Milk Road Macro The Fed Just Flipped the Script: What the Rate Cut Reveals About the 2026 Market Playbook w/ Kevin Muir
Dec 11, 2025
In this insightful discussion, Kevin Muir, former institutional equity derivatives trader and author of The Macro Tourist newsletter, shares his expertise on recent Fed rate cuts and their implications. He highlights why Powell's guidance may be losing its significance and the importance of second-order effects in investing strategies. Muir also delivers fascinating insights on how AI will reshape energy markets, the bull case for aluminum amidst China's policies, and a bullish outlook for non-US equities, emphasizing global opportunities for savvy investors.
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Fed Cuts Without Hitting Target
- The Fed cut rates despite not hitting its 2% inflation target, signaling a change in priorities.
- That shift matters for asset allocation and weakens the predictive power of Fed guidance under a coming leadership change.
Reserve Management Is Operational, Not QE
- The Fed returned to reserve management buying short-term bills to smooth funding after over-tightening via QT.
- This is not QE-era money printing but an operational fix to avoid funding stress and stabilize markets.
Prefer AI Users Over Hype Stocks
- Avoid buying richly valued AI producers like NVIDIA at extreme multiples.
- Instead, buy companies that will use AI to boost margins or deliver second-order benefits from AI adoption.