Why Trump Keeps Calling Kevin Warsh

SPEAKER_1 (0:00)

The US is the world's largest oil producer. So why can events halfway around the world raise the price you pay at the pump? In Just the Facts, USA Facts founder Steve Ballmer uses government data to break down questions like this, without spin or guesswork. From oil prices to the economy, health care, immigration and more, get clear answers grounded in the numbers. Watch Just the Facts at usafacts.org/just the Facts. That's usafacts.org/just the Facts.

Luke Vargas (0:32)

President Trump finds a new economic counselor in the Fed's Kevin Warsh. Plus, airlines push back against ice enforcement at airports and eBay lifts its outlook, boosted by its takeover of second-hand fashion app, Depop.

Jamie Iannone (0:48)

I had a huge group of interns here this summer, and I went around and said, how many of you use Depop? And almost every hand went up.

Luke Vargas (0:57)

It's Thursday, August 6th. I'm Luke Vargas for The Wall Street Journal, and here is the AM Edition of What's News, the top headlines and business stories moving your world today.

In a break from recent precedent, President Trump has spoken repeatedly with Kevin Warsh since he was appointed chairman of the Federal Reserve, with the president calling him in bursts to seek counsel on a range of topics, including the economic effects of AI and the war in Iran. With more on this journal exclusive, I'm joined by Finance Editor Alex Frangos. Alex, first off, we should give kudos here to Brian Schwartz, to Philip Wegman and Nick Timmeros for this reporting, which we've linked to in our show notes. We are less than three months into Warsh's tenure here. Situate for us, if you could, where it looks like his relationship with the president is heading relative to past relationships of this sort.

Alex Frangos (1:51)

Well, it seems off the bat that the president is using Warsh more as a counselor and someone to chat with about the economy than presidents have in the past. Generally, a president nominates a head of the Fed and then the head of the Fed goes off and does their thing and they have very sporadic, stage-managed interactions with the president, all to preserve this idea that the Fed is making independent decisions about interest rates and is not influenced by politics. But of course, Trump is different and this relationship is different. So it seems as if they're having a much more ongoing discussion about the economy and he's using him as a smart person to have around, to ask questions of about AI, the war in Iran and things like that. We don't know if there's been discussions about monetary policy. There's been no public indications that they have been. No one on either side has indicated that the White House is putting pressure on Warsh, Trump calling him up and saying, hey, don't raise rates. But we haven't seen that.

Luke Vargas (2:49)

We should say, Alex, that notably Democrats on the Senate Banking Committee aren't just taking a wait-and-see approach here. They're pressing Warsh pretty hard lately to disclose more about his interactions with the president. Moving on from any talk about rate policy, it isn't hard though to see how Warsh's opinions on things like Iran or artificial intelligence could very much shape the president's thinking.

Alex Frangos (3:11)

Yeah, absolutely. I mean, the president has a roster of people, a kitchen cabinet, so to speak, not necessarily in the cabinet, but people just around the world, world leaders, business leaders, people he just has on speed dial that he calls up and says, hey, what do you think of this? What do you think of that? And Warsh is one of those people, and Warsh is in that social circle of people who are close to the president. That's where he was before he became Fed chair. So I think it makes sense that he's still on that list. But certainly the Fed will view the world in a different way. The Fed chair is going to look at the Iran war and say, this is causing inflation, this is causing supply chain disruptions, this is how I'm analyzing it vis-a-vis monetary policy. Same with AI. Kevin Warsh has actually been quite public in saying that he thinks AI is something that's going to depress inflation, at least over the medium term. And so probably does have thoughts. He also has to be thinking about financial stability and looking at markets and looking at AI go up and down in a very volatile manner. And we'll have a perspective on that that may be relevant.

Luke Vargas (4:11)

External Finance Editor, Alex Frangos. As always, a pleasure, Alex. Thanks for stopping by.

Alex Frangos (4:16)