The Wrap: Silver Soars, Warsh Confirmed & 30-Year Bond Tops 5%
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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 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 15, 2026 | This week featured a lot of important developments in Washington and on Wall Street. For example:
President Donald Trump was in Beijing for talks with President Xi Jinping, with discussions covering tech, trade, and the Iran war. Xi hailed the US-China relationship as the world’s most consequential, telling President Donald Trump: “We must make it work and never mess it up.”
The Dow Jones Industrial Average reached the 50,000 level, driven by intense investor demand for AI and technology stocks. Cisco (CSCO) and other technology shares surged following strong AI demand signals, but remember we are chasing the spend.
Kevin Warsh was confirmed as Chairman of the Federal Reserve, but faces a complex environment because inflation is showing signs of staying high. Markets have been reacting to potential changes in monetary policy under his leadership. Reflecting market fears about inflation, the 30-year Treasury bond topped 5% for the first time since the Great Financial Crisis.
We expect Chairman Warsh to slowly make changes in how the Fed operates and models the outlook for inflation and the economy. The inflation from the Iran war is caused by energy prices and a growing shortage of by-products. There is not much the Fed can do to address these sources of inflation. We expect to see rationing of key products like lubricants and sulfuric acid soon in the US.
Warsh is likely going to pursue a smaller Fed balance sheet and try to use this "tightening" as a bargaining chip to get the FOMC to lower ST rates systemically. Warsh is a supply sider, so he fundamentally disagrees with the left/progressive perspective of Bernanke/Yellen/Powell, who all thought that the Fed could control the Treasury yield curve.
His comments on the disaster of QE are quite clear. Warsh once called QE “reverse Robin Hood” because he thinks correctly that it favored those with more assets. He said that the Fed should be concerned with the distributional consequences of its policies.
This week we published a comment about United Wholesale Mortgage (UWMC) and their failing campaign to acquire the REIT Two Harbors (TWO). This was easily the most widely read post on The IRA in the past year. Bottom line is that UWMC can’t afford to pay cash for the purchase, but the UWMC stock essentially has no value as an acquisition currency.
In our latest column in National Mortgage News, we argue that restricting institutional investors deploying capital in single family homes is bad policy, but reforming 1031 exchanges and requiring public listings for HUD homes could boost affordability. We write:
"The Trump Administration has been struggling to come up with practical policies to help address the surge in home prices caused by the errant policies of the Powell FOMC. One simple but powerful approach is to require HUD, the GSEs and any private issuers working in the conventional and government markets to expose single-family homes to the retail markets before institutional firms are allowed to bid. Problem solved."
In the past five trading days, gold has moved sideways as some managers have been taking profits from last year. Silver futures rose by over 6%, driven by the steady flow of news reports about developments in the technology sector that will boost demand for the metal.
China bought a record-breaking amount of silver in the first quarter (Q1) of 2026, driven by intense demand for solar manufacturing and retail investment. China imported approximately 1,536 to 1,626 tonnes of silver in the first quarter, confirming our view that silver is likely to continue to outperform gold significantly this year.
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