Chapter 1: What are the implications of Trump's pick for Fed Chair?
Yes, we've got Trump's pick for the new Fed chair, but there was also a Fed meeting this week. And who really pays the cost of a snow day? From American Public Media, this is Marketplace. In Washington, I'm Kimberly Adams in for Kai Risdahl. It's Friday, January 30th. Good to have you along.
As you've probably heard by now, this morning, President Trump announced plans to nominate Kevin Warsh as the next chair of the Federal Reserve. As a reminder, Chair Jerome Powell's term as chair is up in May, although he could choose to stay on the board until the end of 2028. Warsh isn't new to the Fed.
He served on its board of governors during the Great Recession and even had his hat in the ring for the job of chair back in 2017 when President Trump last nominated a chair to lead the central bank. So to talk us through what his selection means now, we've got Rachel Siegel at The Washington Post and Catherine Rampell at MSNOW and The Bulwark. Hey, you two. Hi, Kimberly.
Rachel, I want to start with you. Who is Kevin Warsh? Kevin Warsh is a name that the Fed world has known before. As you said, he was a Fed governor 20 years ago. He's very well known within Wall Street. He's known within Trump circles. And he's also known as one of the people who's been under really serious consideration for Powell's successor.
Chapter 2: How do small businesses respond to the ICE strike?
We also know that he's been a critic of the Fed in the past, including some of the things that he says has made the central bank more political than it needs to be, things that the central bank has done to miss the mark on inflation.
But now we're looking at him in the context of being the next Fed chair and one presumably taking over that job if he's confirmed at a moment where he's really going to be tested about the ability to be independent, keep politics out of monetary policy and do so in a way that will exist in the same universe as the policies that are coming out from the White House.
Katherine, talk a little bit more about some of those criticisms that Warsh has made over the year about the Fed. What exactly is his argument? His criticisms have varied somewhat over the years. So I would say that early on when he was on the Fed as a governor, as Rachel mentions, he was quite hawkish and he thought that the Fed was too blasé about inflation. Right.
that it was going to be too big of a risk. Now, mind you, this was during the financial crisis or its immediate aftermath, and inflation did not rear its ugly head. In fact, there were much more serious concerns about deflation at the time. So he was somewhat out of step, but he was known as an inflation hawk.
Now he has been relatively critical of the Fed for keeping rates too high and essentially being too concerned about inflation. So He will have to square some of that evolution publicly, and I'm sure that will come up in confirmation hearings. He's also been extremely critical of the Federal Reserve's quantitative easing. That he's been consistent on.
That's, you know, building up the Fed's balance sheet, buying lots of asset-backed securities and things like that. So that he's been consistent on. And he's also, you know—
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Chapter 3: What choices do business owners face during protests?
He's changed his tune somewhat, shall we say, on the mission of the Fed. And he has complained in the past that there's been too much mission creep in what the Fed is responsible for. More recently, I would say that he has tweaked his message, to put it mildly, to suggest that the Fed should be more cooperative in many ways in terms of supporting the fiscal policy.
Rachel, I want to follow up on that point that Catherine was making about his criticisms of the Fed's balance sheet. It really gets to the role of the Federal Reserve in the U.S. economy. Where does he stand on that and how does that align with the president who nominated him? Sure.
So in the past, he, as Catherine was talking about, he criticized the Fed for its ownership of trillions of dollars in mortgage-backed securities and many of which built up after the Great Recession and during the pandemic. And he has made the argument that this big bond buying spree basically enabled Congress to ramp up spending without worrying about higher borrowing costs. And
I think that there are a couple of threads there that have connections to government spending, to what the Fed's role is when it comes to monetary versus fiscal policy. And these are a lot of the themes that we hear Trump economic officials talking about too, right? Now, those two types of leaders have very different roles, and there are lots of reasons why
monetary policy and fiscal policy come out of different shops, which which maybe we'll talk about now. But I think like with any Fed candidate, it will be compelling. I think we've lost Rachel there.
