Episode
Why Warsh May Let Markets Tough It Out
- Podcast
- Thoughts on the Market
- Published
- Jun 22, 2026
- Duration seconds
- 291
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Summary
Our CIO and Chief U.S. Equity Strategist Mike Wilson reacts to Kevin Warsh’s first Fed meeting, explaining why the new chair’s credibility may require letting markets experience some short-term pain. Read more insights from Morgan Stanley. ----- Transcript ----- Welcome to Thoughts on the Market. I'm Mike Wilson, Morgan Stanley’s CIO and Chief U.S. Equity Strategist. Today on the podcast I’ll be discussing my views on the New Fed Chair and how to interpret his FOMC meeting last week. It's Monday, June 22nd at 11:30 am in New York. So, let’s get after it. I want to spend today on what I think was one of the more important market events of the year so far. Kevin Warsh’s first Fed meeting as the Chair. Specifically, he is trying to fortify credibility at a very delicate moment. The economy is stronger than many expected. Inflation is still running above target. And markets have become accustomed to central banks telling them exactly what to think. Back in February, when Warsh was nominated, I argued that this was the right choice if the goal was to lift market credibility. At that time, precious metals were rising parabolically. To me that was a bad signal that markets were questioning whether policy makers could really run the economy hot without creating a disorderly move in the dollar or a broader inflation problem. Since Warsh’s nomination, the S&P 500-to-gold ratio is up close to 40 percent, and I view that as a powerful vote of confidence from the markets. It suggests investors are giving Warsh the benefit of the doubt – that he can shake up the Fed, reduce reliance on the balance sheet as a policy tool, and solidify discipline that gives the administration some breathing room. But here’s the catch. Enhancing credibility is not always painl…