The Fed Is Hiking Into A Growth Slowdown | Weekly Roundup
A roundup discussion featuring Vincent Delaware from Stonex analyzing the Fed's recent hawkish hiking cycle, questioning whether hiking into a growth slowdown represents a policy mistake, and presenting a thesis comparing Europe's current position to Japan's 2012 situation, where currency debasement may be inevitable.
Summary
The episode opens with discussion of the Fed's recent meeting where they delivered a 25 basis point rate hike with unusual unanimity across the committee. Vincent Delaware was initially surprised by the hawkish execution and Kevin Warsh's improved command of the press conference. The hosts debate whether hiking into slowing growth constitutes a policy mistake, with hosts concluding it was a forced move given market conditions, though they question the efficacy of rate hikes versus other macroeconomic pressures like energy prices and fiscal policy.
A major theme involves identifying "stealth midterm stimulus" totaling $300-400 billion through SPR releases, individual tax refunds, tariff reimbursements, and accelerated capex. The hosts argue much of current earnings growth is artificial and attributable to this waning fiscal support rather than pure productivity gains. They express concern about negative real wage growth despite full employment, attributing this to AI-related worker insecurity rather than strong inflation expectations.
The conversation then shifts to commodity prices, energy costs, and their role in both inflation and growth dynamics. The hosts note conflicting cross-currents: the economy appears strong in nominal terms but shows signs of deceleration in underlying demand. Vincent points to daily treasury statement data and tax collections slowing from 10% growth to 4-5%, suggesting the growth impulse is moderating.
Vincent then presents an extended thesis comparing Europe to Japan in 2012. He argues Europe faces an adverse terms-of-trade shock (cheaper industrial exports from China, higher raw material costs) requiring eventual currency debasement. Japan successfully executed this strategy over 15 years, devaluing the yen from 80 to 165, while balancing government budgets and reducing debt-to-GDP ratios from 200% to 150%. Europe now faces similar pressures but in a less favorable geopolitical context with higher energy costs and inflation, though the ECB and European institutional constraints make coordinated action unlikely until crisis forces intervention.
Vincent recommends a trade structure of short euro against long yen and Brazilian real, noting the carry cost is minimal. He presents a contrarian hedge idea in UK equities, arguing that while unpopular, the UK is further advanced in dealing with these structural shifts (Brexit was a precursor to similar populist movements elsewhere) and offers more policy flexibility than Europe with a single central bank.
The discussion touches on Canada's response under Mark Carney, noting a bipartisan shift away from ESG mandates toward pragmatic resource development and capital investment. Felix notes alignment between conservative and liberal factions around productivity and fiscal capacity, suggesting natural resource exports (potash) provide leverage in trade negotiations.
Throughout, the hosts debate whether current conditions represent temporary cyclical weakness or permanent structural changes requiring policy regime shifts. They note the unusual unanimity of concern about growth among Fed members at potential peak growth, suggesting officials may be turning hawkish precisely when slowdown is arriving.
About this episode
What happens when the Fed hikes into fading stimulus, slowing growth, and persistent inflation? This week, we're joined by Vincent Deluard of StoneX Group to explore America’s emerging stagflation trap, AI’s economic support, and Europe’s potential Japan-style currency reset. We also discuss the contrarian case for UK equities and Canada’s investment revival. Enjoy! TIMESTAMPS: 00:00 Intro 01:34 Did The Fed Turn Too Hawkish? 08:10 The Stimulus Boom Is Fading 13:11 The Return Of Stagflation 21:06 Is The Fed Making A Mistake? 25:45 Can Trump Salvage Midterms? 32:35 Why AI Leaders Want Regulation 35:46 Will Europe Follow Japan? 48:45 The European Debasement Trade 59:28 Is The UK The Best Hedge? 01:05:41 Can Canada Reinvent Its Economy? FOLLOW THE SHOW › Forward Guidance – https://x.com/ForwardGuidance › Felix – https://x.com/fejau_inc › Quinn – https://x.com/qthomp › Vincent – https://x.com/VincentDeluard › Tyler – https://x.com/Tyler_Neville › Telegram – https://t.me/+CAoZQpC-i6BjYTEx › Blockworks – https://x.com/Blockworks RESOURCES › Weekly Roundup Charts – https://drive.google.com/file/d/189_grP_F-bFABLdyh84TJA3GzOlLmIQm/view?usp=sharing EVENTS › Join us at Digital Asset Summit 2026 Asia October 7th & Digital Asset 2026 London November 10-11th https://blockworks.com/events › TOKEN2049 Singapore is back October 7–8, bringing together 25,000 attendees, 300 speakers, and 500 exhibitors for one of the biggest weeks in crypto. Get your TOKEN2049 tickets and 10% DISCOUNT here: https://checkout.token2049.com/events/asia?promo=DASPODCAST10&utm_source=fg&utm_medium=podcast&utm_campaign=daspodcast&utm_id=DASPODCAST › Avalanche Summit NYC lands Sept. 16–17. Save 15% with code BLOCKWORKS15: avalanchesummit.com/registration DISCLAIMER Nothing said on Forward Guidance is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only. Any views expressed are opinions, not financial advice. Hosts and guests may hold positions in the companies, funds, or projects discussed.
