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Feb 12, 2026
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NEUTRAL
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Ferguson states, "The economic data does not support an aggressive move down by the Fed. Maybe one more and then done." He notes inflation is "sticky" and the 10-year yield hasn't moved much because inflation expectations are stable. The market is pricing in a series of cuts (potentially expecting a new Chair like Warsh to cut for productivity reasons). Ferguson argues this is historically "misguided." If the Fed pauses after one cut, the aggressive bond rally trade (betting on plummeting yields) is off the table. Yields will likely flatten or remain elevated due to sticky inflation and strong growth. NEUTRAL. Do not bet on a crash in yields/aggressive easing. A sudden deterioration in the labor market could force the Fed to cut faster than Ferguson expects. |
CNBC
The economic data doesn't support an aggressi...
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Feb 12, 2026
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LONG
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Ferguson highlights that "Wealth effects still exist," "GDP numbers still look like they're going to be strong," and the labor market is stabilizing with "robust" job creation. The bear case for the economy relies on the consumer running out of excess savings. Ferguson counters this by pointing to the wealth effect (from high equity/home prices) and a healing labor market. If the consumer is strong and the Fed is not over-tightening (just waiting), the "soft landing" or "no landing" scenario favors equities over cash. LONG. The macro backdrop supports continued consumer spending and corporate earnings growth. Sticky inflation erodes real wage gains, eventually curbing consumption. |
CNBC
The economic data doesn't support an aggressi...
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Feb 12, 2026
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WATCH
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Ferguson notes that while AI may boost productivity, "the demand for investment starts to go up, which also pushes up interest rates." Investors often assume AI is purely deflationary (allowing rate cuts). Ferguson introduces the Second-Order effect: The massive CapEx required for AI creates a demand for capital, which raises the cost of money (rates). This means the AI boom can coexist with—and actually cause—higher interest rates, rather than solving them. WATCH. Be careful assuming AI will trigger a low-rate environment; the investment phase is capital-intensive and rate-supportive. If AI fails to deliver productivity gains quickly, the investment demand could dry up, altering the rate dynamic. |
CNBC
The economic data doesn't support an aggressi...
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