The Wrap: FOMC Rejects Rate Cut; Mag7+ Dominates Equity Markets
- Apr 30
- 4 min read
In this week’s edition of “The Wrap,” we feature our view of the top events in Washington and on Wall Street over the past week. And please do 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.
May 1, 2026 | This week the nomination of Kevin Warsh to be the next Chairman of the Federal Reserve Board was approved by the Senate Banking Committee. But as we predicted some time ago, Fed Chairman Jerome Powell is going to re main on the Fed's Board of Governors after his term as chairman ends on May 15th. We expect a Senate vote for Kevin Warsh before Powell's term ends.
The FOMC press conference this week was remarkable for many reasons, but the key factor for the banking and mortgage industries is that there is clearly not a consensus for rate cuts at this time. In fact, the FOMC voted to leave interest rates unchanged, but with the most dissenting votes cast since 1992.
The 8-4 FOMC vote included three dissents that agreed with leaving rates unchanged but didn’t support the weak comment about “easing bias” in the FOMC statement. That suggests Warsh will face major obstacles if he tries to convince the Committee to cut rates. More, the decision by Powell to stay on means that President Trump is denied a second open seat on the Board of Governors. Governor Stephen Miran will exit to make room for Warsh.
One aspect of the Powell press conference that has received too little attention was Powell's comments about Warsh possibly replacing Reserve Bank presidents. Powell warned against removing regional Fed presidents because of their monetary policy views. “That would be the beginning of the end of the Fed’s ability to make monetary policy independently,” he said, but the media did not notice.
As we discussed in our interview with Alex Pollock ("Interview: Alex Pollock on the Fed and Gold | Part I"), the 1935 amendments to the Federal Reserve Act designed by Marriner Eccles made the chairman the chief executive of the agency with unilateral power to reject the appointment of Reserve Bank presidents by the local boards of directors. See article below from The International Economy.
This week we featured a comment about the growing inflationary impact of the US-Israeli war with Iran (“Trading Points: China, Sulfur & Silver 银”) and our thoughts on positioning to benefit from the disruption. In Washington, the Trump Administration thinks that curtailing Iranian exports of oil and byproducts will bring Tehran to heel, but it is also boosting inflation and causing a critical shortage of sulfuric acid and other byproducts.
As we wrote this week:
“China is the world's leading producer of sulfur (19 million metric tons in 2025), but already faced tight supply and rising prices in January. China has since implemented a ban on sulfuric acid exports starting in May 2026. Along with a 37.67% year-over-year drop in Q1 2026 imports, China is restricting global supply of sulfuric acid dramatically. What does this mean for stocks and precious metals?”
Earlier this week we had a great conversation with Keith McCullough, CEO of Hedgeye. You can watch the podcast below.
Markets moved down during the past five trading days, with gold and silver off single digits and crypto tokens sagging. Stocks were mostly lower most of the week, but surged on Thursday within a highly concentrated group of technology stocks. Charlie McElligott at Nomura (NMR) described the market action earlier this week:
"Mutual funds are getting crunched because they can’t / don’t own enough of what matters—As ten Tech stocks account for ~75% of the 12% SPX rally since March 30th—and officially killing-off the brief 4Q25/1Q26 “Dispersion” out of MegaCap Tech AI into “Everything Else.” Instead, it’s now “back to the future”: Mag7+ in total control of index returns yet again, where due to the return to “extreme concentration of returns,” these structural underweights in the largest Index market cap stocks sees performance pain further compounded by legacy “Funding Shorts” (INTC, AMD, QCOM, analog chip makers, power names) also booming higher and creating what’s been a nonstop scramble to close the undercapture."
Recent Posts & Reading
Trading Points: China, Sulfur & Silver 银
D. Ricardo on Private Credit & the Real Risk to Financial Markets
How to Really Reform the Fed
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