Jordi Visser: Bessent’s Message: The Fed’s Next Era Will Be AI-Driven

This week’s update highlights the sharp rotation into small caps, fueled by expectations of rate cuts, rising PMIs, and stronger-than-expected earnings growth. Despite a temporary spike in PPI, core inflation remains contained, corporate bond spreads have tightened to multi-decade lows, and global equity markets are breaking to new highs. The reflationary backdrop is supported not just by cyclical factors but by structural shifts in policy and technology adoption. Central to this, Scott Bessent and the current administration are signaling a transition for the Federal Reserve way from backward-looking, overly academic models and toward a forward-looking framework better suited for an AI-driven economy. I view this as a clear indication that policymakers are implicitly embracing a higher...