Craig Shapiro, senior macro strategist and cross-asset trader at Ninja Trader
Live, says Fed chair Kevin Warsh sounded optimistic on growth—largely citing
AI—while falling oil has pushed down inflation breakevens. Shapiro adds that
although the bar for further hikes may be higher than markets expect, the bar
for cuts is even higher; with Warsh hinting that balance-sheet reduction may
take longer, meaningful labor-market deterioration would likely be required to
trigger easing. He cautions that if evidence of a labor slowdown mounts while
the Fed delays policy easing amid still-elevated inflation, risk assets would
likely come under pressure, making rotations from AI into higher-beta cyclical
names or small caps harder and favoring defensive sectors and possibly gold.
