Fed Traps, AI Mania, And Why I Walked Away From Trading
Quoth the Raven
· QTR’s Fringe Finance
· July 27, 2026 at 18:01
· ⏱ 6 min read
| Read on Substack ↗
Summary
The author argues the Federal Reserve is trapped between persistent inflation and fiscal recklessness, with the bond market poised to trigger a deleveraging event that passive investing and market structure have masked. He personally stepped away from active trading but sees opportunities in equal-weight S&P 500, psychedelics, emerging markets, and gold miners for long-term investors who expect further monetary intervention.
•Author believes inflation will not fade easily due to untethered fiscal policy, leaving the Fed stuck between rising prices and recession risk.
•The bond market, not stocks, will dictate the end of the cycle, and the system is heading toward another major deleveraging event.
•Risks are mounting in private credit, regional banks, commercial real estate, and parts of crypto, with private equity stuffed into insurance products echoing 2008-era financial engineering.
•Passive investing, options activity, and market-cap weighting have fundamentally changed price discovery; the author prefers the equal-weight S&P 500 over the cap-weighted index.
•The author ‘pounded the table’ on psychedelics at the start of 2026, continues to favor emerging markets, and finds gold miners attractive after the recent pullback for investors anticipating more monetary intervention.
•The SpaceX IPO is flagged as a potential sentiment gauge for the AI boom, and Michael Burry's comparison of today's AI buildout to the late-1990s internet bubble is revisited.