But, you know, since she talked about him as a Fed candidate, Catherine, I want to follow up with you in terms of his prospects in Congress, because Kevin Hassett, who a lot of folks thought was going to get the nod, turned out to have a lot of opposition in Congress. As I think Rachel mentioned before, Warsh has been around for a long time.
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Chapter 4: How do financial concerns affect business decisions during activism?
He has relationships on the Hill. He has passed through a confirmation hearing before, albeit with different people, of course, or many different lawmakers sitting in the seats that would be there to confirm him or judge him. So I generally don't think he as a candidate, per se, will have a lot of problems.
The one thing that may complicate his path to the Fed chairmanship is the fact that there is still this ongoing investigation, criminal investigation of Jerome Powell, the current Fed chair, which has been as far as I can see, is purely political, but listeners can judge for themselves.
And Senator Tom Tillis, who's a retiring senator, he's a Republican from North Carolina, he sits on the committee that handles Fed nominations, has said that he will oppose any Fed confirmation, including that of the chair, who he seems, you know, he seems to like Warsh, but he has said that he will oppose any nomination, any confirmation all the same,
unless and until this Powell investigation is dropped and closed with some transparency, that basically this should not be hanging over the process going forward. This is political. This investigation of Powell compromises the political independence of the institution of the Federal Reserve itself.
So that's not specific to Warsh, I should be clear, but it may be something that complicates his path to a confirmation. All right. Catherine Rampell of MSN Now and The Bulwark, thanks so much. We also had Rachel Siegel earlier at The Washington Post. Appreciate you. Thanks, Kimberly. Have a great weekend. Wall Street today, markets ended the last trading day of the month down.
And even if traders seem to be somewhat positive about Trump's Fed pick, we'll have the details when we do the numbers. Let's shift over to some company news now, which is also kind of foreign policy news.
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Chapter 5: What challenges do parents face during snow days?
ExxonMobil and Chevron posted their lowest annual profits since 2021 in their earnings reports today, adding yet another reason why neither of these companies seems particularly excited to invest big in Venezuela at the moment, despite White House pressure to do so. In fact, it's not really a time when big oil is looking to pour big money into new oil production at all.
Marketplace's Elizabeth Troval has more on the investment environment for the major oil companies and how that factors into what's next for Venezuela. For now, President Trump's goal of $100 billion in investment in rebuilding Venezuela's oil industry is not amounting to much more than a pipe dream. Tom Tsang is with Texas Christian University.
We're in a low price environment. The market globally is deemed to be in an oversupply situation. Why in the world would they invest in a place like Venezuela?
Some of the roadblocks to big investments there aren't Venezuela-specific. Tseng says since oil prices went negative during the pandemic, energy companies shifted gears towards discipline.
No more drill, baby, drill. You know, get into debt by just continually drilling and drilling. Instead, focus on free cash flows, which allowed companies to pay down debt. to pay dividends consistently.
So you've got more corporate discipline, low oil prices, an oversupplied oil market, and uncertainty around demand. Not exactly the makings of a let's take on a big investment risk moment. Thomas Lyles is with Reistad Energy.
Investment is likely to remain fairly conservative, flattish in a sense, albeit with the ability to pick low-hanging fruit where needed.
So investing in places where there's already massive operations, like in West Texas or Guyana. As for the outlook in Venezuela specifically, a lot needs to happen to make that country investable in a big way, says Andy O'Connor with Morningstar DPRS.
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Chapter 6: How do working parents manage childcare during snow days?
In Venezuela, the challenge is developing abundant resources, not finding them. This requires a higher oil price. And then additionally, most potential investors will need a significant change in the country's legal and commercial frameworks before they consider investing.
The University of Houston's Ed Herz puts it a different way.
Until they see a Trump Hotel on the beach in Caracas, no oil company is going down to Venezuela with billions of dollars.
