Not everyone though is a fan of the president's pick. 314 Research co-founder Warren Pi is writing on X that Kevin Warsh was the worst pick of the four candidates and will not garner trust from the market. Warren joins us this morning to talk more about that.Warren, appreciate the time as always. Good to see you. >> Good to see you.>> Uh you're not alone either. I think Ren Mack has been fairly critical. What do you think is the problem with this pick.Yeah, I I as I laid out there, I think that he is workin ...

Group 1 - Japanese Prime Minister Sanae Takaichi is facing a critical market test ahead of a snap election, with hopes that a decisive victory will support her expansionary fiscal policy [1] - The finance ministry plans to auction approximately 700 billion yen ($4.5 billion) of 30-year government bonds shortly before the elections [1] - Concerns about Japan's fiscal health are heightened, as the country has the worst finances in the developed world, with debt totaling 230% of GDP [2] Group 2 - Recent bond sales have seen yields spike to record highs, particularly in the context of Takaichi's fiscal policies and her leadership within the ruling Liberal Democratic Party [3] - The upcoming auction is viewed as a referendum on investor sentiment regarding fiscal risks associated with the election, with expectations of weak demand due to investor caution [4] - The term premium for 30-year bonds is significantly higher at 2.8 percentage points compared to 1.6 percentage points for 10-year Japanese government bonds, indicating investor concerns [5] Group 3 - This auction will be the first since Takaichi announced the snap election and her pledge to suspend the sales tax, with bond markets likely to react to recent polling suggesting a potential landslide victory for her party [6] - The benchmark 30-year JGB yield was at 3.63% recently, down from a record high of 3.46% but still up about half a percentage point since early October [7]

Fed Policy & Interest Rates - The market anticipates a 25 basis point rate cut, but there may be three Fed voters dissenting, potentially advocating for a 50 basis point cut [1] - The market will closely monitor the Fed's summary of economic projections, particularly the dot plot, to gauge the expected policy rate for the current and subsequent years [2] - The market is pricing in nearly 150 basis points of cuts for the next year, expecting the Fed to go below 3%, which may be difficult for the Fed to indicate [3] - The market expects the Fed to cut rates drastically, anticipating a new Fed chair next year to aggressively save the cycle and prolong the expansion [11][12] Bond Market Dynamics - The president's influence on the Fed is priced into the term premium, which is the value in extending out the bond curve [4] - Forward rates indicate that the market expects 10-year Treasury yields to be close to 550 basis points (55%) in 10 years, the highest in over 20 years [5] - The market may be pricing in too much term premium, as 550 basis points (55%) growth for the next 20 years is unlikely [6] - The market is already pricing in the Fed getting back to its 2% inflation target [13] Economic Conditions & Inflation - The economy is showing a two-speed dynamic, with high-income consumers continuing to spend, making the inflation story tricky [8] - Core inflation, excluding shelter, grew at 270 basis points (27%) last month, the highest level in the last two years, indicating high-income consumers are doing well [9] - Small businesses are suffering due to high interest rates, leading to firing and a higher unemployment rate [9] - Tariff policies and immigration could lead to stagflationary conditions, with lower growth and higher inflation [14]