明修栈道暗度陈仓，沃什为9月“降息”铺路？

Original Author: Zhao Ying

Original Source: Wall Street News

Federal Reserve Chairman Kevin Warsh’s hawkish stance may just be a carefully orchestrated smokescreen.

Academy Securities analyst Peter Tchir, in a recent report, argues that while the market has already priced in a 75% probability of a rate hike in September and expects a cumulative 1.25 rate hikes by year-end, he believes the market is missing a viable path to a September rate cut – a path that Warsh himself may be quietly laying.

Tchir points out that Warsh’s signals are clear enough: use a hawkish tone to suppress tail risks on long-end yields (the 10-year Treasury yield has fallen from 4.46% to 4.37% this week), while leaving room for a future shift in the data narrative. In his view, the endgame for this series of moves could be a rate cut in September, followed by another in October, conveniently timed just before the midterm elections.

This assessment remains a personal opinion, and Tchir himself acknowledges the inherent uncertainties. However, his argument is logically cohesive, covering the redefinition of inflation data, the contest over the narrative of the neutral interest rate, and the core premise that the White House’s policy objectives have never changed.

Hawkishness as Performance? Political Logic Points to Rate Cuts

Tchir’s starting point is a political economy interpretation of Warsh’s behavioral motives.

He argues that the policy objectives of the Trump administration have never fundamentally shifted. The President himself has repeatedly indicated his deep understanding of the real estate market and its critical dependence on low interest rates. Against this backdrop, it’s hard to imagine Trump being satisfied with a sustained hawkish stance from his own hand-picked Fed Chair – unless it’s a pre-negotiated strategy.

Tchir paints a hypothetical scenario: Warsh convinces Trump that sending dovish signals now would be disastrous. By appearing hawkish, he can suppress long-end yields, maintain the appearance of Fed independence, and simultaneously drive Wall Street analysts and media to fully price in rate hike expectations. Then, as data gradually "cooperates," he can pivot to rate cuts under the guise of being "data-dependent," while also attributing inflation problems to the previous Fed’s "use of incorrect data and acting too late."

He adds that Warsh’s father-in-law is a major donor to Trump, a background detail that may not be entirely irrelevant.

Targeting Inflation Data: PCE is Not This Fed’s Benchmark

The most substantive part of Tchir’s argument is a systemic critique of the current inflation measurement system.

He clearly states that the PCE is not the preferred inflation metric for Warsh’s Fed. He believes the PCE was more a preference of the Bernanke era, and Warsh will not be losing sleep staring at PCE data late at night.

His criticism is particularly sharp regarding housing inflation. The "Owners’ Equivalent Rent" (OER) component of the CPI did not peak until mid-2023, topping out around 8%. In contrast, Zillow’s rent data had already hit nearly 16% in early 2022. He notes that the Cleveland Fed has developed the "New Tenant Repeat Rent Index" (NTRR), which closely tracks Zillow’s trends, yet this more realistic indicator receives almost no attention.

His conclusion is that the Fed could easily switch to using the Cleveland Fed’s own developed metric without needing external data, thereby providing data-based justification for rate cuts.

Truflation and "Two-Point-Something is Good Enough"

Beyond the PCE, Tchir also cites real-time inflation data from Truflation. According to him, Truflation builds a daily inflation index based on massive real-time datasets, and its core inflation rate is currently around 1.45%, having stayed below 1.8% since February this year.

He also observes that Warsh’s recent comments hinted that the "first digit" (the integer part) of an inflation number is more important than the precise decimal value. Tchir deduces that the market may be being gradually "conditioned" to accept a framework where "two-point-something" is considered close enough to the 2% target. In his chart, he labels the inflation target line at 2.9%, rather than the traditional 2%.

He believes that once the data narrative successfully shifts, the technical obstacles to rate cuts will be significantly reduced.

Tchir also mentions the work of former Fed insider Miran on neutral interest rates. He argues that while no one in the market is currently discussing the neutral rate, this topic will resurface at the appropriate time.

His logic is that the neutral rate is inherently difficult to measure precisely, with a wide range of estimates. If the new Fed leadership can argue that the previous leadership’s estimate of the neutral rate was too high, this alone could provide a theoretical basis for a 50 to 100 basis point rate cut, while blaming the "old Fed’s mistakes."

Apple Price Hikes and AI Inflation: Raising Rates Targets the Wrong Enemy

Regarding market concerns about AI-driven inflation, Tchir offers a contrarian interpretation.

He points out that Apple (AAPL) recently announced a price increase, and its stock price fell. This market reaction suggests that consumers’ ability to absorb price hikes is being questioned. If even a top-tier consumer goods company like Apple struggles to have its price increases digested by the market, the pricing power of ordinary consumer goods companies will be even weaker – which contradicts the narrative of sustained inflation.

He also cites feedback from a chip company: memory prices haven’t surged due to AI demand, and some products are even cheaper than five years ago. He argues that capital expenditures on AI and data centers are indeed inflationary, but this is a completely different dimension from the affordability issues faced by ordinary consumers.

More critically, he believes that raising interest rates has little to no effect on suppressing AI/data center spending – those tech companies trading at 100x valuations are simply not sensitive to a 50 basis point rate move. Those truly harmed by rate hikes are ordinary borrowers who have nothing to do with AI-driven inflation.

Based on the above judgment, he believes the market will begin to reprice rate cut expectations, and the most certain opportunity lies in the short end of the yield curve – going long short-term Treasuries to bet on a decline in front-end yields. For the long end, he maintains a neutral to slightly bullish stance, believing Treasury Secretary Bessent wants the 10-year yield back in the "3-handle" range, and that Warsh has already eliminated tail risks on the long end through his hawkish rhetoric.

On the equity side, he recommends a significant overweight in the energy sector, especially global nuclear power assets; within the ProSec (Protection & Security) theme, he suggests overweighting biotech/pharmaceuticals and underweighting chips. He remains cautious on the valuations of AI and data centers and warns that potential secondary share offerings from large-cap tech companies could weigh on their stock prices.