While Markets Panic, This Got Approved
Dear Friend,
While headlines focused on war and trade tensions…
Something much bigger happened.
A U.S. government project, 20 years in the making, just confirmed access to a massive new resource zone.
No headlines.
No media attention.
But under U.S. law…
That wealth belongs to Americans.
And one company is already positioned to extract it.
Most people won't realize what this means until it's too late.
"The Buck Stops Here,"
Dylan Jovine, CEO & Founder
Behind the Markets
Thursday, May 21, 2026
The Warsh Fed Is Here. The Regime Change Has Begun.
It's no longer hypothetical. Kevin Warsh is the 17th Chair of the Federal Reserve — and the regime change he promised is already underway.
After months of political wrangling, a bruising confirmation fight stalled in part by Sen. Tom Tillis of North Carolina, the Senate voted 54-45 on May 13 to confirm Warsh — the most partisan confirmation vote for a Fed chair in history. Just one Democrat, Sen. John Fetterman of Pennsylvania, crossed the aisle. Warsh was sworn in at a White House ceremony on May 16, officially taking the reins from Jerome Powell, whose term as chair expired May 15 but who remains on the Board of Governors until 2028. The presence of his predecessor at the same table makes Warsh's first FOMC meeting — scheduled for June 16–17 — unlike any in modern history.
At his April 21 confirmation hearing, Warsh used the phrase "regime change" to describe what he intended for the Fed. He described the FOMC's decision to hold rates at zero through 2021, even as consumer prices began climbing above target in April of that year, as a "fatal policy error" whose legacy the economy is still wrestling with. By mid-year 2021, inflation had climbed above 5%. The Fed, meanwhile, continued purchasing roughly $120 billion in assets per month, vastly expanding its balance sheet, while the Biden Administration insisted the price pressures were transitory. History has not been kind to that call.
Now Warsh inherits the consequences — and they are formidable.
The Inflation Problem Hasn't Gone Away
Warsh takes the chair at one of the most difficult macroeconomic junctures since Paul Volcker's tenure. The Fed has missed its 2% inflation target for more than five years running. The Iran war, which began at the end of February, sent global oil prices surging nearly 40%, and that shock is now passing through to consumers. Wholesale prices jumped 6% in April alone. The Consumer Price Index rose 0.9% in March and 0.6% in April on a monthly basis. The Fed's current benchmark lending rate sits at 3.50%–3.75%, following three 25-basis-point cuts in late 2025.
Markets have largely given up on rate cuts in 2026. CME FedWatch currently prices a 97% chance that the June 16–17 meeting ends with no change. Prediction market platforms Kalshi and Polymarket have seen over $42 million combined placed on no rate movement at that meeting. Short-term Treasury yields have climbed as cut pricing has been stripped from the front end of the curve. Some FOMC officials have even begun openly discussing the possibility of rate hikes if conditions deteriorate further.
The irony is sharp: Trump nominated Warsh with the explicit expectation of lower interest rates. The president even joked earlier this year he might "sue Warsh" if he doesn't cut. But the data are not cooperating — and Warsh, to his credit, told senators during his confirmation that Trump never once asked him to commit to a specific rate decision, and that he wouldn't have agreed if asked.
Iran's New Leader Just Said Something That Should Terrify
Iran's new Supreme Leader made an announcement that could trigger the largest financial crisis since 2008.
"Iran will keep the Strait of Hormuz shut as leverage against the United States."
40% of the world's oil passes through the Strait of Hormuz. It's been effectively closed since the Iran war started.
Oil just crossed $100 per barrel.
But here's the part that should terrify you: Every oil crisis in modern history has ended the same way.
1973 Oil Crisis: Gold surged from $35 to $200 (571% gain)
1979 Oil Crisis: Gold exploded from $200 to $850 (425% gain)
This time is different. This time could be exponentially bigger.
The U.S. government has 8,133 tonnes of gold sitting in Fort Knox, valued on the books at $42.22 per ounce.
With gold trading above $5,000, that's a $750 billion accounting error.
President Trump has the legal authority to fix it with a single signature.
When he does, gold wouldn't just rally. It would explode to unprecedented levels.
$7,000? $10,000? $15,000?
The smart money knows this. They're positioning now, while most Americans are focused on gas prices.
