# F**K: War and Rate Hikes Source: https://www.youtube.com/watch?v=sCf3L2sKxZM Recap page: https://rapidrecap.app/video/sCf3L2sKxZM Generated: 2026-02-18T20:35:42.442+00:00 --- ## Quick Overview Geopolitical uncertainty, potentially exacerbated by the Supreme Court's decision on IEEPA, historically encourages a short-term buy-the-dip mentality for assets like bonds, gold, silver, and oil, while stocks are expected to decline due to persistent inflation concerns and anticipated Fed inaction on rate cuts in the 6-12 month medium term, according to Kevin Warsh's analysis. **Key Points:** - Geopolitical uncertainty, such as potential Iran conflict or Supreme Court rulings, historically leads to short-term buying opportunities ('buy-the-dip') in assets like Bonds, Gold, Silver, and Oil. - The Federal Reserve's medium-term outlook (6-12 months) suggests they will likely hold rates steady ('NOT OUR FRIEND') because inflation is expected to remain elevated due to tariff effects and persistent core inflation. - Warsh's perspective favors being bullish on bonds and bearish on Gold/Silver/Stocks in the short-to-medium term due to the Fed's likely holding pattern on rates. - The military buildup involving over 150 C-17 flights moving equipment to the Middle East, including 112 C-17s arrived or en route, suggests a serious escalation or potential war with Iran, which markets typically 'buy the dip' on. - The Fed's minutes indicated that while downside employment risks moderated, persistent inflation risks meant easing policy further could be misinterpreted as diminishing commitment to the 2% inflation target, supporting the hold on rate cuts. - If the Supreme Court rules against IEEPA protections (IEEP is dead), it could remove a tool for controlling tariffs, potentially keeping goods inflation high and stocks lower. - The massive military buildup of C-17s (170k payload) compared to the smaller C-130s (43k payload) signals a significant military posture, which historically prompts markets to buy commodities and bonds while stocks suffer. ![Screenshot at 00:10: The speaker displays a chart showing Target Rate Probabilities for a December Fed Meeting, illustrating market expectations for future interest rate changes.](https://ss.rapidrecap.app/screens/sCf3L2sKxZM/00-00-10.jpg) **Context:** The speaker analyzes current geopolitical tensions, specifically mentioning a potential U.S. military operation against Iran, as reported by Axios, and connects this risk to market expectations regarding Federal Reserve policy (rate hikes/cuts) and inflation data from the FOMC minutes. The speaker uses these macro factors to forecast short-term and medium-term asset movements, contrasting the historical market reaction to geopolitical uncertainty with the current environment shaped by persistent inflation and Fed policy signals. ## Detailed Analysis The video argues that current geopolitical risks, particularly concerning a potential U.S. military escalation with Iran (as reported by Axios, citing military buildup data like 112 C-17 flights moving equipment), historically create 'buy-the-dip' opportunities in assets like Bonds, Gold, Silver, and Oil. The speaker notes that the Federal Reserve's medium-term outlook (6-12 months) is likely to be unfavorable ('NOT OUR FRIEND') because inflation remains a concern, supported by FOMC minutes highlighting that core goods inflation picked up due to higher tariffs, and housing services inflation showed deceleration rather than a full decline. Consequently, the Fed is expected to keep rates on hold, which favors bonds (Warsh's view: Bullish bonds, Bearish stocks/gold/silver) over stocks in the short-to-medium term. The speaker also discusses the risk associated with the Supreme Court potentially ruling on IEEPA, which could affect tariffs and further complicate inflation control. If tariffs remain or increase, it pressures stocks while potentially benefiting tangible assets like gold/silver. The speaker concludes that this entire geopolitical/inflationary environment favors a cautious, long-term 'buy the dip' approach for risk assets, but specific intermediate-term positioning should favor bonds over stocks. ### Market Outlook Summary - Geopolitical uncertainty is historically a buy-the-dip event for Bonds, Gold, Silver, and Oil; Stocks are expected to suffer as costs remain high. ### Federal Reserve Medium Term (6-12mo) - Fed is likely to keep rates on hold ('NOT OUR FRIEND') due to persistent inflation, despite some softening in labor market risks. ### Warsh's Portfolio View - Bullish on Bonds, Bearish on Gold/Silver/Stocks for the medium term. ### Geopolitical Risk (Iran) - US military buildup (112 C-17s, massive troop/equipment movement) suggests a high probability of conflict or a deal failure, which typically rallies commodities and bonds. ### Inflation Context (FOMC Minutes) - Core goods inflation picked up due to tariffs; housing inflation decelerated, but persistent inflation risks kept the Fed cautious about easing policy. ### Supreme Court IEEPA Ruling Risk - A ruling against IEEPA could prevent the removal of tariffs, exacerbating inflation and punishing stocks. ![Screenshot at 00:10: Speaker pointing to a CME FedWatch Tool chart showing market probabilities for target rate hikes/cuts.](https://ss.rapidrecap.app/screens/sCf3L2sKxZM/00-00-10.jpg) ![Screenshot at 01:20: Speaker holding a small whiteboard illustrating a 'Wait' arrow pointing down \(indicating falling inflation/prices\) and a 'Spend' arrow pointing right \(indicating continued spending\).](https://ss.rapidrecap.app/screens/sCf3L2sKxZM/00-01-20.jpg) ![Screenshot at 05:41: Screen capture of the FOMC minutes highlighting key phrases regarding inflation outlook and tariff effects.](https://ss.rapidrecap.app/screens/sCf3L2sKxZM/00-05-41.jpg) ![Screenshot at 06:14: Truflation chart showing the TruPCE-US index dropping significantly below the BEA PCE Index around December/January.](https://ss.rapidrecap.app/screens/sCf3L2sKxZM/00-06-14.jpg) ![Screenshot at 16:51: A table detailing US Military Buildup, specifically listing C-17 transport flights destined for Middle East bases like Muwaffaq Salti Air Base.](https://ss.rapidrecap.app/screens/sCf3L2sKxZM/00-16-51.jpg)