Kevin Warsh steps into the octagon

Warsh in five?
If you feel robbed that you didn't have a game six to watch last night in the NBA Finals because the Knicks knocked off the Spurs in game five on Saturday night, and you don't have a ticket for a World Cup match anywhere, there is still a little sporting drama for you, sort of. Kind of. Okay, fine, I really just wanted to shoe-horn in a Knicks reference. They won, if you haven't heard.

There is another dramatic contest this week, though it will mainly be behind closed doors. Kevin Warsh, newly installed chair of the Federal Reserve board, is conducting his first meeting of the Fed's rate-setting committee, the Federal Open Markets Committee. The two-day meeting started yesterday and concludes today. Our Kyle Campbell and Ebrima Santos Sanneh have a preview for you.

Everything from the way he talks to the ties he wears will be obsessively analyzed. There is no detail too small when it comes to the Fed chair, whose every utterance has the potential to move markets from Washington to Beijing and back. Warsh was a fairly outspoken critic of the bank, both when he sat as a Fed governor before the 2008 crisis and after he quit. It will be interesting to see what plans he has, and how much power he has to implement them.

One thing that we know he wants to do and probably won't be able to: cut interest rates. With inflation at its highest point in three years and the economy holding up, it's impossible to believe that Warsh could wrestle enough of the committee members into agreeing. The fed funds' rates target range was 3.5% to 3.75% going into the meeting and it will be 3.5% to 3.75% coming out of it. 

M&A-OK
At one point earlier this year it looked like 2026 was going to be a pretty hot one for M&A. Fifth Third closed its $11 billion deal for Comerica in February, just four months after announcing it. The speed was a reflection of the new, business-friendly regulatory stance out of Washington and it augured for more deals.

Then Banco Santander topped that deal with its $12 billion package for Webster, and it looked like we were really going to have something going on here. It wasn't crazy to think that 2026 would be a better year for M&A than 2025, which itself was the best year for deals since 2022.

M&A is always a pretty good indicator of how the executive class is feeling. Deals happen when their stock is up, business looks good, the economy looks good, and they're seeing a good landscape to grab market share. And with a strong first-quarter for earnings, the landscape was looking pretty good. 

That was February, and you all know what happened at the end of February. 

Overall M&A activity has been weaker in 2026 compared to last year. There have been 71 acquisitions so far this year, according to Seaport Research Partners, which is well behind 2025's pace. The big impediment is the uncertainty of the Iran war and its effect on the U.S. economy. It's hard to know exactly when or how this conflict will end, or what terms will be. Even now, with a purported peace agreement, the prospects seem to change daily. But it does feel like the effect on the U.S. economy, so far at least, has not been that damaging, and that seems to be giving some comfort to the executive class.

We noted a pair of mergers earlier this week. In Michigan, Isabella Bank inked a $55 million deal to buy in-state rival Grand River Commerce. In the D.C. area, Old Dominion National Bank and National Capital Bank of Washington merged in a $98 million deal. One twist in the latter deal is it was structured in a way to preserve National Capital Bank as an institution, notable since the bank traces its history back to 1889. 

Those are not huge deals, of course, and it feels like it's been a while since we've had a really sizable deal. But the economic pressure of the war has not so far been that dramatic and the stock market certainly is on fire. I wouldn't be surprised if we started seeing some more deal-making.