#334 Chris Whalen: Trump's Fed Chair Pick Kevin Warsh Is a Classic Hawk, Why Gold Is Due for a Correction But The Bull Market Isn't Over, & The Private Credit Cesspool

In this week's episode of The Wrap, Chris Whalen breaks down President Trump's nomination of Kevin Warsh as Fed Chair, calling him "the only choice" and a "classic hawk" who won't be afraid to lecture Congress on the link between deficits and inflation — something no Fed chair has done in 30 years. Chris explains why Warsh will likely shrink the balance sheet while giving Trump one or two rate cuts, and predicts the nomination may actually keep Powell on the board through 2028 just to deprive Trump of another conservative seat. On markets, Chris sees a more boring year ahead after 2025's extraordinary run, with gold and silver due for a 10-15% correction — though the bull market isn't over. He notes that crypto platforms like Hyperliquid are now trading precious metals, signaling money flowing from crypto into the "shiny object that's moving most." Chris also warns that private equity is becoming a major risk, with one in five firms now illiquid or in default, representing hundreds of billions in potential bank losses.

Links:

The Institutional Risk Analyst: https://www.theinstitutionalriskanalyst.com/

Inflated book (2nd edition): https://www.barnesandnoble.com/w/inflated-r-christopher-whalen/1146303673

Twitter/X: https://twitter.com/rcwhalen

Website: https://www.rcwhalen.com/

Timestamps:

0:00 Welcome

1:09 Kevin Warsh nominated as Fed Chair — Chris's reaction

2:15 Warsh will have to build consensus on the FOMC

3:01 Warsh won't be afraid to link deficits and inflation

3:15 Will Warsh be more hawkish?

4:26 Warsh during the financial crisis — what to expect

5:25 The martyrdom of Jerome Powell: Yellen and Powell did too much

6:04 Hard decisions the market won't like

6:15 A conservative Fed puts pressure back on Congress

7:21 Will Trump like Warsh lecturing on deficits?

7:49 Powell refusing to say if he'll stay as governor

9:32 Is staying on the board political?

10:32 What will Powell's legacy be?

12:09 The state of the Fed's balance sheet: Poor

13:21 Central banks should keep assets short — the Fed didn't

14:15 Powell's comments on the deficit being "unsustainable"

16:08 Markets: S&P briefly hit 7000

17:47 Credit-sensitive stocks under pressure, metals outperforming

18:41 Labor market and layoffs: Amazon, UPS, FedEx

19:19 Personnel costs and inflation

19:42 Gold to $5,600, silver to $110 — correction coming?

20:50 Crypto platforms now trading gold and silver

22:21 Central bank gold holdings now exceed foreign Treasury holdings

24:26 Where Chris is putting his money

24:43 WGA 50 bank rankings preview

26:57 Private equity risk: 1 in 5 firms illiquid or in default

28:29 AI companies leveraged to their eyebrows

28:50 Viewer mail: Taking profits on Annaly?

32:29 Parting thoughts: Earnings, Warsh, and what's ahead

34:47 Closing