That's why I've partnered with American Alternative Assets to bring you The Great Gold Reset.
What the Warsh Fed Will Actually Look Like
Warsh enters with a clear philosophical agenda, outlined repeatedly since his departure from the Board of Governors in 2011 and sharpened at his confirmation hearing:
Drop FAIT. Under Powell, the Fed adopted Flexible Average Inflation Targeting in 2020, allowing inflation to run above the 2% target to compensate for past undershoots. Warsh wants none of it. His framework calls for acting against inflation pressures as they emerge — not after averaging past shortfalls.
Earlier Intervention. Warsh believes the Powell Fed waited too long for data confirmation before acting. He wants a central bank that moves before the data forces its hand — a posture that was entirely absent in 2021.
Less Reliance on Projections. Warsh is skeptical of forward guidance as a policy instrument. He argues that the FOMC's over-reliance on forecasts contributed to the inflation debacle, and wants decisions driven by realized conditions, not models of conditions yet to come.
End the Dot Plot. The Fed publishes its Summary of Economic Projections — including the so-called "dot plot" of individual rate forecasts — four times a year. Warsh believes markets treat the dots as commitments rather than guesses, locking the Fed into defending stale projections. He wants to end the practice.
Shrink the Balance Sheet. The Powell Fed formally paused quantitative tightening in December 2025 and has since resumed modest asset growth through reserve management. Warsh has long argued that the Fed's multitrillion-dollar balance sheet — heavy with mortgage-backed securities and government bonds — undermines its independence by backstopping fiscal policy. He wants it reduced, and sooner rather than later.
Reduce the Fed Footprint. Fewer FOMC meetings. Less public commentary. Warsh told the IMF last year the central bank should "find new comfort in working without applause." He wants the Fed to narrow back to its statutory remit: price stability and maximum employment — not climate policy, not social commentary.
The Internal Fight
Warsh does not walk into a unified committee. The April meeting under Powell drew the highest level of internal dissent since 1992. His predecessor as governor, Stephen Miran — who dissented from every FOMC vote this year by pushing for cuts — is now gone, replaced by Warsh himself. But the committee's hawks are increasingly vocal about maintaining rates or even tightening, while Warsh's own public signals suggest he sees room to cut, if and when inflation cooperates.
As CNBC noted this week, if Warsh tries to push cuts against a committee skeptical of easing in an inflationary environment, the institutional friction will be significant. Jerome Powell's continued presence on the Board, now as a rank-and-file governor under a Justice Department investigation stemming from a controversial office renovation, adds an unprecedented institutional subplot to every policy meeting.
How to Play It
The regime change is now a fact, not a forecast. The question for investors isn't whether it's happening — it is — but what it means for capital allocation.
Bet on Inflation Persistence. The market has been slow to reprice the Iran war's inflationary tail risk. Long gold, long precious metals miners, and TIPS over nominals remain compelling. The combination of structural fiscal deficits and a Fed that is genuinely uncertain about its rate path keeps real yields volatile and real assets attractive.
Short the Long End. A Warsh Fed that aggressively shrinks the balance sheet is net negative for long-duration Treasuries, regardless of where the policy rate goes. Mortgage-backed securities in the Fed's portfolio are being rolled off. Less Fed buying means the market must absorb more duration — and credit markets don't have a bottomless appetite. Long short, short long.
Tilt Toward Quality Credit. The implied Fed Put that compressed credit spreads for over a decade is gone under Warsh. He has signaled clearly that he is less willing than his predecessors to backstop falling asset prices. Higher idiosyncratic risk — defaults, refinancing stress, rollover risk — should push spreads wider. Long investment grade, reduce or short high yield.
Trade Credit Dispersion. This is the most asymmetric opportunity in the new regime. A Fed that lets markets clear means strong issuers survive and weak ones don't. Credit spreads will diverge. Long the balance-sheet-strong names, short the over-leveraged ones. Capture the dispersion directly rather than waiting for it to show up in index-level spread moves.
Volatility Premium. Warsh's stated intent to reduce Fed communication, end the dot plot, and avoid telegraphing moves means less certainty about the rate path. Less certainty means more volatility across rates and credit. If you're not long volatility in the rates complex, it's worth reconsidering.
Until next time,
The Navigator
