I’m reviving this series as a forecast update on the global events I cover. While deep dives are great for introducing a new thesis, they are not optimal for updating. Each deep dive is standalone and needs full context, so I kept repeating large parts of a thesis in every update. Now, I will be able to update you on a rolling basis and build up my theses step by step.
Today I’ll start with the Fed post-mortem and its implications. Then I have a forecast update on Iran and Ukraine after the UNGA.
The Fed
The hike vs no hike thesis was a simple one. It was essentially the market vs the belief in Trump (or the belief that there is a plan). The Fed-Treasury Accord, the grand strategies, Project 2025, Miran’s paper… all imploded on September 16th. However you want to look at it, there’s nothing good for Trump coming out of the hike. But this is only half of the story.
The most important signal about the FOMC wasn’t the decision to hike. It was the fact that the decision was unanimous. The economic data on its own didn’t call for a hike. It was Warsh’s suggestive language that pushed the yields higher. The very person who wanted to abolish forward guidance fell victim to it. Or did he?