Kevin Warsh, President ​Donald Trump’s pick to succeed Jerome Powell as head of the Federal Reserve, is getting closer to confirmation. His nomination was cleared by the Senate Banking Committee in a 13-to-11 vote that stuck to party lines (Republicans supported Warsh for the job), and approval by the full Senate is expected this week.

But then comes the hard part: Will he be able to introduce new processes into a Fed that’s stuck in its ways? He has indicated a desire for big changes at the central bank, including a tighter focus on the Fed’s congressionally established responsibilities, and potentially reducing how much the Federal Open Market Committee (FOMC), which sets interest rates, lets the public into its thinking.

One major change he could bring about soon relates to how the Fed measures inflation, a highly influential factor in its two-pronged mission of maintaining economic stability and maximizing employment.

“The data that’s being used to judge inflation is quite imperfect,” he said during his confirmation hearing.

Pros and Cons

When the Bureau of Labor Statistics drops inflation data each month, it’s sharing the Consumer Price Index (CPI). Meanwhile, the Bureau of Economic Analysis reports the Personal Consumption Expenditures (PCE) data. Both indices include permanent price changes but also a whole lot of noise, which policymakers don’t necessarily want when deciding how to set interest rates. So the Fed also looks at core inflation, which excludes food and energy prices that can fluctuate sharply because of events such as droughts, floods and military conflicts.

Now, Warsh is calling for the central bank to consider “trimmed” mean inflation, which eliminates outliers by sorting the price changes of all items in an index from smallest to largest and removing the most extreme on both ends. There are pros and cons:

• Experts at Brookings say the first release of trimmed mean inflation can better measure inflation than core PCE (both are later revised) and be a better predictor of where inflation is going. It also offers more flexibility around removing volatile elements, since it’s not limited to food or energy.
• On the flip side, “trimmed mean and median inflation measures are unbiased only if the underlying price change distribution remains constant, for example, if prices at the bottom end of the distribution always fall more than prices at the top end of the distribution rise.” Of course, that’s not always the case. The measure would also exclude much of the impact of the president’s tariffs and the war in Iran, which do have a massive impact on the economy, markets and more. Plus, it’s changing the Fed’s goalpost, which doesn’t exactly help the central bank’s credibility.

Upcoming Test: Economists are likely to be looking for early insight into how Warsh’s preferred gauge might work this week. April CPI data comes out Tuesday.

There’s finally some clarity on the Clarity Act, a piece of legislation expected to pave the way for crypto’s mainstreaming.

The head of legal affairs at Coinbase expects the Clarity Act to pass by summer’s end, now that banks and crypto companies have reached a compromise regarding stablecoin rewards. Coinbase walked away from the act in January, when CEO Brian Armstrong wrote on X that no bill is better than a bad bill. He argued that banks were trying to shut down competition from crypto competitors by banning them from offering customers rewards for holding stablecoins on their platforms. Banks said that the system operated too similarly to traditional savings accounts.

Now, Armstrong’s saying, “Mark it up,” meaning send it to the Senate Banking Committee for a hearing known as a markup. The revised Clarity Act lets customers earn rewards for activities like trading or staking, but not for just letting stablecoin sit in their accounts.

Wall Street’s Warm Welcome

The act’s progress through the Senate raised investor hopes. Shares of Stablecoin issuer Circle, which reports earnings today, surged 20% shortly after the compromise came out. Coinbase, the main platform that distributes Circle’s USDC coin, jumped more than 6%. Bitcoin, meanwhile, broke past $80,000 for the first time since January.

By getting the nod of approval from both big banks and regulators, crypto companies can start working with Wall Street to integrate blockchain tech into traditional financial architecture:

• Circle’s SVP of marketing said at Consensus Miami’s annual crypto conference last week that stablecoins could become a part of digital payments in a way that users won’t even notice. Stablecoins could be used to conduct transactions faster and cheaper than traditional payment rails. Chainalysis expects the number of on-chain stablecoin transactions to match off-chain Visa and Mastercard transactions sometime in the 2030s.
• The Clarity Act’s passage could prompt more traditional financial institutions to lean into the shift by supporting stablecoin payments, partnering with crypto companies, or issuing their own stablecoins.

A New Look: Proponents of the Clarity Act expect it to help crypto change from jeans and a hoodie to a suit and tie. Also at Consensus Miami, Binance’s CMO likened the moment to crypto moving past its Prohibition-era stage into an infrastructure-building phase. Stablecoins are the most palatable part of the crypto ecosystem for regulators and Wall Street, and could serve as an entry point for other parts of the crypto-verse to be considered.

Now that makes for good optics.

Shares of 175-year-old materials-maker Corning soared to an all-time high last week following the announcement of a multi-billion dollar partnership with AI kingmaker Nvidia to make fiber-optics. It’s a big win for the company best known for making iPhone screens, and comes as the American AI industry scrambles to near-shore its supply chain.

Factory Setting

Nvidia’s interest in Corning is twofold. First, like much of the rest of the tech industry, tariffs and geopolitical tensions have left Nvidia eager to reduce exposure to Taiwan, China and Vietnam (see: Apple’s recently increased interest in domestic chipmaker Intel). Second, its next-gen chips are pushing up against the limits of copper wire, leaving high-tech fiber-optic cables as a suitable (and now critical) replacement.

The deal struck between the companies last week is Nvidia’s attempt to kill two birds with one stone and a couple of billion dollars:

• According to regulatory filings, Nvidia is investing $500 million in Corning stock, with the right to acquire up to 15 million more shares for a total equity stake worth roughly $3.2 billion.
• In turn, Corning has pledged to increase its domestic fiber optic production capacity by 50%, with plans to build three new US manufacturing plants in North Carolina and Texas that will employ some 3,000 workers.

“We’re going to scale up optical at a scale that, quite frankly, no optical companies have ever enjoyed,” Nvidia CEO Jensen Huang said during an interview on CNBC’s Mad Money last week, adding that the company aims to help “revitalize American manufacturing for the first time in several generations.”

Metatextual: For Corning, it’s the second major Big Tech deal this year, after landing a $6 billion partnership with Meta in January, also to supply fiber optics. Shares of Corning are up roughly 110% so far this year and 320% in the past 12 months. Not bad for the company that invented Pyrex glass cookware more than a century ago.