{"id":621803,"date":"2026-06-19T21:00:00","date_gmt":"2026-06-19T21:00:00","guid":{"rendered":"https:\/\/buglecall.org\/?p=621803"},"modified":"2026-06-19T21:00:00","modified_gmt":"2026-06-19T21:00:00","slug":"is-the-fed-finally-done-rescuing-markets","status":"publish","type":"post","link":"https:\/\/buglecall.org\/?p=621803","title":{"rendered":"Is The Fed Finally Done Rescuing Markets?"},"content":{"rendered":"

Is The Fed Finally Done Rescuing Markets?<\/span><\/p>\n

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\u00a0Submitted by QTR’s Fringe Finance<\/a><\/em><\/p>\n

GLJ Research\u2019s\u00a0Gordon Johnson<\/a>\u00a0is one of my favorite analysts on the street to read and gets a rare endorsement from me (I hate basically everyone selling sell-side style research) because, like my friend Mark Spiegel, he is one of the last few analysts out there that seems committed to the truth\u2026.no matter how ridiculous it makes him look in the short term while he\u2019s waiting for his theses to play out.<\/p>\n

Johnson came away from this week\u2019s Fed meeting with a conclusion that would have sounded almost absurd just a few months ago: the Fed may finally be breaking with the post-2008 playbook. And the timing couldn\u2019t be better for the Fed to do this to make a total fool out of me. After all, I\u00a0literally just predicted a month ago<\/a>\u00a0there\u2019s no way they would ever stop the neverending cycle of QE they started two decades ago. Days ago, I satirically wrote\u00a0that the only bear case left for markets is total human extinction<\/a>.<\/p>\n

Enter Kevin Warsh\u2019s first press conference as Fed Chair with\u00a0inflation running completely out of control<\/a>. My friend GoJo makes the\u2026err\u2026bold\u00a0<\/em>claim that the Fed is not tweaking it\u2019s post-2008 playbook\u2026not adjusting it around the margins\u2026breaking with it.<\/strong><\/p>\n

<\/strong>\"\"<\/a><\/strong><\/p>\n

Johnson\u2019s central argument is that Kevin Warsh\u2019s first meeting as Fed Chair represented a repudiation of the Bernanke-Powell era and a return to a much older conception of central banking\u2026one where the Fed\u2019s primary job is delivering price stability, not reassuring investors, supporting asset prices, or providing a detailed roadmap for every future policy move.<\/p>\n

The actual rate decision this past week was almost beside the point. The Fed held rates steady at 3.50%-3.75% for a fourth consecutive meeting. What mattered was everything around it. Warsh stripped forward guidance from the statement, calling it ill-suited to the current environment. He refused to submit his own dot-plot projection. The statement itself was shortened and reduced largely to facts. Nine of twelve participants now expect at least one hike by year-end.<\/p>\n

Meanwhile, Warsh launched multiple task forces to reevaluate the Fed\u2019s framework and openly emphasized the institution\u2019s obligation to restore credibility on inflation.<\/p>\n

Markets did not exactly celebrate at first (before, of course, turning higher on Thursday). On Wednesday, stocks sold off, gold weakened, two-year Treasury yields surged, and September hike odds nearly doubled. Investors who showed up hoping to hear some variation of \u201ccuts are coming\u201d instead got a lecture on inflation credibility and a reminder that the Fed\u2019s mandate is not maximizing the S&P 500.<\/p>\n

To Johnson, this wasn\u2019t simply a hawkish meeting. It was the opening shot of a regime change. His view is that the modern Fed became two things after 2008. First, it became obsessed with transparency. Every possible future policy path was telegraphed through dots, forecasts, projections, speeches, press conferences, and carefully managed expectations.<\/p>\n

Second, and more importantly what I argue all the time, is that it it became a de facto backstop for risk assets. Investors learned that serious market weakness would eventually trigger accommodation. Bad economic news became good market news because it increased the probability of Fed support.<\/p>\n

Johnson believes Warsh is deliberately dismantling that framework.<\/strong>\u00a0No dot. Less guidance. Fewer promises. More uncertainty. More emphasis on inflation. More willingness to surprise markets. In Gordon\u2019s telling, the \u201cFed put\u201d is not merely being questioned; it is being retired. That is a massive claim. It\u2019s also why Johnson reaches for perhaps the biggest comparison available: Paul Volcker.<\/p>\n

\"\"<\/a><\/p>\n

In a note out to clients this week, Johnson argues that Warsh\u2019s intellectual instincts are fundamentally different from Bernanke\u2019s. Bernanke\u2019s worldview was shaped by the Great Depression and the dangers of deflation. Warsh\u2019s appears much more shaped by the inflationary experience of the 1970s.<\/p>\n

Johnson points to Warsh\u2019s long-running criticism of quantitative easing, his concerns about balance-sheet expansion, and his warnings about inflation risk dating back more than a decade. He also highlights Warsh\u2019s role during the QE2 debates, when Warsh publicly expressed skepticism about the very policies his institution was pursuing and eventually left the Board before his term expired.<\/p>\n

