“Don't Fight the Fed.” But What If You Can't Find It?

• Warsh has stated he does not believe in forward guidance, arguing it traps the Fed into holding forecasts longer than warranted and that the central bank should 'work without applause' rather than manage market expectations
• The elimination of the dot plot would increase market volatility around economic data releases (CPI, jobs reports, earnings) as investors lose the ability to front-run Fed moves, requiring a shift from Fed-watching to fundamentals-driven investing
• Tomorrow's June meeting is strategically optimal for this change as it is one of only four meetings per year that includes the Summary of Economic Projections containing the dot plot, forcing Warsh to address the issue directly

Summary

Key Development: New Federal Reserve Chairman Kevin Warsh may eliminate forward guidance and the dot plot—tools central banks have used since 2008 to telegraph future rate policy—potentially at tomorrow's FOMC meeting.

Background: Forward guidance emerged after the 2008 crisis when conventional rate cuts hit zero. Former Chair Ben Bernanke introduced the dot plot (quarterly projections of future rates), which Jerome Powell expanded with press conferences after every meeting. This created an entire Wall Street industry around decoding Fed communications.

Warsh's Position: At his April Senate confirmation hearing, Warsh stated: "I don't believe in forward guidance" and criticized how the Fed becomes "locked into" published forecasts even when data changes. He advocates for a Fed that "works without applause" and responds to real-time data rather than managing market expectations.

Why Tomorrow Matters: June's meeting is one of four annually that includes the Summary of Economic Projections containing the dot plot. Warsh must either publish it, modify it, or actively decline—making this a natural inflection point. The rate decision itself is expected to be a hold, even considering Sunday's Iran peace deal.

Market Implications

• Increased volatility around economic data releases (CPI, jobs reports, PCE)
• Shift from Fed-signal positioning to fundamentals-based investing
• Reduced ability to "front-run" Fed moves
• Strengthened case for hard assets like gold as traditional anchors weaken

Investment Strategy Changes

1. Focus on economic data over Fed communications
2. Position for higher volatility around data events
3. Consider hard assets as portfolio stabilizers

Bottom Line: The investing maxim "don't fight the Fed" assumes knowing where the Fed is headed—a paradigm that may end under Warsh's leadership.