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🔍 Analysis: The Rate Cutting Cycle is Over

In this video, Benjamin Cowen argues that the Fed's rate-cutting cycle is finished and that a new rate-hiking cycle has already begun globally.

• Employment dropped by 23,000 jobs, but the unemployment rate fell to 4.1%.
• Labor force participation is declining sharply, keeping unemployment low. Job openings have normalized to pre-pandemic levels.
• Layoffs remain low – no imminent recession risk.

• Inflation is not fully tamed; rising oil prices could push CPI higher again.
• The 30-year Treasury yield is climbing toward 5%, as markets fear reaccelerating inflation (not a recession).

• The Fed hasn't moved rates since 2025. Cowen expects a token 25 bps hike – either in September or December 2026.
• Many other central banks (Eurozone, Australia, Japan, New Zealand) have already raised rates. The GDP-weighted policy rate is rising worldwide.

• A rate hike is not the end of the world – it signals a strong economy. Historically (e.g., the 1990s), rate hikes caused only short corrections.
• Cowen predicts a 10–20% stock market correction, starting in September/October.
• For Bitcoin, this could mark the cycle bottom before the next bull run.

Key takeaway: The rate-cutting cycle is over – investors should prepare for stable to slightly rising rates, which can create long-term opportunities.

Note: The „Investing Through The Cycles“ conference is scheduled for November 21, 2026. Ticket prices increase after September 1.

Summary follows...

Summary follows...

Summary follows...

• Structural Shift: The Fed is evolving from a chairman-dominated entity into a committee with 12 independent voters, akin to the Supreme Court.
• Background: Donald Trump's attacks on the Fed heightened concerns about the central bank's independence, leading to a record number of dissenting votes (10 dissents this year).
• Examples: At the July 29th meeting, three members dissented, all favoring a rate hike. The probability of a hike was 35-40%, a far cry from the historical 2% or 98%.
• Leadership Style: New Fed Chair Kevin Warsh supports this shift, calling internal debates a "healthy family fight." He is a primus inter pares, not a sole ruler.

• Rejection of Forward Guidance: Kevin Warsh opposes "forward guidance" (predicting future rate moves). He argues the market treats it as a promise, leading to policy errors like the "transitory inflation" narrative of 2021 or the "Taper Tantrum" of 2013.
• Lack of Reaction Function: Warsh is not providing a clear "reaction function" (rules of the road). He is waiting for task force results to define which data will guide future decisions.
• Consequence: The market must learn to navigate more ambiguous signals and focus on raw data instead of the Fed's interpretation.

• The Bond Market Paradox: Despite the Fed cutting rates by 175 basis points since September 2024, long-term yields (10-year and 30-year) have risen. The 30-year yield recently hit a 19-year high.
• The Logic: Bond investors fear inflation eroding their fixed coupons. If the Fed doesn't fight inflation, they sell bonds, pushing yields up. Once the Fed shows concern (e.g., by raising rates), the bond market calms down.
• The Thesis: "When the Fed starts worrying, bond traders stop worrying." A credible fight against inflation through higher rates could lower long-term yields.
• Moral Hazard: Withholding forward guidance aims to prevent excessive risk-taking and leverage, which caused the Silicon Valley Bank collapse.

• Economic Strength: The U.S. economy is strong enough to handle higher rates. The stock market is at an all-time high.
• AI as a Driver: Massive AI investments (larger than the U.S. defense budget) are a key economic engine. Jim Biano calls AI the biggest technology since the railroad.
• Housing Market: Despite high mortgage rates, home prices are at record highs. Higher rates could stall prices, which would be beneficial for 140 million renters seeking to buy a home.

• Current Phase: According to Jim Biano, we are in the "1997/98" stage of the AI cycle. Massive capex is justified by the technology's transformative potential.
• Outlook: A bubble is likely when enthusiasm becomes unbounded. The crash may be 2-3 years away and could be severe.
• Optimistic Case: Real productivity gains from AI will eventually support the economy, leading to a soft landing after the bubble bursts.

• The "Debasement Trade": Gold and Bitcoin have not recently acted as clear safe havens. The strength of the U.S. dollar in times of crisis dampens this trade.
• Bitcoin's Problem: Bitcoin lacks a full ecosystem (like DeFi on Ethereum) and is too reliant on institutional adoption (IBIT ETF).
• "Strong vs. Weak Crypto": Jim Biano advocates for "strong crypto" (decentralized, permissionless, serving people in unstable countries) and warns against begging for permission in Washington (Clarity Act).
• Call to Action: Crypto's true opportunity lies in building an alternative financial system for the 1+ billion people in nations with unstable currencies, not just serving as another asset class for the wealthy.

This is a summary of the conversation with Jim Biano, presenting his analysis of the Fed's structural changes, market dynamics, and the role of crypto.