#337 Chris Whalen: Someone's Going to Be Disappointed — Trump vs. Warsh on the Fed
Sat Feb 07 2026
In this episode of The Wrap, Chris Whalen discusses the structural conflict between President Trump and incoming Fed Chair Kevin Warsh: Trump wants home prices to stay high, while Warsh wants to shrink the Fed's balance sheet — and "someone's going to be disappointed." Chris warns that resuming quantitative tightening could repeat the 2018 repo crisis, especially concerning given Morgan Stanley paid 45% for repo funding in Q4 2025. He breaks down the Penny Mac disaster, where Bill Pulte's $200 billion MBS buyback plan caused the stock to crash from $150 to $90 in a day, explaining why "when politicians play with markets, bad things happen." On housing, Chris argues there's no easy policy fix for affordability — prices simply need to fall 10-20% to normalize. He declares last year's speculation wave over, noting "we just ran out of runway," and advises investors to shift toward defensive positioning and stocks with cash flows. Chris remains bullish on gold and silver long-term despite recent pullbacks, urging viewers to buy the dips.
Links:
The Institutional Risk Analyst: https://www.theinstitutionalriskanalyst.com/
Inflated book (2nd edition): https://www.barnesandnoble.com/w/inflated-r-christopher-whalen/1146303673
Twitter/X: https://twitter.com/rcwhalen
Website: https://www.rcwhalen.com/
Timestamps:
0:00 Welcome
1:13 Last year was a year of aspiration — reality is setting in
2:30 Gold and silver pullback — Chris is buying the dips
4:19 Speculative money rotating from crypto to metals (Hyperliquid)
5:00 Still bullish on gold and silver long-term
7:11 Kevin Warsh and the yield curve problem
8:20 Politicians can't control long-term rates — but they keep trying
9:43 Can Warsh shrink the balance sheet without breaking something?
11:46 Trump vs. Warsh: Someone's going to be disappointed
13:23 Significant number of realtors didn't do deals last year
14:38 Housing consolidation and overcapacity
15:26 Is housing a leading or lagging indicator?
17:04 The only fix: Home prices need to fall 10-20%
19:36 The Penny Mac bombshell explained
21:40 "Our leaders are not serious people"
22:53 What would smart housing policy actually look like?
24:35 Theme for 2026: Risk off and defensive positioning
25:00 Preserving capital over speculation
26:21 "We just ran out of runway" — the end of the speculation wave
28:11 Viewer mail: Congress stuck between a rock and a hard place
29:12 The two bad choices: Hyperinflation or less growth
31:14 Americans hate paying taxes — and seeing money wasted
32:20 Closing thoughts
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In this episode of The Wrap, Chris Whalen discusses the structural conflict between President Trump and incoming Fed Chair Kevin Warsh: Trump wants home prices to stay high, while Warsh wants to shrink the Fed's balance sheet — and "someone's going to be disappointed." Chris warns that resuming quantitative tightening could repeat the 2018 repo crisis, especially concerning given Morgan Stanley paid 45% for repo funding in Q4 2025. He breaks down the Penny Mac disaster, where Bill Pulte's $200 billion MBS buyback plan caused the stock to crash from $150 to $90 in a day, explaining why "when politicians play with markets, bad things happen." On housing, Chris argues there's no easy policy fix for affordability — prices simply need to fall 10-20% to normalize. He declares last year's speculation wave over, noting "we just ran out of runway," and advises investors to shift toward defensive positioning and stocks with cash flows. Chris remains bullish on gold and silver long-term despite recent pullbacks, urging viewers to buy the dips. Links: The Institutional Risk Analyst: https://www.theinstitutionalriskanalyst.com/ Inflated book (2nd edition): https://www.barnesandnoble.com/w/inflated-r-christopher-whalen/1146303673 Twitter/X: https://twitter.com/rcwhalen Website: https://www.rcwhalen.com/ Timestamps: 0:00 Welcome 1:13 Last year was a year of aspiration — reality is setting in 2:30 Gold and silver pullback — Chris is buying the dips 4:19 Speculative money rotating from crypto to metals (Hyperliquid) 5:00 Still bullish on gold and silver long-term 7:11 Kevin Warsh and the yield curve problem 8:20 Politicians can't control long-term rates — but they keep trying 9:43 Can Warsh shrink the balance sheet without breaking something? 11:46 Trump vs. Warsh: Someone's going to be disappointed 13:23 Significant number of realtors didn't do deals last year 14:38 Housing consolidation and overcapacity 15:26 Is housing a leading or lagging indicator? 17:04 The only fix: Home prices need to fall 10-20% 19:36 The Penny Mac bombshell explained 21:40 "Our leaders are not serious people" 22:53 What would smart housing policy actually look like? 24:35 Theme for 2026: Risk off and defensive positioning 25:00 Preserving capital over speculation 26:21 "We just ran out of runway" — the end of the speculation wave 28:11 Viewer mail: Congress stuck between a rock and a hard place 29:12 The two bad choices: Hyperinflation or less growth 31:14 Americans hate paying taxes — and seeing money wasted 32:20 Closing thoughts