Welcome To The Politics Of AI

Citadel Securities warns that the Fed is behind the curve on a resilient US economy where inflation is broadening and the labor market is reaccelerating. Simultaneously, the massive AI capex boom is driving energy costs higher, creating a new 'politics of AI' that risks a populist backlash.

Key Takeaways

• 1.The Federal Reserve's current outlook is 'behind the curve' relative to strong US growth fundamentals and reaccelerating inflation.
• 2.Inflation is broadening from energy into services and intermediate goods, with PPI showing significant upward pressure.
• 3.The labor market appears to be reaccelerating, with private-sector hiring rising to a monthly run-rate of 170k-180k.

Table of Contents

• CHAIR WARSH WILL NEED TO NAVIGATE AN AWKWARD FACT PATTERN AT HIS FIRST MEETING...
• INFLATION IS A PROBLEM NOT JUST FOR THE FED, BUT FOR THE WHITE HOUSE TOO.
• THE POLITICS OF AI

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