Stephanie Pomboy: Has The Grand Game Just Changed?

**Adam Taggart** (0:03)
All right, and we should be live. Welcome to Thoughtful Money. I'm Thoughtful Money founder and your host, Adam Taggart, and we are very lucky to be joined today again, by the macro maven herself, Stephanie Pomboy, for her monthly macro and market outlook.
How are you doing, Steph? Here I am.

**Stephanie Pomboy** (0:24)
I'm doing great. How are you doing?

**Adam Taggart** (0:26)
I'm good. Let me just get rid of this conference banner, so I'm sure I'm going to bring it up again at the end of the discussion.
I'm doing great.
Things are coming fast and furious, both in the outside world and also in the Taggart inside world. So I look a little bleary-eyed and my hair is still wet. Please forgive that. But first, Stephanie, let's start with the most important thing here, which is that your knee is recovering quite well, it seems.

**Stephanie Pomboy** (0:55)
Oh, I thought you were going to ask the most important thing is Wilhelmina, but that's okay.
Yeah, I'm getting there. I've never broken anything before, so this is all new to me and it's frustrating to be mentally prepared to do everything I used to do, but have my body not quite be ready to be there. But I guess this is part of the recovery process. But everything is going great. Thank you for asking.

**Adam Taggart** (1:23)
All right. Well, and now that you shame me, how is Wilhelmina doing?

**Stephanie Pomboy** (1:27)
Yeah, I'm joking. She's doing great and she's snoring at my feet here. So if you hear those soothing sounds of Bulldog, I apologize. I confused her.

**Adam Taggart** (1:36)
No, they're very soothing. I hope we hear them. All right, Steph, well, look, as you know, I have to name these live streams before we've actually talked with one another. So hopefully this title will hit near the mark of what we're going to discuss today. The title is, Has the Grand Game Just Changed? And I pulled that up because there's a lot of things that have been going on that have the potential to be sort of game changers going forward. I've got a whole list of them and obviously you probably have some of your own, but I'd love to get your reaction to some of these things.
First off, we have a Fed that is really seemingly trying to become much more non-interventionary.
Kevin Warsh is, and he reaffirmed this at his Jackson Hole speech, he is trying to restore the purity, the integrity of the market signal, right? And as you know, for decades now, the Fed has been one of the chief culprits in placing its thumb on the scale by all the interventions it's done. And Warsh and I, I agree with him on this. He said, look, we should be reacting to the market signal. The market shouldn't be reacting to us. The market is a much more efficient machine, and therefore, we really want to understand what that machine thinks. So I interviewed Dr. Art Laffer about a week ago, who knows Kevin personally and has for a long time. And in his words, he thinks Kevin is going to be one of, if not the most meaningful Fed chairs of his lifetime. And he shared on the video, so I'm sure he's not uncomfortable with me sharing it. But he's 86

**Stephanie Pomboy** (3:26)
Yeah, I know.

**Adam Taggart** (3:28)
He's done a lot of Fed chairs. And he's personally known them. I mean, back to McChesney and Browns.
So obviously, that's pretty high praise coming from him. He sees that Kevin's role, he thinks could be measured in decades. Like he thinks that he might be at the Fed for the next 25 years. Warsh is still relatively young. Who knows? But if that's the case, where we've got somebody in there who really tries to restore the Fed to the resource of last resort versus the resource of first resort has been playing for the past couple of decades, and can potentially sit on its hands as we go through run-of-the-mill corrections and not jump in, that just could be a really different world. In fact, I think it's a world I'd like to live in, but I'm curious.

**Stephanie Pomboy** (4:22)
Agreed. Basically, we're talking about eliminating the Fed put that has been put in place with Chairman Greenspan in 87 and has been steadily burnished Fed chairman after Fed chairman for the four decades since. I think it's actually an interesting parallel we can get into this when we get into a broader market conversation as opposed to just talking about the Fed right now. But thinking about Kevin Warsh's tenure, similar to that of Greenspan in terms of taking the reins at a time when he is clearly articulating a very hawkish position as Greenspan did in 1986 when he was appointed, and watching the long end of the yield curve edge higher and higher and higher, while the stock market essentially is thumbing its nose at higher interest rates, which is exactly what happened from the end of 1986, all the way through the summer of 1987 into the fall until finally, the stock market couldn't defy the pull of interest rates any further. But it's kind of an interesting parallel, because both Fed chairman were green, came in, had these grand plans to be more hawkish. And in the case of Greenspan, obviously, not only did he end up having to capitulate, but he then became the father of the Fed put. So it's kind of just an interesting context. And I think about it every day as I watch these 10-year yields here, but also globally move higher and higher. And equity investors, at least to listen to the financial media and all the pundits who get paraded forth there, seem to be not terribly perturbed. I mean, they see it as something that's not super positive, but they don't view it as an existential threat to the economy or the stock market right now.