Trump just nominated Kevin Warsh to replace Jerome Powell as Fed Chair.

The market reaction? Gold plunged 9%. Silver posted its worst single-day drop since 1980: -31.4%.

Wait. Something doesn't add up.

Warsh has been calling for rate cuts. Trump complains daily that rates are too high. A "compliant" new chair should mean easier policy ahead—right?

So why did markets react the opposite way?

Here's what most people miss: How much power does the Fed Chair actually have? Can one person dictate policy?

I'm Howard Uncle, CQF holder. Today I'll teach you an analytical framework: how to read the 12 FOMC voting seats to predict Fed policy direction.

Master this, and you won't need to guess anymore. Just count the votes.

Ⅰ. What's Different About This Fed Transition?

Let's set the stage.

On January 30, 2026, Trump formally nominated Kevin Warsh to succeed Jerome Powell. Powell's term as Chair expires in May 2026.

But this transition has unusual features:

First: The DOJ launched a criminal investigation into Powell.

On January 11, 2026, the Justice Department served a grand jury subpoena to the Fed. The probe concerns Powell's testimony about a $2.5 billion headquarters renovation project.

The next day, Powell released a video statement directly linking the investigation to rate policy:

"This is the consequence of the Fed setting rates in the public interest rather than according to presidential preference."

That's a heavy statement. Powell explicitly suggested the DOJ probe is political retaliation.

Second: Warsh's policy stance has shifted dramatically.

From 2006-2011, Warsh served as a Fed Governor—and was firmly hawkish. He opposed QE2, advocated balance sheet reduction, and ultimately resigned over policy disagreements with Bernanke.

But in 2024-2025, he publicly supported rate cuts, criticized Powell, and called for Fed "regime change."

From committed hawk to rate-cut supporter—this shift puzzles markets. Did he genuinely evolve? Or is he performing for the nomination?

Third: Senate confirmation faces obstacles.

Republican Senator Thom Tillis (Banking Committee member) publicly stated he'll oppose any Fed Chair nomination until the DOJ's Powell investigation is "fully and transparently resolved."

Senate Majority Leader Thune acknowledged: without Tillis's support, Warsh "may not" clear confirmation.

Translation: Warsh's nomination could drag on—or fail entirely.

Ⅱ. How the Fed Actually Makes Decisions

Many assume the Fed Chair's word is law. It's not.

Rate decisions come from FOMC (Federal Open Market Committee) votes. Majority wins. The Chair gets one vote—same as everyone else.

The FOMC has 12 voting seats in two categories:

Permanent Voting Rights (8 seats):

Seat	Source	Term
7 Board Governors	Presidential nomination, Senate confirmation	14-year terms, very difficult to remove
NY Fed President	Appointed by NY Fed Board	Permanent voting rights

Rotating Voting Rights (4 seats):

The remaining 11 regional Fed presidents rotate annually. In 2026: Cleveland, Atlanta, San Francisco, and Richmond.

Critical point: The Chair cannot fire Governors.

Governors serve independent 14-year terms. Removal requires "cause"—a standard never tested. Trump tried to remove Governor Lisa Cook; courts blocked him.

This means: Even if Warsh becomes Chair, he can't purge dissenting Governors.

Ⅲ. The 2026 FOMC Voting Landscape: Three Factions

Based on public statements and voting records, I've mapped the 12 voting members into three camps:

Faction 1: Rate Cut Supporters (3-4 votes)

Member	Position	Basis
Christopher Waller	Governor	Voted for rate cut at January meeting
Mary Daly	SF Fed President	Publicly dovish
Raphael Bostic	Atlanta Fed President	Neutral-dovish
(Miran replacement)	Governor (pending)	Likely Trump ally

Waller was a Trump first-term appointment but has recently turned dovish. At the January 28 FOMC meeting, he and Miran voted for a rate cut against maintaining rates.

Faction 2: Data-Dependent / Centrists (4-5 votes)

Member	Position	Basis
Philip Jefferson	Vice Chair	Biden appointee, dovish but data-driven
John Williams	NY Fed President	Independent core, neutral-hawkish
Tom Barkin	Richmond Fed President	Data-driven
Jerome Powell (if remains)	Governor	Data-driven, opposes Trump

This faction won't blindly support either direction. They watch data: falling inflation supports cuts; sticky inflation supports holding.

Faction 3: Cautious / Hawkish (3-4 votes)

Member	Position	Basis
Michelle Bowman	Vice Chair for Supervision	Firm hawk, multiple dissenting votes
Michael Barr	Governor	Neutral-hawkish
Beth Hammack	Cleveland Fed President	Hawkish
Lisa Cook	Governor	Dovish, but opposes Trump

Bowman, despite being a Trump first-term appointee, dissented multiple times in 2024 against rate cuts she considered premature. She may prove Warsh's biggest obstacle.

Cook is unusual: her stance is dovish, but after Trump's attempt to remove her, she may resist any policy shift perceived as "politicized."

Ⅳ. Who Is Kevin Warsh?

Kevin Warsh, 55, served as Fed Governor from 2006-2011. He's currently a research fellow at Stanford's Hoover Institution.

His father-in-law, Ronald Lauder, is an Estée Lauder heir and longtime Trump ally and donor.

Warsh 2006-2011: Committed Hawk

He publicly opposed QE2 in 2011, advocated Fed balance sheet reduction, and resigned over policy disagreements with Bernanke.

