My old econ professor, Jeremy Siegal is a known “Fed Watcher.” I quickly formed an opinion on Kevin Warsh after watching the new Federal Reserve Chairman’s debut FOMC meeting in June and waited a couple of days before listening to Siegal’s analysis; our views are identical.
Spoiler alert: I am very happy about Warsh and believe he is the right person to guide our increasingly complex economy. He had me with the first six words he uttered: “The Committee will deliver price stability.”
The meeting enforced the feeling of a fresh start at the central bank. Taking the wheel at the Fed is one of the toughest jobs in the world, especially succeeding Jerome Powell (I am a fan, btw). Warsh’s highly anticipated first public meeting in June proved he is exactly the steady, forward-thinking leader the economy needs right now.
First, the tone: His communication style during the post-FOMC meeting press conference is direct and concise. I contrast it with the typical ultra-cryptic “Fed-speak.” Warsh came across as clear, decisive, and market-savvy.
Second, the action: While it is still early to judge, I very much liked his balance of handling inflation concerns while signaling a pragmatic, pro-growth approach to interest rates. Warsh’s background, having been the youngest Fed Governor during the 2008 financial crisis, gives him the unique, practical market experience required for this moment.
Navigating the Waves
Warsh is facing a challenge not seen since the early days of Paul Volcker’s tenure at the Fed, perhaps even more unusual: Powell keeping a seat on the board, political pressures, the ascendance of China, and very stubborn inflation numbers. I am confident that his decisive debut actions quieted the skeptics and showed he can maintain the Fed’s critical institutional independence while still prioritizing economic stability. Warsh’s first outing was a major win for both Wall Street and Main Street, the two constituents that are most important to our borrowers and our business.
If you haven’t watched June’s FOMC presentation, view it here: https://www.youtube.com/watch?v=7pIFqmMCxVc. This broadcast captures the exact tone and public actions that are defining the start of his tenure.
The Impact on our World
Stability is the key economic underpinning to our business. Above all, when we look at new lending opportunities, we judge the quality and stability of the business’ free cash flow. Full employment, price stability, and lower interest rates are the three macro-economic factors that figure heavily into every loan we underwrite. And the new leadership at the central bank are laser-focused on these three factors.
As always, please consider Gulf Coast Small Business Lending when you start thinking about how to grow or acquire a business. We are on standby to listen to your plans and hopefully help you finance your dream. You can find a listing of our experienced business development officers along with their contact information on our website here: https://gulfcoastsba.com/our-people/. We are actively supporting entrepreneurs nationwide as SBA Preferred Lenders.