In Johnson\u2019s interpretation, today\u2019s Warsh is the same man who spent years warning that emergency monetary policy was becoming permanent monetary policy. That\u2019s why he sees continuity rather than reinvention. To Gordon, this isn\u2019t a politician adopting hawkish language because it\u2019s fashionable. It\u2019s someone who has been making versions of the same argument for fifteen years and now finally has the votes.<\/p>\n

This all sounds great. I hope Gordon is right. I have a sneaking suspicion that he isn\u2019t. And before we start engraving \u201cVolcker 2.0\u201d onto commemorative plaques, it\u2019s worth remembering a few things.<\/p>\n

The first is that\u00a0the easiest thing in the world for a central banker to do is talk tough. The hardest thing in the world for a central banker to do is stay tough.<\/strong><\/p>\n

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Volcker\u2019s legacy wasn\u2019t built on speeches, communications strategy, or symbolic changes to Fed procedures. It was built on tightening until inflation broke despite overwhelming political pressure, market turmoil, and public outrage. The real Volcker test begins when unemployment rises. The real Volcker test begins when stocks are down 25%. The real Volcker test begins when Congress starts screaming and the White House decides inflation is suddenly less important than growth.<\/p>\n

And that has been the time where the chickenshit cowards who advocate for today\u2019s monetary policy go into full panic mode and capitulate,\u00a0sometimes on national television<\/a>.<\/p>\n

If we\u2019re being honest, the Fed\u2019s institutional history doesn\u2019t exactly inspire confidence. Every cycle begins with stern declarations about price stability. Every cycle begins with promises that inflation will be defeated and that credibility is paramount. Then something breaks\u2026a bank, a market, a major employer, a politically important sector, or the broader economy itself, and suddenly the framework gets rewritten,\u00a0CNBC anchors shit themselves<\/a>\u00a0and\u00a0act like 2 year olds throwing temper tantrums<\/a>, and the Fed and Treasury come to the rescue. Then, the Fed chair at the time is praised for having \u201ccourage\u201d and\u00a0wins the Nobel Prize<\/a>.<\/p>\n

The emergency becomes permanent. The temporary facility becomes structural. The exception becomes the rule. The Fed\u2019s modern history is not one of relentless discipline. More often than not, it\u2019s a story of capitulation followed by a very sophisticated explanation for why capitulation was actually prudent policy all along. As Peter Schiff often says, \u201cthere\u2019s nothing more permanent than a temporary government program\u201d.<\/p>\n

And that\u2019s the part of Gordon\u2019s thesis I\u2019m not yet willing to underwrite.<\/p>\n

To be clear, I\u2019m not dismissing it. In fact, I think Johnson is right to focus on the reaction function rather than the rate decision itself. A central bank\u2019s communication framework often tells you more than a 25-basis-point move ever could. If Warsh is truly trying to reintroduce uncertainty into markets, force investors to price risk without a guaranteed backstop, and reorient the institution around inflation rather than asset prices, that would represent a profound shift.<\/p>\n

The problem is that every Fed chair\u00a0looks tough<\/em>\u00a0before something important breaks.<\/p>\n

Personally, I\u2019m not ready to declare that Warsh is picking up where Volcker left off. I am willing to wait and see. If he continues prioritizing inflation over asset prices, if he accepts market pain as a necessary consequence of restoring credibility, and if he proves willing to keep tightening in the face of inevitable pressure, then perhaps Gordon\u2019s thesis will prove correct.<\/p>\n

What I do think Gordon gets right is the underlying inflation question.<\/p>\n

As I have written repeatedly, if inflation is genuinely persistent,\u00a0rate hikes are ultimately necessary<\/a>. There is no magic workaround. There is no AI-powered escape hatch. There is no press-conference solution. Inflation is not defeated through clever narratives or optimistic forecasts. It is defeated through tighter monetary conditions that reduce demand, re-anchor expectations, and restore confidence in the currency.<\/p>\n

History is fairly clear on that point, which is why so many people celebrate Volcker today while simultaneously advocating policies that would make a genuine Volcker-style campaign impossible. Everyone loves inflation fighters in retrospect. Very few people are willing to tolerate the economic pain required to actually defeat inflation in real time.<\/p>\n

That\u2019s why I remain skeptical. Because the Fed has spent the better part of two decades teaching markets that pain will eventually be relieved. Breaking inflation is hard. Breaking\u00a0expectations and psychology that has become laden with hubris and euphoria is harder<\/a>, as I\u00a0wrote back in early 2025<\/a>. Breaking the institution\u2019s own reflex to intervene may be hardest of all.<\/p>\n

So yes, Gordon may be right that the Fed put is dying. He may even be right that Warsh intends to kill it. But intentions are cheap. Every Fed chair sounds independent until the pressure arrives. Every Fed chair talks about credibility until credibility becomes expensive. As Mike Tyson said famously, \u201ceverybody\u2019s got a plan until they get punched in the mouth.\u201d<\/p>\n