His words then: "Monetary policy can't solve everything. Excessive easing creates long-term risks."

Warsh 2024-2025: Rate Cut Supporter

He's repeatedly criticized Powell, advocated rate cuts, and argued productivity gains can offset inflation pressure.

He's also hinted the Fed should coordinate housing affordability policy with Treasury—traditionally taboo for central bank independence.

Market's Question: Who is he really?

Wall Street's assessment is blunt: "Is Warsh a man for all seasons, or a chameleon?"

Two possibilities:

1. Genuine evolution: He experienced the 2008 crisis and recovery, updated his views
2. Strategic accommodation: He's saying what Trump wants to hear; once confirmed, he may revert to hawkish instincts

Honestly, nobody knows. That's the source of market uncertainty.

Ⅴ. The Chair's Real Power: What They Can and Can't Do

Many overestimate the Fed Chair's authority.

What the Chair CAN do:

Power	Description
Set the agenda	Decides what FOMC discusses
Build consensus	Pre-meeting coordination across factions
External communication	Press conferences, Congressional testimony, market guidance
Vote	One vote, same as everyone else

What the Chair CANNOT do:

Limitation	Description
Veto power	None—one vote is one vote
Remove Governors	Cannot—14-year terms are independent
Force votes	Cannot—each member votes independently
Unilaterally set rates	Cannot—requires majority

Historical Reference:

• Greenspan (1987-2006): Few dissents; built consensus through strong pre-meeting coordination
• Bernanke/Yellen: Occasional dissents; emphasis on transparent communication
• Powell: More dissents; emphasized data-dependence

Which path will Warsh take? If he pushes for cuts but faces Bowman-led opposition, his options are limited:

• Compromise and accept a moderate path
• Apply public pressure (risks appearing "politicized")
• Wait for Trump to appoint more allies (takes time)

Ⅵ. Interest Rate Scenarios: Three Possibilities

Based on current FOMC dynamics, here are three scenarios:

Scenario A: Moderate Rate Cuts (Highest probability ~50%)

Warsh proposes 25 basis point cut.

• Support: Waller, Daly, Bostic, new nominee, some centrists
• Oppose: Bowman, Hammack, possibly Barr
• Result: 7-8 votes for, 3-4 against. Passes.

Scenario B: Hold Steady (Probability ~35%)

Inflation data stays sticky; centrists lean toward holding.

• Support holding: Williams, Jefferson, Barkin, Bowman, Hammack
• Support cutting: Waller, new nominee
• Result: 6-7 hold vs 4-5 cut. No cut.

Scenario C: Aggressive Cuts (Lowest probability ~15%)

Warsh proposes 50 basis point cut.

• Support: Waller, new nominee, possibly Daly
• Oppose: Nearly all centrists and hawks
• Result: 3-4 for, 7-8 against. Rejected.

Key Variables:

1. Does Powell remain as Governor? His Chair term ends in May, but his Governor term runs to January 2028. If he stays, he becomes a counterweight to Warsh.
2. Who replaces Miran? Trump will almost certainly nominate an ally—adding one vote for cuts.
3. Where does inflation go? If inflation rebounds, centrists shift toward holding or even hiking.

Ⅶ. Asset Class Implications

US Dollar: Short-term support, medium-term independence concerns

Markets initially breathed relief—Warsh isn't a complete Trump puppet; he has institutional credibility. This supported the dollar.

But medium-term, if the Fed appears politicized, the dollar faces a "credibility discount."

Stocks: Higher-for-longer rates, valuation pressure

Markets interpreted Warsh's nomination as "rates won't drop sharply." This hurts high-multiple growth stocks; it relatively favors financials and value.

Gold and Silver: Dollar-devaluation trade collapses

Gold's 9% plunge and silver's 31.4% crash reflect the collapse of the "dollar devaluation" narrative.

Previously, markets feared Trump would install a compliant chair who'd slash rates and tank the dollar. Warsh's nomination broke that expectation.

Bitcoin: Warsh's stance is complex

Warsh has publicly criticized crypto as "not real money," yet he's invested in crypto startups.

His approach appears pragmatic rather than ideological. Focus on financial stability, not blanket suppression.

Ⅷ. How to Use This Framework

Here's a simple method: Count the votes.

Before each FOMC decision, track where the 12 voting members stand publicly:

1. Tally votes for cuts vs. hold vs. hike
2. Watch "swing votes"—centrists' latest statements
3. Monitor dissents—if someone votes against, internal disagreement is growing

This won't give 100% accuracy, but it helps you understand the probability distribution of policy outcomes.

Current landscape:

• Moderate cuts: High probability
• Aggressive cuts: Low probability
• Sudden hikes: Very low probability (unless inflation spikes)

This beats guessing "what Powell thinks" or "will Trump pressure succeed."

Conclusion

A Fed Chair transition matters, but it's not a one-person show.

Warsh's nomination brought markets temporary relief—he's not a pure political puppet. But his true stance remains uncertain.

What matters more is understanding the FOMC voting structure:

• 12 seats, three factions
• The Chair has influence but no veto
• Policy direction depends on majority votes, not one person

Next time you see Fed headlines, don't just read the title. Count the votes. See who supports what. The policy path becomes clearer.

I'm Howard Uncle. I teach investment analysis methods—not what to buy or sell. My goal is helping you think independently, identify risks, and build your own judgment framework.

Learning methods beats chasing conclusions.