u/mayorolivia

The author argues that inflation is supply-side driven, so Fed rate hikes will not fix it, and that Iranian escalation over the next two months is aimed at hurting Trump in the midterms. In that environment, small caps and speculative 'shitcos' get hit hardest because they are most rate- and risk-sensitive. The stated catalyst is geopolitical escalation into the midterms and a Fed hike that fails to control supply-driven inflation. Main risk is that the escalation or hike does not materialize as described.

The author argues the market has already priced in a Fed rate hike, so the expected outcome is neutral for equities. If the Fed instead does not hike on Wednesday, they expect a hard market selloff because it would further damage the Fed's credibility. The catalyst is the Wednesday Fed decision.