Even Chevron, which is already operating in Venezuela, is cautious. While it may increase its Venezuelan production in the near term with modest investments, there's still a ceiling on major growth for now. I'm Elizabeth Troval for Marketplace. Pushback against immigration and customs enforcement funding by Senate Democrats is blocking a government funding deal.
And so we're likely going to have at least a partial government shutdown over the weekend. And congressional Democrats aren't the only ones trying to protest the ongoing immigration crackdowns across the country, especially the ones happening in Minnesota. A coalition of activists from across the country have called for a national shutdown today to protest ICE and
In New York City, Fannie Gerson of Fan Fan Donuts and the restaurant Mijo says the vast majority of her employees are immigrants. And so today, like many businesses around the country, she faced a choice.
We can either stay open, business as usual, or we could stay open and give a portion or the entire sales to an organization that we all agree upon, or we close.
She asked her employees what they wanted, and everyone chose to shut down.
I don't know if we can really afford to, but this is just the bigger and what was most important to us, even though we don't know exactly, like, the financial hit.
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Chapter 7: What role do small businesses play during community protests?
Caroline Glover of the restaurant Annette and the traveling Mercy's Bar in Aurora, Colorado, says this is a tough time of year. For us, closing down on a Friday night at the end of the slowest month of the year just was not a business decision that we could do. You know, we couldn't support our staff financially if we did that.
She says most employees told her... They want to work because they have rent to make at the end of the month. So she decided on a middle ground. They're open and donating 10% of sales all weekend to refugee and immigrant rights organizations. In the Twin Cities, hundreds of businesses shut their doors last Friday, including St. Paul's store, The Yarnery.
But co-owner Scott Rohr says he's not shutting down today.
In part because we are donating proceeds from various projects, not just today, but throughout the weeks.
He says he and the business are in this for the long term. So he's planning for what other actions or closures might look like in the future. I'm Carla Javier for Marketplace. Coming up... I want a nice drink. I want a fancy drink. I don't want to spend that money, though. Especially in this economy. But first, the numbers. The Dow Jones Industrial Average lost 179.4% to close at 48,892.
The Nasdaq gave up 223.9% to finish at 23,461.
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Chapter 8: How can businesses balance activism and financial sustainability?
And the S&P 500 dipped 29.4% to end at 69.39. Gold and silver were on a tear all month until they tanked today. Investors who fled to them as safe havens in uncertainty seemed a bit less uncertain after the president named his choice for Fed chair. Silver sank more than 25%. Gold fell about 9%. Bonds also fell. The yield on the 10-year T-note rose to 4.24%. And you're listening to Marketplace.
This is Marketplace. I'm Kimberly Adams. Parts of the eastern U.S. are forecast to get more snow this weekend. This comes after much of the country was hit by heavy snow and ice last weekend. That storm brought power outages, canceled flights, and school closures. In some places, power is still out, roads are still treacherous, and schools are still closed.
Working parents, however, don't get a snow day. They get a day where they're working two jobs, and there are all sorts of costs to that. Marketplace's Stephanie Hughes shares her firsthand experience. This week, I've been referring to my seven-year-old, William, as my assistant.
You know how to find those letters so fast?
Yes, I'm a good typer. Baltimore, where I live, was hit by about a foot of snow. Public schools have been closed all week. My husband and I split up childcare and tried to do our jobs with the kids around. But even when you hide yourself away in the house, your children will find you. Let me send this one message and then I'm going to come downstairs and talk to you and daddy, okay?
For working parents, no days become this jumble of work and parenting where you feel like you do nothing well. And I'm one of the lucky ones. I can work from home. I heard from lots of parents in the region who are exhausted.
It's been a bad week, I would say. It's been a comically bad week.
Matthew Johnson manages a team of developers for a tech company. He lives in Washington, D.C. with his wife, who works in data visualization. They have three kids. This week, they had to take turns working and caring for their children, which meant taking paid time off.
We're just burning through PTO while at the same time putting in hours to work to just try to keep not even the ship running, but just making sure the ship doesn't sink.
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