Iran Hot Take, and... What you're not hearing about Fed Governor Christopher Waller's job application to replace Jay Powell

Iran hot take: The US bombing of Iran's nuclear facilities is following our playbook perfectly, with Israel moving first to clear the skies for safe US B2 "bunker-buster" sorties. The fix is in, with Russia having pre-agreed to work with Saudi and the US to keep global oil supplies flowing.

Fed Governor Waller is shamelessly throwing his hat in the ring to replace Powell as chair, by de-emphasizing the risk of inflation driven by tariffs and calling for a rate cut at the next FOMC meeting. He is unique among Fed officials in understanding that tariffs are not perfectly passed through to consumer prices, and if they are, that they will not trigger second-round inflation effects. We agree. And we think he is correct when he points out that economic data is all mandate-consistent now -- which argues for holding policy steady rather than either tightening or loosening. Yet he cites backward-looking models that drive the FOMC's "dot plots" to argue that the neutral rate is in fact far lower than the present funds rate. Claiming to be "data-driven," this comes off as an argument of convenience to justify rate cuts to cater to Trump. Waller claims to have made these arguments for over a year, but actually only began making them in April. He has not dissented at any FOMC meeting since tariffs became a primary concern, at which rates were always left unchanged. He did dissent at the March FOMC, but said he supported keeping rates unchanged -- his objection was to the decision to end QT, the one dovish thing the Fed has done all year.