The Wrap: Powell Stays on the Federal Board; Gold and Silver Retreat

In this week’s edition of “The Wrap,” we feature our view of the top-ten key events in Washington and on Wall Street over the past week. Don’t forget to watch “The Wrap with Chris Whalen” on The Julia LaRoche Show every Saturday on YouTube to catch our discussion of what’s hot and what’s not in the world of finance and investing. 

March 20, 2026 | Gold and silver prices continued to pare gains from the past 90 days, even as deliverable supplies of both metals are shrinking rapidly in the Far East. Selling of gold accelerated yesterday as the Gulf States sought to raise cash in the face of continued attacks on oil and gas facilities.

One point we repeat to readers and clients alike is that the market prices for metals in the US and London markets, where prices are reckoned in fiat currencies, are diverging from prices in Asia, where physical delivery is expected and required.

The war with Iran is likely to keep downward pressure on metals prices in the near term, but this may be another buying opportunity a la Liberation Day last year. At one point silver prices were up 70% in 2026, confirming our view that the metals complex was going to remain volatile. But given the burgeoning federal debt and the outlook for inflation in the US, we like the precious metals component of our portfolio more and more. 

As we told a viewer of “The Wrap” this week, investing in precious metals is about preserving value, but you must also maximize yield on fiat assets. That’s why we like residential mortgage REITs as a haven for cash and limit holdings of low-return T-bills. 

Powell Stays on the Fed

The Federal Open Market Committee made no change in the target for short-term interest rates on Wednesday. Most officials maintained earlier projections for at least one quarter-point reduction in borrowing costs this year. The members of the FOMC continue to pretend that they can control inflation. 

As expected, Governor Stephen I. Miran issued his fifth straight dissent and voted for a quarter-point cut. This was the second FOMC meeting in which a majority of voting members kept rate guidance unchanged at a range of 3.5 percent to 3.75 percent. 

“The FOMC surprised no one when it voted to hold the funds rate steady in the range of 3.5%-3.75% by a vote of 11-1,” notes John Ryding of Brean. “Governor Waller returned to the fold and recognized the reality of the inflation data.  The Fed continued to signal that one cut this year and one next year is the central case for the median committee member but the forecasts for growth and inflation were lifted.” 

It is pretty clear from the latest FOMC meeting this week that Chairman Jerome Powell is going to remain on the Federal Reserve Board after May as we have long predicted. Despite growing calls from conservatives for Trump to end his legal campaign against Powell, the White House seems to be incapable of adjusting strategy. 

In fact, Powell has indicated he intends to remain as Fed Chair until his successor is confirmed by the Senate, and Senate Republicans will not confirm Kevin Warsh until President Trump ends the legal campaign against Powell.  President Trump has repeatedly criticized Powell’s management of the Fed’s renovations and he is right to do so, but there are far better ways to make the point about the Fed’s operational chaos.  Will President Trump appoint an "acting chair" in May?

A couple of quick questions about US monetary policy for our growing audience:

Why is inflation stubbornly above the FOMC’s target range? Because of the federal debt. 

Why did investors pour $2 trillion into unsuitable private equity and credit schemes? Because of the inflation caused by the federal debt. 

Why did banks lend and commit almost $4 trillion more to unsuitable private investment and credit schemes?  Because of the balance sheet inflation caused by quantitative easing and the federal debt. 

Why is affordable housing increasingly beyond the reach of millions of Americans? Because of the inflation caused by the federal debt. 

Take an example: Rental inventory in New York City fell 5.5% YoY to 25,989 units in February as median rent rose 8.2% to $3,950,” CRE Daily reports. “Manhattan led declines (−3.5%), marking a record 24-month slide, with rents up 6.9% to $4,700; Brooklyn and Queens also posted solid gains.”

So why doesn’t anybody talk about the federal debt in Washington? Good question.

This week the Federal Housing Finance Agency headed by Bill Pulte dropped replacement‑cost value (RCV) insurance rules for conventional mortgages underwritten by Fannie Mae and Freddie Mac, reverting to cheaper pre‑2024 standards. 

One reader of The IRA noted on X: "RCV was always the GSE requirement. FHFA wasn’t solving for a real problem, but was instead chasing headlines to produce a deliverable on climate" during the Biden Administration.

The rollback sidelines climate‑risk protections amid broader federal retreat from tracking weather impacts, but may not be accepted by the insurance industry. “The move offers optics, not solutions, showing FHFA’s reactive approach to housing costs,” notes Jonathan Miller of Miller Samuel. 

Back on March 12th (“Countrywide II: UWMC + TWO = ? Loan Depot Flops, Again”) we predicted that the proposed merger between United Wholesale Mortgage (UWMC) and Two Harbors (TWO) would fail to get the support from a majority of TWO shareholders. That’s precisely what happened.

TWO is now working to get support for the deal, but the sagging stock price of UWMC is not helping. This week, of note, TWO disclosed that a cash offer reportedly had emerged. The competing bid includes covering a $25 million termination fee, Housing Wire reports. The Two Harbors' board is evaluating the unsolicited offer as a potential superior proposal.

Private Credit Festers

On Wall Street, the run away from private equity and credit continues to widen, with pressure now being felt by funds that specialize in consumer credit. “Stone Ridge Asset Management told clients in the fund last week that recent redemption requests were so high that it would honor only 11% of the amount investors wanted back,” according to The Wall Street Journal.  

Stone Ridge purchases consumer and small-business loans made by companies including Affirm (AFRM), Block (XYZ) and Lending Club (LC), the latter of which was one of the best performing bank stocks in 2H 2025.  Of note, the major Wall Street investment banks led by Goldman Sachs (GS) are now offering clients strategies to short the public equity of the major sponsors of private credit strategies.

We told Tom Keene on Bloomberg Radio this week that the inclusion of retail investors in private credit funds was a fundamental error in judgement by the sponsors that made a run inevitable.  Why did the sponsors of private credit like Apollo (APO), Ares (ARES), Brookfield (BRK) include retail investors? Greed and stupidity. Welcome to Wall Street.

As we’ve noted this past week (“Risk Concealed: Private Credit, PIK and the Banks”), many banks have been shedding credit risk to the sponsors of private credit schemes, but some banks are smarter than others.  Even when a bank sells a loan to a credit sponsor, the risk may not be eliminated.

“How can the regulatory-capital arbitrage break down and ‘boomerang’ counterparty/credit risk for a bank?” asks veteran risk manager Victor Hong in an email to The IRA. “When the non-recourse bank financing of a private credit loan for its owner might arguably leave the bank FULLY exposed to that sold loan.”

Despite the inflationary bias, the US economy is showing growing signs of weakening, according to Morningstar. Key factors include rising unemployment, declining consumer confidence, reduced consumer spending, falling corporate profits, and a slowdown in manufacturing. Other indicators also include an inverted yield curve, declining GDP growth, and increased credit delinquencies in areas such as mortgages and credit cards.

One indicator of the K-shaped economy is hotels, where luxury properties are showing rising profitability but other venues are not (h/t Accounting Solutions). Revenue per available room (RevPAR) in the luxury category for daily rates in excess of $500 was up by 9% during a recent week in mid-February versus the same period in 2025, according to data provider STR. 

RevPAR fell for economy hotels, however, a category with an average room rate around $67. More significant, foreign visitors, who spend multiples of what domestic travelers do on food and lodging, have been scarce, according to the International Trade Administration. 

In January, European and Asian visitor numbers were down 3.4% and 11.7%, respectively, compared with a year earlier. Visits by Canadians, for whom only November data is available, were 16.7% lower than a year ago. 

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