Hypothesis: Budget Math Suggests Big Tariffs Are Coming. This week we learned that Treasury Secretary Bessent is trying to get Trump to change his scorecard for the success of his economic policies from a higher stock market to a lower 10 year yield. Lowering borrowing costs for.

Can someone please show the President that gasoline prices on average in American are not really falling and nowhere are they actually below $2/gal despite the fact that oil prices have been soft.

What do you want to know?.

Reminder:. Now that Trump has fired Cook (for cause), this could set off a chain reaction where Trump now appoints 2 more governors to the FOMC, Trump would hold a 4-3 majority on the board of governors (would move to 5-2 if Powell left after his chair is over);. That majority.

Oh my!!.

This idea about the Fed dealing with their different mandates over different time horizons demonstrates the asymmetry in their reaction function, one which continuously favors the employment mandate over inflation mandate, even when the inflation mandate is further away from.

This is my quant.

Powell knew exactly what he was doing with that speech at Jackson Hole and what the reaction of asset prices would be. He could have very easily kept the market in the dark about the September rate cutting decision and forced the market to actually wait to see that the labor.

If the Fed really wanted to help the housing market, would actually selling its MBS holdings be a good idea?.

Fed interest rate cuts aren’t bullish for risk assets if they come for the wrong reason. My base case is that Fed is cutting because of Labor weakness → earnings roll over → equities fall despite easier policy. If you think this is more like 2019 than the 1970s, make your.

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In sum, Powell caved. Rate cuts are coming, but credibility is on the line. My base case: cuts forced by labor weakness → equities struggle, hard assets win. Watch the long end. If vigilantes reappear, the party ends fast.

Positioning:. Favor gold and bitcoin over equities as this is more about Fed credibility on inflation and $ debasement than loosening into an economic re- acceleration.

Bonds are the credibility test. If term premia rise, long-end yields will climb even as the Fed cuts short rates. That means tighter financial conditions despite easing. Classic vigilante move. Didn't happen yesterday but let's watch to see what happens this week into heavy.

For equities, it comes down to why the Fed is cutting:. •Scenario A (25%): Disinflation continues → earnings hold up, multiples expand. •Scenario B (75%): Labor market weakens → earnings roll over, recession dynamics ensue. My Base case: Scenario B.

The Fed’s problem:. •Cuts won’t cushion low-end consumers. •Cuts won’t save over-levered small caps. •Inflation expectations risk drifting higher. Narrative shift: “Fed capitulation” has begun.

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This isn’t 2019’s “mid-cycle adjustment.”. Core PCE is still 2.9% y/y and moving higher. Powell is easing with inflation above target and employment still very close to maximum. That looks a lot more like the 1970s than the late 2010s.

Powell caved at Jackson Hole. The Fed is preparing to cut in September, prioritizing jobs over inflation. Markets threw a party: stocks, gold, crypto up; dollar and yields down. But the credibility risk is real. 🧵.

RT @Convertbond: Financial Repression

Going live to talk about Jpow's PACO performance this morning.

RT @ces921: Jackson Hole Speech: JPow starring as PACO