The market is mispricing the Fed. The next move is a hike, not a cut, as sticky inflation persists. A potential Warsh chairmanship would cement a hawkish reset, ignoring political noise. This macro headwind is being overpowered by a structural AI capex supercycle. $800B in spending is driving double-digit earnings revisions, decoupling tech from a sluggish economy. This is the primary long thesis, with alpha moving to smaller names.

Fed Governor Waller's hawkish pivot to floating rate hikes is a direct challenge to the incoming, politically-appointed Chair Warsh. This isn't a random speech; it's a pre-emptive strike to re-anchor the Fed's inflation mandate against White House pressure for cuts. Waller is signaling that a hawkish faction will fight to keep the reaction function data-dependent, a view echoed by Treasury. The Fed's independence is immediately being tested.

Core view: "Inflationary growth" regime is the new paradigm. Fade bearish sentiment; hard data is what matters. Fiscal dominance (6% deficit) underpins growth but keeps yields/inflation sticky. The play is a leadership rotation from tech/semis to cyclicals (financials, industrials). Own gold as a diversifier in a world where bonds offer little protection.

Geopolitical risk premium in energy is structural, not transient, keeping inflation sticky and forcing central bank divergence. BOJ is the cleanest hawkish bet, set for a 1% hike in June on domestic wage strength, ignoring external noise. RBA is next if CPI pass-through confirms. Fed remains inflation-focused, capping risk assets. The key macro trade is long North Asia (tech exporters) vs. short South/SE Asia (commodity importers) as the growth gap widens.

Don't chase the US-Iran deal narrative. What's on the table is a fragile, interim ceasefire, not a real accord. Trump is politically trapped: he needs lower oil prices pre-midterms but faces huge domestic blowback for a weak deal. Iran knows it has leverage. This is a temporary de-escalation to open the Strait, kicking the can on core nuclear issues. The structural risk premium in oil isn't going away. Fade the knee-jerk selloff.

Fading geopolitical risk premium in oil is the main event, providing a green light for tech longs. Lower energy prices shelve JPY intervention risk as FX vol collapses. The new Fed chair's focus on a "trimmed-mean" inflation definition is a dovish tell, despite QT noise. The real signal is the structural breakdown in stock-bond correlation; multi-asset books must adapt to this new regime.

New Fed Chair Warsh signals a hawkish pivot. The market's rate cut fantasy is dead; a hike is now on the table, driven by sticky inflation and elevated oil. Warsh's first job is to reset the statement to neutral and firm up the dot plot. Separately, the AI capex supercycle is the dominant structural theme. $800B in spending is driving double-digit earnings revisions, decoupling corporate profits from sluggish GDP. This is a powerful margin expansion story.

The key trade is front-running the new Fed regime under Warsh. Expect a dovish pivot masked by balance sheet shrinkage. He'll use statistical framing like "trimmed mean inflation" to justify rate cuts, sending yields lower and NDX higher. Ignore soft sentiment data; it's noise. The oil spike is a misread—the world is flush with crude. Once the temporary disruption premium evaporates, oil collapses, reinforcing the disinflationary narrative for the Fed's pivot.

Forget cyclicality. The memory shortage is structural & extends well beyond 2026. Micron's CEO confirms they can only meet ~60% of insatiable AI-driven demand, creating a durable supply/demand chasm. This underwrites a multi-year supercycle and sustained pricing power. The $200B US capex plan is the signal. The true bottleneck for AI expansion isn't capital, it's silicon. This is a secular tailwind for the entire hardware stack and a core long for NDX.

A Warsh Fed signals a dovish pivot, but a slow burn. His core thesis: the AI/tech boom is a positive supply shock, providing the intellectual cover to ease. He's a strategic consensus-builder, not a maverick, so don't expect immediate cuts. He'll build a foundation for a gentle easing cycle, viewing Powell's presence as a non-factor. This framework is structurally bullish for duration and tech, but the timing is gradual.