The market’s attention this week remains squarely focused on two interconnected themes: the durability of the AI-driven bull market and the Fed’s policy outlook under new Fed Chair Kevin Warsh. Washington’s decision to exert greater control over frontier AI models reinforced the view that artificial intelligence is now a strategic national asset, further boosting investor confidence in the AI CapEx cycle and the broader Paradigm C regime.
Meanwhile, investors received their first meaningful clues regarding Warsh’s policy reaction function. While the Fed delivered a hawkish hold and reaffirmed its commitment to price stability, the more important development was the introduction of five task forces focused on communications, data quality, balance sheet policy, inflation measurement, and productivity & jobs.
Taken together, these initiatives suggest the Fed may increasingly rely on real-time labor market and inflation indicators, which could ultimately result in a more dovish assessment over the next two-three quarters. (more details in tomorrow’s Lead-off Morning Note)
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