Fed Chair Pick Kevin Warsh Wins Key Senate Committee Vote

Summary

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Bloomberg Intelligence Podcast

Episode: "Fed Chair Pick Kevin Warsh Wins Key Senate Committee Vote"

Date: April 29, 2026
Hosts: Paul Sweeney, Scarlet Fu
Main Guests: Enda Curran (Fed and Economics Reporter), Neeraj Patel (Senior Software Analyst)

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Overview

This episode covers two main themes:

• Federal Reserve Leadership Transition: Kevin Warsh's progress toward becoming the next Fed Chair after clearing a crucial Senate committee vote, and the ongoing succession drama involving current Chair Jay Powell amid ongoing DOJ and inspector general investigations.
• AI’s Impact on the Software Industry: Examination of how artificial intelligence is disrupting software, particularly software-as-a-service (SaaS), with insights from Bloomberg Intelligence on industry winners and losers as well as strategies for adaptation.

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I. Federal Reserve Leadership: Warsh’s Senate Committee Win & Powell’s Uncertain Future

Key Developments

• Kevin Warsh clears the Senate Banking Committee (01:52–02:58)
  • After months of delay, Warsh's nomination for Fed Chair will advance to a full Senate vote.
  • Jay Powell's term ends May 15, with timing for final confirmation still in question, but not critical due to calendar placement of the next FOMC policy meeting.

“After many months of protracted negotiations, we finally have had that committee vote now. So this moves Mr. Warsh’s nomination out of the Banking Committee and it should go on to the Senate floor for a full vote… Today just really cements that after that extraordinary succession drama we’ve had since January.”
—Enda Curran, Bloomberg Fed Reporter (02:14)

Jay Powell’s Position and the DOJ Investigation

• Powell can remain as a Fed Governor until January 2028 (03:08–04:24)
• Powell likely to address his status at the upcoming Fed press conference (04:24)
• Ongoing DOJ and inspector general (IG) investigations impact Powell’s ability to step down confidently

“He can’t leave his governor role until the specter of that DOJ investigation into him and the Fed is cleared in all finality… There’s a debate over whether or not what the DOJ did last week in terms of dropping their investigation does meet that threshold of finality.”
—Enda Curran (03:08)

Fed Independence and Political Tensions

• Intense political scrutiny and risks to Fed credibility (04:25–05:22)
  • Discussion on how Warsh will handle pressure from President Trump, especially regarding interest rates.
  • Broader implications for Fed governance and the outcome of pending Supreme Court cases (notably involving Governor Cook).

“Mr. President Trump continues to hammer the Fed over interest rates. He wants them brought down quickly. He’s even said that he would be disappointed if Mr. Warsh… doesn’t get a move on pretty quickly…”
—Enda Curran (04:29)

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II. AI & the Software Sector: Risks, Winners, Losers, and Company Strategies

Current Market Dynamics and Pressures

• AI disruption in application software is separating winners and losers (08:01–09:20)
  • Core 'system of record' vendors (Salesforce, Workday, SAP) are unlikely to be replaced by AI
  • Marketing-heavy software companies (HubSpot, Klaviyo, Adobe Marketing, etc.) are at higher risk

“System of record companies like Salesforce… are at least not going to be structurally replaced by AI. Other companies that are in marketing application… they have more pressure there because… AI is very good at [language-based repetitive solutions].”
—Neeraj Patel (08:35)

Valuations, Private Credit, and Spillover Effects

• Downward pressure on valuations and ripple effect: (09:20–10:50)
  • Both large public software companies and smaller, private, venture-backed firms are feeling impacts.
  • The pullback in additional analytics/AI-layer growth (e.g., Medallia) signals a leveling of growth rates.

“Even for the big large cap companies, they’re trading on par with the S&P 500. That’s never happened historically… The additional growth rate is being pulled down because AI is attacking the workflow layer, the analytic layer, the insight layer, which was an upsell or additional cross-sell.”
—Neeraj Patel (09:59)

How Software Companies are Responding to AI

• Focus on developing 'agents' and AI-native solutions (11:00–11:53)
  • Companies are aggressively introducing AI agents, though without charging customers (yet).
  • Monetization from AI is not expected to surface until mid-2027.
  • Current financials will not reflect these transitions in the near term.

“They’re introducing agents, introducing them quite aggressively. They’re not going to charge customers for this additional usage… After mid-2027 we expect some repricing… So they’re definitely taking the steps that they should be in introducing agent and AI native solutions.”
—Neeraj Patel (11:00)

Near-term Outlook and Metrics to Watch

• AI agent 'building blocks' and software infrastructure metrics are key leading indicators (12:05–13:09)
  • Metrics such as downloads of AI coding agents, protocol adoption, and agent orchestration usage are being tracked.
  • As long as these metrics grow, agent penetration into enterprise software is considered inevitable.

