#426 Danielle DiMartino Booth: Warsh Could Slam the Economy Into Recession — Fed Day Reaction

On Fed Day, Danielle DiMartino Booth, CEO and chief strategist at QI Research, joins Julia in studio to react to the Fed’s 10–2 vote to hold rates. She calls it a hawkish hold and says the real surprise was Governor Lisa Cook’s dissent alongside Beth Hammack’s, a move she sees as political after renewed attacks from President Trump. Booth calls Kevin Warsh’s press conference “word salad” and says his refusal to call financial conditions tight protects his narrative more than it reflects reality. She warns that hyperscalers are on a debt treadmill they can’t stop, and that more than 100% of GDP growth is now coming from AI. Further tightening, she argues, could slam the economy into a recession rather than ease it into one. She says Warsh is ignoring the inflation breadth measure he told markets to watch at Jackson Hole, along with the underemployed renters missing from jobless claims. The Fed’s biggest blind spot, she says, is the credit market, especially with foreign investors piled into the AI trade.

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Links:    

Danielle's Twitter/X: https://twitter.com/dimartinobooth  

Substack: https://dimartinobooth.substack.com/

YouTube: https://www.youtube.com/@DanielleDiMartinoBoothQI

Fed Up: https://www.amazon.com/Fed-Up-Insiders-Federal-Reserve/dp/0735211655

Timestamps:

0:00 Preview: “They can’t afford the rent”

0:26 Welcome: Fed Day reaction

0:57 Lisa Cook’s surprise dissent

2:54 Why it was a hawkish hold

3:57 Warsh and financial conditions: “in touch with his narrative”

5:14 An unsatisfying press conference

6:13 Liquidity into year-end and the $100 billion IPO

7:32 The hyperscalers’ debt treadmill

8:25 Could Warsh slam the economy into recession?

8:47 What jobless claims are missing

12:13 Lessons from Halloween 2018 and the Powell pivot

13:10 How fast the rate-cut debate could flip

13:57 Fewer Fed meetings and the risk of an emergency cut

14:39 “Fed Up” again: renters and the underemployed

15:36 Inflation breadth: Warsh’s own yardstick

17:02 More than 100% of GDP growth is AI

18:09 What a blue wave could mean for AI

18:55 What the Fed is underestimating: credit

19:55 Wrap-up