We have to talk about Kevin…

Blain’s Morning Porridge Feb 3, 2026 – We have to talk about Kevin… “I would say [Fed Policy] has been in some sense Reverse Robin Hood.”The nomination of Kevin Warsh as next Fed Chair has been rationalised as positive for stability and managing Trump. But will a new name on the desk means certainty will return? Nothing really changed within the Administration – Trump remains Trump and has a massive War Chest to fight the coming bitter Midterms.There was a relieved nodding of heads when Kevin Warsh was announced as Trump’s nominee for the Chair of the Federal Reserve last week. Most Fed watchers immediately spotted the multiple inconsistencies swirling around the appointment – and sought to rationalise them in a positive fashion. Warsh is an inflation hawk highly critical of QE (the manipulation of interest rates), who wants to shrink the Fed balance sheet, while Trump wants a submissive Fed Chair who will ease, ease and ease.The consensus swiftly emerged of how Trump had been “persuaded” to appoint a credible Fed Chair, concluding Warsh has the necessary “people” skills to “manage” Trump’s assaults on the Fed’s independence and the potential damage he can do to America’s financial standing, the dollar and, critically, the Treasury market.Warsh is already squaring the problematic hawk vs dove circle by arguing the massive productivity gains AI is going to create will allow lower rates. (He says he’s focused on Data, but AI gains are, thus far, largely anecdotal.) How is that going to play out if the AI boom fizzles and an Oracle debt crisis triggers a run? (That will be an interesting one for Warsh to explain. Who knew the Fed Chair’s primary function would be to manage the President’s monetary policy demands? That authoritarianism 101.)You can read the Morning Porridge by subscribing on ⁠www.morningporridge.com⁠, and have it delivered fresh to your inbox every morning!