I love reading Gordon\u2019s take and will continue to do so. But I\u2019ll only believe the Fed put is dead when the next crisis arrives and the Fed refuses to revive it.<\/p>\n

I\u2019d love to hear your take on what you think Warsh\u2019s tenure will look like in our ongoing discussion here<\/a>. Who\u2019s stance do you agree with more?<\/em><\/p>\n

—<\/em><\/p>\n

\u00a0<\/p>\n

QTR\u2019s Disclaimer<\/strong><\/em>:<\/strong>\u00a0Please read my full legal disclaimer\u00a0on my About page here<\/a><\/em>.\u00a0This post represents my opinions only.<\/em>\u00a0In addition, please understand I am an idiot and often get things wrong and lose money. I may own or transact in any names mentioned in this piece at any time without warning. Contributor posts and aggregated posts have been hand selected by me, have not been fact checked and are the opinions of their authors. They are either submitted to QTR by their author, reprinted under a\u00a0Creative Commons license<\/a>\u00a0with my best effort to uphold what the license asks, or with the permission of the author.<\/em><\/p>\n

This is not a recommendation to buy or sell any stocks or securities, just my opinions. I often lose money on positions I trade\/invest in. I may add any name mentioned in this article and sell any name mentioned in this piece at any time, without further warning. None of this is a solicitation to buy or sell securities. I may or may not own names I write about and are watching. Sometimes I\u2019m bullish without owning things, sometimes I\u2019m bearish and do own things. Just assume my positions could be exactly the opposite of what you think they are just in case. If I\u2019m long I could quickly be short and vice versa. I won\u2019t update my positions.<\/em><\/p>\n

As of May 20, 2026 I personally no longer actively trade (read my story here<\/a>). My\u00a0investing\/saving is done by recurring contributions mostly to sector ETFs and a few select equities, trusted third parties who oversee my accounts, and advisors<\/a>. Such advisors or funds, through individual equities, options, index funds, mutual funds, ETFs, or other securities, may have positions in, exposure to, or holdings of names mentioned herein that I know nothing about. Basically, via index funds, ETFs and individual equities it is possible I could own, have exposure to, or not own anything at any point. As of the same date, May 20, 2026, in an\u00a0attempt to lead a healthier lifestyle<\/a>, I\u2019ve also excluded myself from fantasy sports, sports betting, online and in-person casinos and prediction markets.<\/em><\/p>\n

And all positions can change immediately as soon as I publish this, with or without notice and at any point I can be long, short or neutral on any position. You are on your own.\u00a0Do not make decisions based on my blog.<\/strong>\u00a0I exist on the fringe. If you see numbers and calculations of any sort, assume they are wrong and double check them. I failed Algebra in 8th grade and topped off my high school math accolades by getting a D- in remedial Calculus my senior year, before becoming an English major in college so I could bullshit my way through things easier.<\/em><\/p>\n

The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I did my best to be honest about my disclosures but can\u2019t guarantee I am right; I write these posts after a couple beers sometimes. I edit after my posts are published because I\u2019m impatient and lazy, so if you see a typo, check back in a half hour. Also, I just straight up get shit wrong a lot. I mention it twice because it\u2019s that important.<\/em><\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nFri, 06\/19\/2026 – 17:00<\/span><\/p>","protected":false},"excerpt":{"rendered":"

Is The Fed Finally Done Rescuing Markets? \u00a0Submitted by QTR’s Fringe Finance GLJ Research\u2019s\u00a0Gordon Johnson\u00a0is one of my favorite analysts on the street to read and gets a rare endorsement from me (I hate basically everyone selling sell-side style research) because, like my friend Mark Spiegel, he is one of the last few analysts out… Continue reading Is The Fed Finally Done Rescuing Markets?<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":621804,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rop_custom_images_group":[],"rop_custom_messages_group":[],"rop_publish_now":"initial","rop_publish_now_accounts":[],"rop_publish_now_history":[],"rop_publish_now_status":"pending","footnotes":""},"categories":[18,19,10,21,12,11,9],"tags":[],"class_list":["post-621803","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cancel-culture","category-censorship","category-civil-liberties","category-election-integrity","category-equal-justice","category-free-speech","category-religious-freedom","entry"],"_links":{"self":[{"href":"https:\/\/buglecall.org\/index.php?rest_route=\/wp\/v2\/posts\/621803","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buglecall.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buglecall.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buglecall.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buglecall.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=621803"}],"version-history":[{"count":0,"href":"https:\/\/buglecall.org\/index.php?rest_route=\/wp\/v2\/posts\/621803\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buglecall.org\/index.php?rest_route=\/wp\/v2\/media\/621804"}],"wp:attachment":[{"href":"https:\/\/buglecall.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=621803"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buglecall.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=621803"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buglecall.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=621803"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}