The Fed's Approaching Stress Test

The report analyzes the market implications of Kevin Warsh's appointment as Fed Chair amid rising US inflation and yield levels. It highlights AI's dominance in earnings growth and shifting geopolitical and domestic political risks in Asia and Europe.

Key Takeaways

• 1.The Fed faces a potential 'stress test' with the appointment of Kevin Warsh as chairman as US CPI reaches its highest level since 2023 at 3.8%.
• 2.AI is the primary driver of market returns, accounting for 80% of S&P 500 returns year-to-date and 83% of MSCI AC Asia Pacific ex-Japan 2026 earnings growth.
• 3.Memory chip giants Samsung and SK Hynix are shifting towards long-term agreements (LTAs), which may reduce traditional hyper-cyclicality and support multiple re-ratings.

Table of Contents

• Paris
• Geopolitics and Iran
• Trump's Visit to Beijing
• AI Capex and Earnings Momentum
• North Asia Tech Hardware
• The Memory Sector and LTAs
• China Chip IPOs and Exports
• US Labor Market Strength
• UK Politics and Gilts
• French Presidential Outlook
• German Politics and the AfD

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