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Everyone watched the Fed today and saw "no cuts" or a dot plot that looked "hawkish" They're missing what actually happened. Kevin Warsh just quietly announced he doesn't care about dot plots & he'll rebuild entire FED for an AI economy, while measuring inflation differently.

39,963 просмотров • 1 месяц назад •via X (Twitter)

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The new Fed Chair just went on record saying AI is the biggest economic shift of his lifetime and markets are completely missing what that means (Save this). Kevin Warsh, the newly confirmed Fed Chair declared that artificial intelligence is "perhaps as important a change in the economy, business, and households as we've had in my adult lifetime." Before being nominated, Warsh called the current moment the most productivity-enhancing wave of our lifetimes, past, present, and future and argued in a Wall Street Journal that AI would be a significant disinflationary force that bolsters American competitiveness for decades. Warsh's core thesis is built on a direct parallel to the 1990s internet boom. He argues that the internet took a decade to show up in official productivity data, but the Fed under Greenspan took the bet early allowing the economy to run hotter than conventional models suggested and the result was a historic expansion with low inflation and rising real wages. Warsh wants to make that same bet on AI, and has said "the anecdotes will be there before the data. Policymakers will have to take a chance." But his first meeting as Fed Chair tells the more complicated near-term story. Today, Warsh held rates steady at 3.5 to 3.75%, the fourth consecutive hold and nearly half the committee signaled they want to hike rates before year end, with nine officials forecasting at least one increase. The reason AI infrastructure spending is currently inflationary before it is disinflationary, the $4 trillion global data center buildout is consuming steel, electrical equipment, land and skilled labor faster than it is producing productivity gains. Warsh notably did not submit a rate forecast dot at all, the only FOMC member not to, a deliberate signal that he refuses to box himself in. He also made a sweeping structural change to how the Fed communicates. Warsh stripped forward guidance from the policy statement entirely and has reduced the frequency of public Fed commentary, his philosophy being that markets should react to data, not to Fed predictions. This is a fundamental shift from the Powell era, and it means volatility around economic data releases goes up substantially from here.

Milk Road AI

72,903 просмотров • 1 месяц назад

KEVIN WARSH IS ANOTHER REASON BEHIND THIS MARKET CRASH. Yesterday’s sell off began when the probability of Kevin Warsh becoming the next Fed Chair surged sharply. , This reaction was due to Kevin Warsh’s policy record. Kevin Warsh is not a new name. He served on the Federal Reserve Board from 2006 to 2011 and played a role during the 2008 crisis. Since leaving the Fed, he has been one of the most vocal critics of how monetary policy was handled after that period. He has repeatedly argued that QE inflated asset prices, increased inequality, and mainly benefited financial markets rather than the real economy. He has described QE as a REVERSE ROBIN HOOD policy. He has also said the post 2020 inflation surge was a policy mistake, not an unavoidable outcome. That tells markets he is less tolerant of prolonged ultra easy policy. While Warsh now supports cutting interest rates, his framework is different from what markets are used to. He has opposed for rate cuts combined with balance sheet reduction, not open ended liquidity. This is a big issue. Markets are pricing the risk that rates may come down, but liquidity may not expand the way it has in previous cycles. That combination is not friendly for highly leveraged trades, stretched equity valuations, or liquidity driven rallies. In simple terms: • Trump wants lower rates • Warsh wants tighter balance sheet discipline • Markets fear rate cuts without QE The era of QE is no longer guaranteed. And markets are finally starting to price that reality.

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424,051 просмотров • 5 месяцев назад