“What I’ve been focusing in on is what are the building blocks for these agents… are the downloads increasing?... So as long as that increase is continuing… then we think agents are going to come to the enterprise and it’s just a matter of time.”
—Neeraj Patel (12:05)

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Notable Quotes & Memorable Moments

• “After many months of protracted negotiations, we finally have had that committee vote now. So this moves Mr. Warsh’s nomination out of the Banking Committee and it should go on to the Senate floor for a full vote…” (02:14, Enda Curran)
• “He can’t leave his governor role until the specter of that DOJ investigation into him and the Fed is cleared in all finality.” (03:08, Enda Curran)
• “System of record companies… are at least not going to be structurally replaced by AI. Other companies that are in marketing application… they have more pressure there…” (08:35, Neeraj Patel)
• “Even for the big large cap companies, they’re trading on par with the S&P 500. That’s never happened historically…” (09:59, Neeraj Patel)
• “Monetization from AI is not going to surface until mid-2027.” (11:00, Neeraj Patel)

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Important Segment Timestamps

• Fed Chair Nomination, Warsh Vote: 01:52–02:58
• Powell’s Situation/DOJ Investigation: 03:08–04:24
• Fed Independence & Political Pressure: 04:25–05:22
• AI Disruption in Software, Winners/Losers: 08:01–09:20
• Valuations & Private Credit Dynamics: 09:59–10:50
• Software Companies’ AI Strategies: 11:00–11:53
• Metrics & Future Impact of AI: 12:05–13:09

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Summary

This episode juxtaposes the high-stakes developments in U.S. monetary policy leadership—amid investigations and political tension—with a deep dive on how artificial intelligence is forcing software companies to adapt, innovate, and brace for fresh business models. Listeners get insider analysis on the upcoming Fed transition, challenges for Jay Powell, and sector-level insights on tech as AI rapidly changes the growth calculus for even the largest players.

Transcript

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[Bloomberg Host]

Wash. Fed Chair no clears Senate panel vote so after much delay moving very quickly here. So we want to bring in end occurrence Bloomberg Fed and Economics Reporter and it looks like we're making some progress here or the Congress is making some progress on getting more Mr. Walsh on board.

[Bloomberg Fed and Economics Reporter]

Yeah so after many months of protracted negotiations, we finally have had that committee vote now. So this moves Mr. Walsh nomination out of the Banking Committee and it should go on to the Senate floor for a full vote probably at some point soon. Mr. Powell Current Fed Chair Mr. Powell's term ends on May 15th. Whether or not Mr. Warsh gets his vote, full vote by then, or whether he's a few days over doesn't really matter very much because the next policy meeting after today isn't until the middle of June. So today just really cements that after that extraordinary succession drama we've had since January over the DOJ investigation and all the rest of it around all the rest of questions around the Fed. Mr. Walsh has now cleared that critical vote and is on the way to be the next chair.

[Host]

Right. The question now is what happens with Jay Powell seat. His term as Chair ends on May 15. Do you think this is something he's going to address at the news conference at 230?

[Bloomberg Fed and Economics Reporter]

Ender I think it'll be hard to avoid it. Scarlett as you say, his term as chair will end in the middle of next month, but he's entitled to remain on as a governor at the Fed until January 2028. Typically speaking Fed chairs head off and enjoy their retirement ahead into the sunset. But Mr. Powell made it was maybe last month, I think it was in his press conference that he can't leave his governor role until the specter of that DOJ investigation into him and the Fed is cleared. In all finality now there's a debate over whether or not what the DOJ did last week in terms of dropping their investigation does meet that threshold of finality because two things. A, they continue to appeal against the Fed's court wind that quashed the DOJ subpoena in the first place. That's one thread on this. And the second part of it is the the inspector general investigation into the Fed into the cost of the building renovation there is expected to report at some point over the summer. And the DOJ made it clear they have a threat that they could renew their investigation depending on what that particular finding from the IG throws up. So from Mr. Paul's, Powell's point of view, he may want to hang on to all of that. Clear critics would say he should just move on because it risks sort of stoking political resentment and political criticism of the Fed. But he's sure to comment on it. I would imagine at his press conference later today.

[Host]

It works.

[Bloomberg Host]

Independence of the Fed, where is that discussion these days?

