Trump's Fed Pick: The Crisis Veteran Who Called for Regime Change

Donald Trump nominated Kevin Warsh to lead the Federal Reserve on Friday, ending months of speculation about who would replace Jerome Powell when his term expires in May.

Warsh, 55, served as a Fed governor from 2006 to 2011 and has spent the years since becoming one of the central bank's sharpest critics.

The pick surprised few on Wall Street.

Warsh was the youngest Fed governor in history when George W. Bush appointed him at 35. During the 2008 financial crisis, he served as a vital conduit between the Fed and Wall Street, helping coordinate the AIG bailout and JPMorgan's acquisition of Bear Stearns.

Don Kohn, the former Fed vice chair, recalled that Warsh "knew these people on Wall Street" and could tell "when they were arguing their book and when they were bringing us good information."

But Warsh has turned against the institution he once served.

He told CNBC last summer he supported "regime change" at the Fed, arguing its monetary policy "has been broken for quite a long time."

He's attacked everything from the central bank's reliance on data to its expanded mandate on issues like climate change.

Let's watch where this one goes.

The Dollar's Decline: Trump's Gamble on America's Currency

The US dollar hit a four-year low this week, capping off a brutal stretch that has seen the greenback shed 2.2% this year after tumbling more than 9% in 2025.

President Trump's response? "I think it's great."

Trump has long championed a weaker dollar as a boon for American manufacturers. His logic is pretty straightforward: when the dollar falls, US exports become cheaper for foreign buyers, and companies with overseas operations see their foreign earnings worth more when converted back home.

"You make a hell of a lot more money with a weaker dollar... than you do with a strong dollar," he said last July.

But the White House's comfort with currency weakness has market watchers worried. Nela Richardson, ADP's chief economist, calls the decline a "double-edged sword."

While cheaper exports sound appealing, a weaker dollar makes imports more expensive and could reignite inflation.

More concerning, it threatens investor confidence at a time when the US needs to sell trillions in Treasury debt to finance its growing deficit.

Cole Smead of Smead Capital Management sees this as the start of a sustained bear market. He points to the 2002-2008 period, when the dollar plunged 41% after the tech bubble burst.

With 70% of the MSCI World Index now comprised of US stocks, he argues capital will eventually flow elsewhere as investors chase better returns.

The dollar's decline reflects more than just economics. Trump's erratic policy approach, from Liberation Day tariffs to Greenland threats to attacks on Fed independence, has unnerved markets.

Investors are responding by hedging dollar exposure and piling into gold, which has doubled in price over the past year.

Treasury Secretary Scott Bessent tried to calm nerves this week, insisting the US "always has a strong dollar policy." But his boss keeps saying otherwise.

The disconnect raises a fundamental question: can the US pursue Trump's growth agenda while maintaining the dollar's reserve currency status? The market is starting to price in the answer.

Tesla Bets the Factory on Robots

Tesla is killing off the Model S and Model X, the vehicles that made electric cars mainstream. The Fremont factory lines that once built these flagship sedans will now produce Optimus humanoid robots instead.

Elon Musk calls it "an honorable discharge" for cars that helped Tesla become the world's most valuable automaker.

The shift comes with a massive price tag. Tesla's capital expenditures will jump from $8.6 billion last year to over $20 billion in 2026, funding six production lines across robotics, autonomous vehicles, and AI infrastructure.

Analysts wrote that Musk has reached a "burn the ships" inflection point, committing fully to a vision with no room for retreat.

The timing is rather awkward. Tesla's revenue fell 3% in 2025, marking its first annual decline on record. Fourth quarter net income dropped 61% to $840 million.

Automotive revenue, still 70% of the business, declined 10% as Tesla failed to launch new EV models while facing fierce competition from BYD in China and European rivals.

To fund the transformation, Tesla invested $2 billion in Musk's AI startup xAI this week. The company is also evaluating potential AI collaborations with xAI, whose Grok chatbot already runs in Tesla vehicles. Meanwhile, SpaceX is reportedly in merger talks with both Tesla and xAI ahead of a planned IPO this year.

Musk acknowledged that Optimus remains in early stages, with no significant production expected until late 2026.

The Cybercab robotaxi faces similar delays. Musk admitted that Optimus isn't yet being used in Tesla factories "in a material way," despite plans to build a million units annually at the repurposed Fremont site.

For investors, this is a bet on potential revenue from self-driving software and robotaxis before auto sales recover. As one longtime Tesla fan posted on social media: "Tesla has no interest in making cars anymore."