Why Iran Is Trump’s Greatest Taco and the Fed’s Impossible Split: Bits + Bips

Summary

• Trump announced a 5-day ceasefire with Iran, de-escalating Middle East tensions, which caused oil to crash below $90/barrel, Bitcoin to surge from $68,200 to above $71,000, and gold to sell off sharply.
• Rahm Alawalia frames this as "the greatest taco of Trump's career," introducing a "Trump put" where Trump intervenes to prevent market crashes, but notes market indecision with high volatility and rapid repricing.
• The Fed held rates steady but revealed a historic internal split: 7 hawks want zero cuts in 2026 vs. 5 doves wanting 50 bps or more, with inflation projections raised to 2.7% and Powell warning inflation isn't declining as hoped.
• Rahm argues inflation will be higher for longer due to war spending, supply chain pressures (e.g., TSM and Micron raising prices), and commodity spikes, while Chris Perkins suggests the energy shock may be transitory and AI could be disinflationary.
• Rahm is accumulating high-quality, reasonably priced companies like Nvidia, Meta, Progressive, and S&P Global for their resilience and free cash flow yields amid uncertainty.
• Elon Musk's $25B Terra Fab chip fabrication project is criticized by Rahm as unrealistic due to high costs, Tesla's limited cash flow, and technological hurdles; Rahm had a short position on Tesla and may re-short after a rally.
• Jeff Bezos raising $100B to buy and AI-transform manufacturing companies signals potential value capture in applied AI rather than in AI model companies themselves.
• Job cuts in crypto (e.g., Algorand, Gemini) are attributed to AI but are likely excuses for restructuring and free cash flow issues, not large-scale AI displacement; net engineering hires are still positive overall.
• AI benefits are accruing to end-users through workflow automation (e.g., using Claude for memo generation), with venture capital subsidizing the real economy, rather than to AI model companies.
• Political predictions: Rahm and Chris believe Republicans will retain the Senate, with the House possibly flipping to Democrats, reflecting dissatisfaction with both parties.