Michael’s CIO (Check-It-Out) Report — events, sarcasm, and global macro reflections
September 16, 2025
The Federal Reserve is now stuck between a soft landing and a hard place with a weakening labor market, yo-yo consumption, and confusion over whether 3% inflation has taken up semi-permanent residence or if disinflation will Halloween haunt them if they sit on their hands too long.
The Fed’s been tap-dancing on a narrow beam between inflation vigilance and recession avoidance, but the music’s changed as job and employment cracks appear.
Come Wednesday’s FOMC meeting, the FED may wear a blazer over pajamas, trying to look composed, but with the COMFORT ZONE clearly winning as rates decline.
Markets may celebrate the liquidity boost, but inflationary stickiness will keep expectations muddy and cause mixed feelings at the long end of the yield curve with loud voices seeing both higher and lower prices for 10 and 30-year bonds.
For investors, it raises the risk that this cycle becomes a cut-pause-hike-again remix with markets dancing to the beat of the wrong drummer🥁
If President Trump captures the Federal Reserve and crashes interest rates, markets might soar on adrenaline while the economy quietly overdoses.
Realistically from a wider angle though—AND WHAT NO ONE TALKS ABOUT—is that Trump and Powell are on the same side in that they both want to keep the economy growing; it’s not a matter of direction but more a question of stimulus timing and amount.
This is in stark contrast to the last presidential residency with Biden, where Powell was trying to slow the economy by raising interest rates and Biden was trying to stimulate it with huge fiscal initiatives. Although quieter, Biden and Powell were at loggerheads to a much greater extent than Trump and Powell.
If President Trump seizes effective control of the Federal Reserve and turns it into Mar-a-Lago Monetary Policy, with interest rates plummeting, we are in for a wild Keynesian cosplay. Slashing rates in a high-deficit, supply-constrained, demographically aging economy could juice asset prices—stocks, real estate, maybe even Labubu dolls and Beanie Babies—but whether it fuels inflationary demand or increases supply (which is deflationary) remains to be seen. Note: I think it increases supply!
With President Trump in the White House and Congress playing tug-of-war, fiscal stimulus becomes more bark than bite unless it involves tariffs or tax cuts that bypass legislative gridlock. If POTUS leans on the FED to cut rates while Congress stalls on policy, we could get monetary stimulus to compensate for fiscal gridlock.
It’s like Reaganomics in theory, but with TikTok geopolitics and a 130% debt-to-Gross Domestic Product ratio.
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