Can Political Pressure Force the Fed Into Stagflation?
Current Assessment
Our causal model estimates 23% probability (started at 45% — significant deterioration). Kalshi markets price the top related contract (Will Kevin Warsh be Chair of the Federal Open Mark) at 97¢, while our thesis implies 20¢ — a +77¢ edge. Across 130 tracked contracts, we see systematic mispricing.
Latest evaluation (3h ago): Thesis confidence declined slightly as internal market noise about short-term rate volatility and Powell's exit timeline continues to dominate over meaningful political structural changes. No material evidence has broken the core 'impossible triangle' thesis, but the signal-to-noise ratio in current
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
.038 batting average across 130 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 | 97¢ | 20¢ | +77¢ | 2¢ | 594.41/5K |
| 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¢ | 262/314 |
| P | DOJ reopens Powell investigation by...?: June 30YES | 5¢ | 60¢ | +56¢ | 1¢ | 6K/3K |
| P | US recession by end of 2026?YES | 23¢ | 72¢ | +50¢ | 1¢ | 9K/5K |
| K | Will it be reported that the DOJ reopens or initiates a criminal investigation into Jerome Powell before Jan 1, 2027?YES | 22¢ | 70¢ | +49¢ | 1¢ | 6K/2K |
| K | Will Federal Funds Rate Decision be No change AND Dissents be >0 for Jun 2026?YES | 40¢ | 85¢ | +45¢ | 2¢ | 34/3K |
| P | Will Trump try to fire Powell as Fed Board Member by...?: June 30YES | 4¢ | 45¢ | +41¢ | 2¢ | 1K/987 |
| P | Canada recession before 2027?YES | 15¢ | 55¢ | +40¢ | 2¢ | 229/61 |
| K | Will the rate of core PCE inflation be above 0.3% in April 2026?YES | 27¢ | 65¢ | +39¢ | 1¢ | 25.32/847 |
| K | Will CPI rise more than 0.4% in May 2026?YES | 84¢ | 45¢ | -38¢ | 3¢ | 511/936 |
| K | Will the upper bound of the federal funds rate be above 3.50% following the Fed's Jan 27, 2027 meeting?YES | 34¢ | 72¢ | +38¢ | 6¢ | 70/98.78999999999999 |
| K | Will Jerome Powell leave Member of the Board of Governors of the Federal Reserve System before Jan 1, 2027?NO | 52¢ | 15¢ | +37¢ | 1¢ | 1K/572 |
| P | Kevin Warsh cuts rates at first Fed meeting?YES | 4¢ | 40¢ | +36¢ | 2¢ | 53/101 |
| K | Will CPI rise more than 0.5% in July 2026?YES | 19¢ | 55¢ | +36¢ | 8¢ | 305/202 |
| K | Will the upper bound of the federal funds rate be above 3.75% following the Fed's Sep 16, 2026 meeting?YES | 16¢ | 50¢ | +35¢ | 5¢ | 1K/214 |
Recent Evaluations
Automated analysis runs every 15 minutes. Major events trigger immediate re-evaluation.
Thesis confidence declined slightly as internal market noise about short-term rate volatility and Powell's exit timeline continues to dominate over meaningful political structural changes. No material
Thesis confidence declined to 0.35 as labor market data (unemployment markets) moved sharply against the stagflation node, though aggressive buy-side depth in high-rate 2027 markets confirms the 'Fed
Thesis confidence adjusted slightly down to 0.42. While core political assumptions (Trump-Warsh-Powell triad) remain intact with locked nodes, the market shows increased conviction in a 2026 tariff re
No material change to core thesis; recent market movements represent noise rather than fundamental shifts in Fed/political dynamics. Confidence lowered slightly to reflect continued uncertainty in mac
Thesis confidence declined to 0.44 due to market signals indicating a stronger-than-expected labor market, which complicates the 'Stagflation' leg of the trilemma. However, increased pricing for Powel
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.
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