[Bloomberg Fed and Economics Reporter]

And it's become very fraught, very divisive. Of course, you know, Mr. President Trump continues to hammer the Fed over interest rates. He wants them brought down quickly. He's even said that he would be disappointed if Mr. Wash, if he gets finally confirmed a share, doesn't get a move on pretty quickly as well so that political pressure can just be there. We wait, of course, the outcome of the Supreme Court really on the Governor Cook case, that's going to be very important. We wait and see what Mr. Powell signals about his future. That's going to be very important. But I think between now and the end of the year, there will be a lot of focus on how will Mr. Walsh respond to political criticism? Will he kind of stand up as a heat shield for the Fed, or does he? Will he be seen as buckling under Mr. Trump's pressure on the one hand? And on the other hand, how do the rest of the policymakers react, including Mr. Powell, likes Ms. Cook, etc. So lots of question marks still in terms of the mood music hanging around the Fed.

[Host]

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[Bloomberg Host]

One of the issues is the growth of AI, and we've seen the market really discern winners and potential losers from AI. One of the sectors that's come under pressure has been software, particularly software as a service sector. So I'm going to break that down a little bit. We can do that with Neeraj Patel, senior software analyst at Bloomberg Intelligence. Neeraj, I know you put out a research note recently on this, but we saw earlier or late last year, earlier this year, some software stocks, and particularly the software as a service stocks like ServiceNow and Salesforce really get sold off here. What's your view?

[Neeraj Patel]

Yeah, I think when we look at the AI disruption to application software, huge market, 700 billion market, but definitely there's winners and losers. And from our view, system of record companies like Salesforce, like Workday, like SAP are in the at least not going to be structurally replaced by AI. Other companies that are in marketing, Application, HubSpot, Klaviyo, even some of Salesforce Marketing, Adobe Marketing, they have more pressure there because it's a very heavy language based, repetitive type of solution that they offer to the clients, which AI is very good at. So we think they're more suspect to being displaced.

[Host]

The software market is massive. We kind of forget that sometimes because we talk about only the big players. But there's a lot of startups and they're borrowing from the private credit market as well. And I go back to some news from the previous week about a Blackstone fund cutting the value of its loan to a dental implant company. That's, you know, kind of private credit woes continued. But Blackstone also refused to extend a lifeline to a software company, Medallia. And I know that's kind of out of the purview of, you know, the big software companies that we cover that are listed. But I'm wondering whether there's any spillover to the bigger software companies from something like that.

[Neeraj Patel]

Yeah, I think it's a ripple effect and I think you've seen this with the valuation coming down. And when we look at a couple of valuation metrics, even for the big large cap companies, they're trading on par with the S&P 500. That's never happened historically. They're trading at 20 times forward earnings and they have about an 8 to 9% sales growth rate and operating margin that's on par. And there is definitely spillover from these smaller companies because what that is signaling to us is the additional growth which was an additional analytic or AI layer like Medallia was selling, like these other companies were providing, was sitting on top of a base core package. So the additional growth rate is being pulled down because AI is attacking the workflow layer, the analytic layer, the insight layer which was an upsell or additional cross sell for these companies.

[Bloomberg Host]

What can some of these software companies do? I don't know, to protect their business, to defend against AI? What can they do?

[Neeraj Patel]

Yeah, I think they're taking the steps. We're just not seeing it in the financials and we're not going to see it for the next couple of quarters. You're going to see this steady low teens growth rate. The gross margin is going to be preserved. But under the hood they are developing a lot of agents for their portfolios and that's exactly what they should be doing. They're introducing agents, introducing them quite aggressively. They're not going to charge customers for this additional usage. They want to land that account and maybe after mid-2027 we expect some repricing of the subscription and the outcome task based solution. So they're definitely taking the steps that they should be in introducing agent and AI native solutions. But it's just going to be, you know, we're going to have to wait for some type of AI monetization to surface from these companies which is going to take until mid-2027.

[Host]

From Nira, we were talking earlier about how four of the Mag7 names are reporting earnings after the close. What will you be listening for as it affects your software industry?

[Neeraj Patel]

Yeah, I think we've been trying to get a handle of, you know, when is the financial impact to application software and as well as infrastructure software going to take place? It's not there today as we've stated and I think as you're pointing out Scarlett, what do we look at is kind of a little gray. But what I've been focusing in on is what are the building blocks for these agents? And when I look at the building blocks I see the coding agents, cloud code cursor, OpenAI, Codex. Are the monthly downloads increasing there also some of the other ecosystem metrics like MCP which is a standard protocol of communication. Are the downloads increasing? There are the usage for orchestrating these agents. There's some other AI native solutions like LangChain and Crewai is that usage being increased. So as long as that increase is continuing, which is being utilized by these big four cap companies, then we think agents are going to come to the enterprise and it's just a matter of time and it's giving us a signal that trend's underway.

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