At least in terms of scheduled events, this’ll be a slow week on the macro front in the US. The data docket’s nearly empty and the Fed’s in their self-imposed quiet period ahead of the October FOMC meeting.
While chatting with Kristalina Georgieva at the IMF meetings in Bangkok last week, Kevin Warsh gave no indication whatsoever that the market’s wrong to pencil in a pause for the October 28 policy decision.
The BEA won’t release September’s PCE price update until the day after, but even if the Fed gets the numbers ahead of time and the core print’s unfavorable, it won’t matter: October’s a skip. Or a “pause.” They’re not going to hike six days before the midterms.
The sell-side’s operating on the assumption that the nascent hiking “cycle” will resume in December, and that the Committee will hike again in March then call it done having reversed 2025’s trio of cuts. I don’t think that’s necessarily “wrong,” I just think it’s boring and, perhaps, a little naive.
In my view, Warsh is looking for an excuse to avoid raising rates again. The data’s not cooperating at all, but if inflation ebbs, even just at the margins, I suspect his ostensible commitment to price stability will take a backseat to the imperative of staying in Donald Trump’s good graces. Particularly if the “task forces” conveniently determine that inflation’s mis-measured in the US
The September CPI–PPI series was little short of a disaster, and as the figure above shows, a CPI-derived version of the so-called “supercore” metric the Fed tracks is back above 3%, which BMO’s Ian Lyngen noted is three-quarters of a point higher than the 2013-2019 average.
But… well, again, I think Warsh is hoping against hope that he can wait this out. That the “one-off” jolt from successive tariff escalations and the “temporary” impact of rolling supply shocks will abate before his back’s completely against the wall.
Of course, it’s also possible the US economy rolls over, thereby making the whole thing a moot point. “As real rates continue pressing higher, we become increasingly wary that something will buckle under the strain of elevated borrowing costs,” BMO’s Lyngen remarked. “Perhaps once the upward trajectory of AI capex spending is exhausted and the onus returns to the consumer to drive real growth, the outlook on the balance of risks between inflation and employment will shift accordingly.”
The annotated figure above, from BofA’s Michael Hartnett, is a not-so-subtle reminder: Real yield peaks and adverse macro-market events go together like Teddie peanut butter and Joolies Medjool dates on movie night in my Knoxville loft. Or like Russia and Ukraine in a Vladimir Putin historiographical essay.
Speaking of Russia and Ukraine, geopolitics will fill whatever void’s left this week by an empty US macro schedule. Tensions are boiling over again between Trump and Volodymyr Zelensky, who over the weekend accused The White House of throttling Starlink internet speeds to hamper Ukraine’s army and slow-walking Patriot interceptor deliveries. The accusations came after Trump waived new tariffs on the largest buyers of Russian energy, a move that drew bipartisan rebuke.
And then there’s France, where some of the worst social upheaval in living memory threatens to tear The Fifth Republic asunder before Marine Le Pen even has a chance to do it herself as president next year.
Meanwhile, corporate earnings will continue to roll in stateside, semi stocks will try to recover from their worst week of 2026 and the credit market will continue to grapple with CoreWeave jitters.
If you’re worried about the AI trade, just know Jensen Huang doesn’t share your concerns. “All of this is going to pass,” he told Bloomberg’s Emily Chang. “The reason is very simple: [AI is] going to be transformative. It’s going to impact every single industry and every single country and we’re [just now] at the beginning of that.”
Joolies!!!!!
Anna& Sarah if you can’t find the Joolies
Even the national review was complaining about Trump and Russia
In Huang we trust! AI will save us all! (Coming back to Copilot, Claude and ChatGPT to express how thankful I am over their years of services).
Over the last 6 months it’s been hard to find any place on the internet that doesn’t contain AI hype, AI slop or AI advertising. If that’s the AI nirvana we’re being sold then I’d like to take a pass. Unfortunately, the impact of 25 years of digitizing most everything makes it nearly impossible to navigate daily life without doing it online. Most of us are well and truly hooked on the digital heroin they’ve made it impossible to live without. The oligarchs know it or they wouldn’t be investing trillions.
You are correct about addiction. The foundations of AI are disturbingly manipulative to human psychology. So much I think that people will outsource their thinking to it. What will be the result? A world that is addicted to an ai drug that will one day go off the rails. There are a number of Sci-fi scenarios about similar situations. The imbalance can persist for generations creating a false sense of permanency. The result is however inevitable. This is one technology that has the potential to become indespensible to many’s existence and therefore create a horrible sense of loss if ended abruptly if not complete disfunction. Is it time to unplug from the grid? Or does an old guy like me have so few years that it will not make any difference?
Your latter alternative fits my situation, My daughter hates it when I say I’m glad I’m old.
Well Jensen has the leather jacket, and when has anybody with leather jacket been wrong?
Exactly.
If the world truly values global peace, the three countries that need to be in agreement as to the terms are US, China and Russia. These are the three countries that have the ability to cause the most damage across the globe.
US and China for obvious reasons (largest economies) and Russia because they are a big oil exporter, combined with having the capability of wreaking significant havoc across the world.
I won’t be surprised when, in order for these 3 countries to agree on global peace, the US agrees not to defend Taiwan or Ukraine, China stops supporting Iran (and the US is allowed to put Iran in it’s place) and Russia agrees to halt further aggression against Ukraine and beyond.
Sorry to tell EU that they aren’t a global leader- but they just aren’t. One of their main problems is economic. Two years ago, I went to the Paris auto show, which had lots of impressive Chinese cars. I returned this year, almost ALL Chinese cars. Why Europe allowed that to happen, I will never understand. What was wrong with figuring out how to viably build and sell European cars?
Better than the alternative, which is WW 3.
Why would Russia agree to halt their aggression? The whole point of Putin’s escapades is to recreate the glory days of the Soviet Union and Tzarist Russia.
If China decided Russia was no longer useful or the US decided not to elect a wannabe autocrat who is envious of Putin’s dictatorship, Russia could be brought to heel quickly if either of those two countries wanted it to be so.
I’m not entirely sure what you were going for with the title image, but thanks to you H what immediately popped into my head was:
leave the cigarettes and lighter on the nightstand, but put the Rolex in the hotel room safe.
As if there wasn’t enough stupidity rolling around my head, ha!
Ha! Funny story about that banner. That’s a new version of one of my all-time favorite “late summer” banner collages I created in Photoshop in the pre-AI era. Last night, I gave it to ChatGPT with this prompt:
“Attached is an old collage I made pre-ChatGPT. It shows an Asian woman lighting a cigarette with a setting sun superimposed on it. The color scheme is Wong Kar-wai-esque. Recreate it for me, only make it a little more obvious what people are looking at. (I was limited in my previous effort because I couldn’t redraw the picture, but you can).”
The banner image here is what ChatGPT came up with.
funny that you made it pre AI … it’s one of my faves and I usually skim quickly over the headline images…
“As real rates continue pressing higher, we become increasingly wary that something will buckle under the strain of elevated borrowing costs,” BMO’s Lyngen remarked. “Perhaps once the upward trajectory of AI capex spending is exhausted and the onus returns to the consumer to drive real growth, the outlook on the balance of risks between inflation and employment will shift accordingly.”
That and the second chart just about say it all, no? Additionally, if the cost of borrowing begins to impede the completion of data centers, then the entire AI “time to profitability” equation must also change.
On a separate note, I am now putting “Trump shenanigans during midterm elections lead to protests/riots in U.S.” on my bingo card.