Macro Hive Conversations With Bilal Hafeez Ep. 326: Jon Turek on Fed Cuts, Recession Risks and Political Risks
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Sep 18, 2025 Jon Turek, Founder and CEO of JST Advisors, delves into the intricacies of the US labor market's slowdown and its implications for Fed policy. He discusses the significant influence of AI-driven capital expenditures on US growth and potential inflation risks. Turek also shares insights on FX trends, particularly his bearish view on the dollar and the upcoming UK budget risks. Additionally, he explores how political dynamics, particularly from the Trump era, have shaped Fed narratives, hinting at evolving market pricing as Powell's succession looms.
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Labour Market Is The Marginal Story
- The marginal story for markets is the US labour market slowing and whether it signals normalization or recession.
- That labour dynamics will likely dictate how aggressive the Fed's easing cycle becomes for the rest of the year.
Wage Trends Point To Demand Weakness
- Wage growth falling in the US suggests weaker labour demand rather than only supply constraints.
- This makes the dovish case for Fed cuts more compelling despite supply-side distortions like migration.
Equities Running On AI CapEx And No Circuit Breaker
- The equity rally is partially AI-capex driven and may run independently of weak cyclical data.
- Markets price 'cuts-without-recession' and lack a circuit breaker from fixed income if reflation occurs.