is focused on price stability. Signaling his commitment to a new strategy, Warsh was the one “missing dot” from the dot plot that came out of the last week’s meeting, withholding his projection of the path of short-term interest rates in the years ahead, while all other Fed decisionmakers continued to participate.

We are also pleased that Warsh is having the Fed take a much closer look at the size of its balance sheet and the shift from the “scarce reserve” system the central bank used for many decades to a system of “ample reserves.” Don’t expect an imminent shift back to a scarce reserves system, but at least the Fed has now taken a first step in that direction.

Although Warsh was on the Fed as a regular member back during the Global Financial Crisis and supported the original version of Quantitative Easing at the time, he opposed later rounds of QE and has had some second thoughts about the policy tool. Hopefully he will recognize that it was not QE that saved the economy in 2008-09 or during COVID.

One way to tell how serious Warsh will be about changes and reforms at the Fed is to watch things other than monetary policy. The Fed has become too large an institution. It’s not just about its enormous balance sheet, it’s also about personnel. The Federal Reserve system employs about 25,000 workers. Yes, that includes bank regulators, check clearers, night watchmen, currency distribution systems, and researchers. But are all those researchers really focused on issues related to banking or monetary policy?

The Chicago Fed, in particular, seems gung-ho for a role in community development, including on issues of housing affordability. But every dollar that’s spent on this project, and others similar, is a dollar that instead would have gone to the US Treasury, reducing the need for future tax revenue. Ultimately, these are taxpayer funds being used to do what Fed officials want, without an appropriation by Congress.

One big problem is that former Chairman Jerome Powell is still a regular member of the Fed’s Board of Governors and we think he is unlikely to leave until at least late this year. While many say he’s sticking around due to potential legal issues involving cost overruns at the Fed, it might also be to see the outcome of the mid-term elections this Fall, because those elections may determine who Trump can appoint as a successor. If so, this is a purely political decision, which is exactly what Powell in the past has said he’s against.

06/23/2026

Proud to help raise awareness (and funds) for Unravel Iowa in their fight against pediatric cancer. Don't just be sorry, be active!

Huge thanks to Shane OMalley and his fellow riders from the local clubs that support Sons Of Silence Central 10wa, for an incredible Father's Day weekend fundraising ride!

34 motorcycles and 50+ riders covered 200 miles through Waukee, Winterset, Creston, Osceola, and Indianola, and they raised $1,500 for Unravel Iowa!!

05/04/2026

https://www.ftportfolios.com/Commentary/EconomicResearch/2026/5/4/chairman-in-name-only

Monday Morning Outlook
Chairman in Name Only

Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 5/4/2026

Kevin Warsh wants to make some big shifts in monetary policy at the Fed. Unfortunately, unless and until soon-to-be former Chairman Jerome Powell steps down from his regular seat on the Federal Reserve Board, Warsh will be Chairman in Name Only.

One new policy Warsh wants is to shorten up the maturity structure of the Fed’s assets, getting it out of the business of holding longer-term securities. Another is to shift away from holding mortgage-backed securities and focus on Treasury securities only.

Even more important, Warsh wants the Fed to unwind Quantitative Easing, a policy he originally supported back in 2008-09 in the midst of the so-called Global Financial Crisis, but apparently later came to oppose – or at least oppose to the extent the Fed has made it a permanent feature of monetary policy rather than a temporary measure.

To successfully unwind QE it’s likely the Fed would also have to end the policy of paying banks interest on reserves, which means a Warsh chairmanship holds out the hope of eventually taking us back to a monetary regime where policy is implemented through scarce reserves rather than abundant reserves.

The problem is that even though Warsh will become Chairman soon, Powell has announced he will keep his board seat for at least the time being. Reports suggest he is only doing so temporarily but will depart that seat – which would open-up another position for President Trump to fill – as soon as the Administration commits with “finality and transparency” to ending the Justice Department’s investigation of the Fed.

But as long as Powell stays it will be tough for Warsh to shift policy at the Fed, either the long-term policies we outlined above or even shifts to short-term interest rates. The Fed bank presidents would still be the old Powell-approved presidents and likely with him on policy, not with Warsh. And the Powell faction at the Fed would still have four votes on the Board versus only three for Warsh.

Which brings us to another reason Powell may end up trying to stick around longer, maybe even all the way until January 31, 2028, when his term as a board member fully runs out. If Powell leaves before then and Trump replaces him on the board, the Trump-appointed board majority could then threaten to fire Fed bank presidents who oppose them. Yes, the courts have made it tough for Trump himself to fire board member Lisa Cook, but the courts would have a tougher time protecting bank presidents from a board majority.

In the meantime, Warsh, as official chairman, could try to speed Powell’s departure by making his life at the Fed uncomfortable: maybe take away his parking space and staff plus put his office in the basement. But the decision to leave would still be Powell’s until January 2028.

Based on Powell’s statements about trying to protect Fed “independence” from politics, preventing Trump from getting a board majority may be an ulterior motive for Powell to stay, which means the policy shifts supported by Warsh could be on the back burner for some time to come.

04/22/2026

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