Can Political Pressure Force the Fed Into Stagflation?
Current Assessment
Our causal model estimates 42% probability (started at 45%). Kalshi markets price the top related contract (Will Kevin Warsh be Chair of the Federal Open Mark) at 97.5¢, while our thesis implies 20¢ — a +77.5¢ edge. Across 111 tracked contracts, we see systematic mispricing.
Latest evaluation (1h ago): Confidence decreased slightly to 0.42 as market signals for 2026 unemployment improved, weakening the 'stag' component of the stagflation thesis, though political friction at the Fed remains a priced-in factor.
Stagflation traps the Fed in an impossible triangle. Powell stays until Warsh confirmation. Trump investigates Powell via DOJ while nominating Warsh. The power struggle between Trump-Powell-Warsh matters more for rate decisions than CPI prints. Fed credibility erodes.
Track Record
.043 batting average across 111 contracts with positive avg movement. A useful lens — the market is surfacing the right opportunities, execution varies.
Confidence Over Time
Implied Returns
Weekly Analysis
Fed succession confidence dipped 10 points as Powell signals stability
Causal Model
Each factor has an estimated probability. Changes propagate through the tree to update overall confidence.
Market Edge Analysis
Contracts where market price diverges from thesis-implied value. Positive edge = market underprices this outcome.
| Contract | Market | Model | Edge | Spread | Depth | |
|---|---|---|---|---|---|---|
| K | Will Kevin Warsh be Chair of the Federal Open Market Committee (including in acting capacity) on Jun 17, 2026?NO | 98¢ | 20¢ | +78¢ | 1¢ | 496.59/5K |
| K | Will Jerome Powell be Chair of the Federal Open Market Committee (including in acting capacity) on Jun 17, 2026?YES | 3¢ | 75¢ | +72¢ | 2¢ | 776.46/693.9200000000001 |
| K | Will Rand Paul vote for the next Fed Chair nominee?NO | 78¢ | 15¢ | +63¢ | 3¢ | 233/1K |
| P | DOJ reopens Powell investigation by...?: June 30YES | 6¢ | 60¢ | +55¢ | 1¢ | 2K/2K |
| P | Kevin Warsh confirmed as Fed Chair by...?: May 15NO | 95¢ | 40¢ | +55¢ | 1¢ | 4K/254 |
| P | US recession by end of 2026?YES | 23¢ | 72¢ | +50¢ | 1¢ | 17K/1K |
| K | Will John Fetterman vote for the next Fed Chair nominee?NO | 97¢ | 50¢ | +47¢ | 2¢ | 399.15999999999997/5K |
| K | Will Federal Funds Rate Decision be No change AND Dissents be >0 for Jun 2026?YES | 39¢ | 85¢ | +46¢ | 6¢ | 806/921 |
| K | Will Jerome Powell leave Member of the Board of Governors of the Federal Reserve System before Jan 1, 2027?NO | 56¢ | 15¢ | +41¢ | 2¢ | 1K/811.71 |
| P | Will Trump try to fire Powell as Fed Board Member by...?: June 30YES | 6¢ | 45¢ | +39¢ | 2¢ | 172/1K |
| K | Will the upper bound of the federal funds rate be above 3.00% following the Fed's Apr 28, 2027 meeting?YES | 45¢ | 82¢ | +38¢ | 5¢ | 40/141.75 |
| P | Kevin Warsh cuts rates at first Fed meeting?YES | 4¢ | 40¢ | +36¢ | 4¢ | 245/6K |
| K | Will CPI rise more than 0.5% in July 2026?YES | 22¢ | 55¢ | +34¢ | 3¢ | 262/222 |
| K | Will the upper bound of the federal funds rate be above 4.50% following the Fed's Sep 16, 2026 meeting?YES | 3¢ | 35¢ | +32¢ | 4¢ | 599/931 |
| K | Will the upper bound of the federal funds rate be above 3.75% following the Fed's Jul 29, 2026 meeting?YES | 8¢ | 40¢ | +32¢ | 4¢ | 3K/1K |
Recent Evaluations
Automated analysis runs every 15 minutes. Major events trigger immediate re-evaluation.
Confidence decreased slightly to 0.42 as market signals for 2026 unemployment improved, weakening the 'stag' component of the stagflation thesis, though political friction at the Fed remains a priced-
Thesis confidence increased slightly to 0.52 as market price movements across the rate curve (Sep '26, Dec '26, Apr '27) align with the 'higher for longer' stagflation narrative despite weak unemploym
Thesis confidence remains stable as recent price moves in unemployment and inflation markets cancel each other out, while the core 'political struggle' narrative remains the primary differentiator fro
The thesis is under severe pressure following Jerome Powell's announcement that he will remain a Fed Governor after his Chairmanship. This invalidates the 'orderly handoff' to Warsh and introduces a m
Thesis confidence dipped slightly due to Kevin Warsh's conformation friction and his attempts to signal independence from Trump's dovishness, though stagflation indicators remain firm.
The single most important development is the DOJ dropping its criminal investigation into Powell — this is a confirmed reversal of a previously LOCKED causal node (n2.1) and directly undermines a core
Thesis confidence softened from 0.77 to 0.74 due to market pricing shifting sharply toward lower long-term rates (nodes n4.2/n4.4), which partially conflicts with the 'Stagflation Trap' delay model. W
Thesis confidence increased slightly (0.16 to 0.18) as Fed nominee Kevin Warsh moves through the Senate confirmation process with a strategy of rhetorical independence, while market pricing aggressive
The formal termination of the DOJ investigation into Powell removes a key driver of the thesis regarding aggressive Trump-led undermining. This significantly weakens the 'impossible triangle' pressure
Thesis confidence remains steady at 5% as the core conflict (Trump vs. Powell) intensifies via a 14.5% jump in 'firing' probability, while the 'Warsh confirmation' leg remains the primary bottleneck t
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