#426 Danielle DiMartino Booth: Warsh Could Slam the Economy Into Recession — Fed Day Reaction

Axel Merk, founder and CIO of Merk Investments, which manages about $2.5 billion, joins Julia ahead of this week’s FOMC meeting. He explains why Fed Chair Kevin Warsh’s goal of “removing a dose of accommodation” means a tightening bias without a sledgehammer. He also explains why gold has fallen during the Iran war: markets treat it as a temporary supply shock that pushes real rates higher. And he describes the decoupling he’s watching for that could free gold from the conflict. Merk, who met with Warsh at the Fed in August, says Warsh has been consistent and is trying to pull the Fed back from micromanaging the economy and from heavy forward guidance. He also describes the institutional pushback Warsh faces. He breaks down the four kinds of gold buyers and sees near-zero odds of a hike this week. He warns that the AI debt binge could eventually force lower rates. And he argues that AI’s massive capital needs are leveling the playing field for gold miners, which he calls some of the cheapest assets out there. Thank you to our partners Augusta Precious Metals — To learn more, visit https://juliabuysgold.com/ or text “Julia" to 35052 Monetary Metals - learn more at https://www.monetary-metals.com/julia/

In this episode of The Wrap with Chris Whalen, Chris calls Treasury Secretary Scott Bessent’s comments on Fannie Mae and Freddie Mac a “pump and dump.” He explains why the GSEs won’t be released during Trump’s term and lays out his own fix: buy back the public common shares and leave the U.S. as the sole shareholder. He breaks down Auction.com data showing foreclosure auctions up 25% from a year ago as COVID-era protections end and housing shifts to a buyer’s market, and he shares his advice for sellers: price to sell. Whalen also covers REIT earnings, United Wholesale Mortgage’s strategy shift and Annaly’s return to book value. He explains why he’s less bullish than his friend Ralph on 10-year Treasuries near 5%, and whether the Fed will hike or hold at next week’s meeting. He says he’s long energy, adding to gold on weakness and cautious on financials as credit problems surface. He closes with the risk he thinks nobody is watching closely enough: an unexpected turn in the Russia-Ukraine war.

Long-time macro investor Jordi Visser, founder of Visser Labs, makes his in-studio debut with a bold message: the only macro force that matters right now is artificial intelligence. He explains why the economy has become far less rate-sensitive since the iPhone launched in 2007, and why Anthropic and OpenAI’s leap from $30 billion to roughly $170 billion in combined annual recurring revenue marks the start of agentic commerce, with personal AI agents managing more of our lives. He lays out his “bank-pocalypse” thesis, where agents and crypto compress bank valuations by moving money to better yields instantly. He also argues that many veteran macro voices are wrong about AI because they don’t use it. Visser traces his own shift from perma-bear to tech optimist, from closing out his book before Lehman in 2008 to a life-changing trip to Silicon Valley’s Singularity University. He makes the bull case for agentic compute, names hacking and government pushback as the biggest risks, and closes with his most contrarian call: crypto, which he sees as a 100-to-1 long shot that could be the best-performing asset of the next year even if the S&P goes nowhere.

David Rosenberg, founder of Rosenberg Research and author of Bear in the Bull Ring, says he has never seen so many imbalances in the economy and markets in his 40-year career. He argues we’re in an AI-driven bubble, now in “extra innings.” Ten stocks make up over 40% of market cap while the median stock is down nearly 20%. The Shiller CAPE has topped 40 and the equity risk premium has turned negative. Beneath roughly 2% GDP growth, he sees an economy held up by AI capex, a falling savings rate and stock-market wealth effects, while hiring stalls and real incomes shrink. Rosenberg warns that Kevin Warsh’s Fed risks a policy mistake by hiking into a supply shock with a flat yield curve. He also flags fading fiscal stimulus, midterm gridlock and canceled data center projects as headwinds that put recession odds above 50-50 for 2027. His prescription is to de-risk without going to zero equities: shift toward Treasuries (two-year and 10-year notes), defensive sectors like utilities, healthcare and REITs, gold, and some cash, so you’re one of the “strong hands” when the cycle turns.

In this week's episode of The Wrap with Chris Whalen, Julia and Chris start with President Trump’s $5,000 cash dividend promise, which Whalen calls “bread and circuses,” and why affordability, driven by gasoline and diesel prices tied to the war with Iran, could deliver a 50-seat House swing to Democrats. Whalen says we’re already on a double-digit inflation path, points to September’s PPI as the highest since late 2022, and argues the Fed may be forced to hike before the midterms, possibly over Chairman Warsh’s objection. Fresh from the Mortgage Bankers Association conference in Chicago, he shares why industry insiders like Stan Middleman expect home prices to soften 5–10% over the next three years, how construction costs are putting a floor under prices, and why layoffs are hitting mortgage lenders and realtors. He also covers United Wholesale Mortgage, bank earnings (JPMorgan’s miss and Bank of America’s record $1.5 billion OCC fine), and why he sees the AI trade as circular finance heading for a reset. They close with viewer questions on banks holding low-coupon COVID-era mortgages and the outlook for Annaly.