Jim Bianco: Jerome Powell is Holding the Fed Hostage

Summary

Jim Bianco discusses the controversy over Jerome Powell staying at the Fed, the shift toward independent voting at the FOMC, and the protracted Strait of Hormuz blockade. He argues oil prices will stay elevated, interest rates will trend higher, and defense stocks will underperform due to the rise of drone warfare. The conversation also covers Fed structure, market pricing of rate hikes, and the impact of AI on the economy.

• Powell's decision to stay is seen as political, holding the Fed hostage over building cost investigations.
• The FOMC saw an 8-4 vote with three dissents over easing bias language, signaling growing independence.
• The Strait of Hormuz blockade is expected to be prolonged, with no clear military solution.
• Brent crude oil futures (December 2026) are making new highs, indicating elevated prices ahead.
• Interest rates are expected to drift higher, with the 30-year bond briefly touching 5%.
• Prime defense stocks like Boeing, Lockheed Martin, and RTX are declining due to warfare shifting to drones.
• Ukraine's successful use of drones is cited as a model for 21st century warfare.
• The Supreme Court ruling on Lisa Cook's firing could lead to further upheaval at the Fed.