Kevin Warsh sat in front of Congress for two days and said words. The markets listened. Analysts called it a credibility test. He passed by not f*cking up the words.
This counts as news because the bar for Federal Reserve chairmen now sits at "didn't drool on the microphone." Warsh avoided major stumbles, which in Fed chairman terms means he remembered his own name and the name of the building he works in. The House nodded. The Senate nodded. Everyone agreed that inflation exists and should probably be dealt with at some point, maybe, if it's not too much trouble.
The real test comes next. Warsh has to prove his commitment to price stability, which is Fed-speak for "make number go down without making other number go down too much." Retail traders are currently loading up on leveraged ETFs based on their interpretation of Warsh's tie color during the testimony. Blue tie means dovish. Red tie means hawkish. Purple tie means they're about to lose their mortgage payment on a 0DTE SPY call.
Nobody asked Warsh about his actual plan. They asked if he was committed to having a plan. He said yes. This satisfied everyone. The hearing ended. Warsh left. Congress moved on to naming a post office.
Price stability will now be determined by whether Warsh raises rates, lowers rates, or stares at rates until they feel uncomfortable and adjust themselves. Technical analysis suggests none of this matters because the 50-day moving average crossed the 200-day moving average last Tuesday, which means either hyperinflation or deflation or possibly a mild summer.
Warsh faces a rapid test. Not of his intellect or his economic framework, but of whether he can keep talking without saying anything actionable while markets pretend his syntax contains hidden alpha.
Photo by Marek Studzinski on Unsplash
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