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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