Key Insights
- Vincent Delaware argues the Fed's hike was hawkish in execution and messaging, contrary to his expectation of a dovish hike, and credits Kevin Warsh with improved performance and stronger command of the room than his predecessor.
- The hosts identify approximately $300-400 billion in 'stealth midterm stimulus' through SPR releases, individual tax refunds, tariff reimbursements, and accelerated capex that is set to decline after elections, artificially supporting current earnings.
- Despite full employment, real wages have been negative for six months as nominal wage growth slowed while inflation remained elevated, creating demand moderation pressures that haven't yet appeared in employment data.
- The Fed appears to be hiking into peak growth and potential slowdown at the moment of greatest consensus about economic strength, suggesting officials may be making timing errors due to lagged data.
- Vincent argues Europe faces the same terms-of-trade shock that Japan faced in 2012—cheaper industrial exports from China paired with higher raw material costs—requiring eventual substantial currency debasement to rebalance.
- Japan's 15-year yen debasement from 80 to 165 successfully resolved its structural problems while avoiding the debt crisis by achieving positive growth of tax receipts exceeding interest costs, reducing debt-to-GDP from 200% to 150%.
- Europe cannot execute the same currency debasement strategy as cleanly as Japan due to Eurozone fragmentation, lack of political consensus, unfavorable commodity price environment, and absence of committed leadership comparable to Abe and Kuroda.
- The hosts expect the French spring election and subsequent German election to trigger the first political crises in Europe, eventually forcing an existential Eurozone debt crisis that will compel ECB intervention.
- Vincent recommends a long-duration trade structure of short euro paired with long yen and Brazilian real, noting that carry costs are minimal and the trade addresses the debasement dynamics he expects.
- Vincent presents UK equities as a contrarian hedge against Europe, arguing the UK is structurally 10 years ahead in dealing with populist shifts and institutional change, has already undergone significant deleveraging in pension allocations, and possesses a single central bank providing policy flexibility.
- Mark Carney in Canada is navigating a successful bipartisan consensus around pragmatic resource development and away from ESG mandates by aligning with former Conservative PM Stephen Harper, demonstrating how crisis and tariff threats can enable previously divisive policy shifts.
- The hosts argue that current economic conditions reflect a combination of nominal growth masking real weakness, with inflation persisting above 2% for years creating a 'stagflationary malaise' that prevents supporting all economic sectors simultaneously.
Topics
Transcript
Welcome to Token 2049. Token 2049 Singapore is back October 7th and 8th, bringing together 25,000 attendees, 300 speakers and 500 exhibitors for the world's largest crypto event. Token 2049 will be happening at the same time and in partnership with our own Digital Asset Summit Asia, so come check out both conferences during the same week. Across Token 2049 week specifically, there'll be more than 1 000 side events culminating with after 2049 and the formula one weekend and the speaker lineup is stacked across the board shane coplin of polymarket jeff yan of hyperliquid arthur hayes balaji nasdaq ceo adina friedman and many more join us in singapore this october for token 2049 and the digital asset summit…
Full transcript available for MurmurCast members
Sign Up to AccessMore from Forward Guidance
The Market Is Mispricing A Correlation Shock | Dean Curnutt
Dean Curnutt discusses how unprecedented low correlation among S&P 500 stocks (5-15% vs. historical 35-40% in benign markets) is mispricing tail risk, creating an attractive opportunity for tail hedging strategies. He argues that multiple uncertainties—geopolitical tensions affecting crude oil, fiscal deficits pressuring Treasury yields, and AI hyperscaler capital demands—could trigger a correlation shock that would significantly impact markets.
The Bond Market Is Trapping The Fed | Weekly Roundup
Two market analysts discuss the Bank of Japan's bond market interventions, recent PPI inflation data, and the Fed's upcoming decision on interest rate hikes. They analyze the political incentives driving policy decisions, the composition of bond yield increases, and tactical implications for commodity and equity trades heading into the FOMC meeting.
Fiscal Dominance Is Breaking The 60/40 Portfolio | Matt Hougan & Bob Haber
Matt Hougan (Bitwise CIO) and Bob Haber (Proficio founder) discuss how fiscal dominance and currency debasement are breaking the traditional 60/40 portfolio model, arguing that investors need exposure to hard assets like gold and Bitcoin as hedges against government spending and monetary degradation.
Druck Calls Out Bessent & Will Jackson Hole Derail The Debasement Trade? | Weekly Roundup
Hosts discuss Stan Druckenmiller's criticism of Treasury Secretary Bessent's yield suppression efforts, the mechanics of government bond market intervention through the TGA, and concerns about frontier AI model IPOs being vastly overvalued while facing commoditization pressures from open-weight competitors and Chinese models.
Treasury-Led Financial Repression Is Ushering In A Debasement Regime | Weekly Roundup
The hosts discuss Treasury Secretary Bessent's announcement of doubled long-end Treasury buyback operations ($2B to $4B), framing it as a shift toward treasury-led financial repression and currency debasement ahead of midterm elections. They analyze this as a fiscal dominance strategy funded by T-bill issuance, comparing it to QE and highlighting the inflationary implications and asset allocation opportunities it creates.