🚀 Warsh's first Fed Meeting

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Year To Date Performances:

1. In his inaugural monetary policy meeting as Federal Reserve Chairman, Kevin Warsh initiated a significant institutional regime change, balancing a steady benchmark interest rate with hawkish inflation rhetoric and sweeping structural overhauls. While the Federal Open Market Committee (FOMC) voted unanimously to hold the federal funds rate at 3.5% to 3.75%, the newly released "dot plot" revealed a deeply divided central bank, splitting 9-9 between members favoring a pause or cut and those advocating for a quarter-point rate hike later this year. Warsh purposefully chose to refrain from submitting his own dot, asserting that structured forward guidance hamstrings independent policy. He simultaneously sent shockwaves through bond markets by hammering the phrase "price stability" a dozen times during his press conference, sending the policy-sensitive 2-year Treasury yield soaring by 14.4 basis points. To institutionalize his long-promised structural reforms, Warsh announced the formation of five specialized internal task forces to aggressively review Fed communications, balance sheet mechanics, AI integration, and core inflation modelling.

2. The Senate Armed Services Committee has approved an 18-9 bipartisan provision within the fiscal year 2027 National Defence Authorization Act (NDAA) that would bar defence contractors from executing stock buybacks or paying dividends without prior approval from the Department of Defence. Section 815 of the bill, which is scheduled to take effect on June 15, 2027, targets contractors who are underperforming on their government contracts or failing to prioritize domestic manufacturing capabilities. The provision allows companies to obtain a waiver from the defence secretary if they submit a qualifying defence investment plan to expand production capacity and prioritize capital expenditures. Noncompliant companies face severe penalties, including the suspension of contract payments and a total loss of contract eligibility. While proponents argue the measure instills necessary fiscal discipline and holds corporate executives accountable to taxpayers, prominent business coalitions like the U.S. Chamber of Commerce and the Aerospace Industries Association strongly oppose the mandate, warning it represents an unprecedented government overreach that will ultimately stifle private investment and weaken the broader defence industrial base.

3. The recent U.S. export controls barring foreign nationals from accessing Anthropic’s advanced Fable 5 and Mythos 5 models have exposed a critical vulnerability in India’s tech ecosystem, which has historically relied on building applications on top of foreign foundational software. This policy shift has amplified deep structural concerns regarding India’s massive sovereign AI deficit, as the nation currently lacks domestic frontier-scale models, home-grown semiconductor fabrication, and the massive data center capacity commanded by the U.S. and China. While private capital is starting to respond, evidenced by local AI firm Sarvam AI securing a $300 million funding round at a $1.5 billion valuation with backing from HCL Technologies, experts argue that both corporate and venture capital allocations remain far too conservative compared to the multi-billion-dollar investments seen overseas. Prominent tech voices, including veteran investor Mohandas Pai and Zoho co-founder Sridhar Vembu, are calling on Prime Minister Narendra Modi to radically scale up the national AI mission, warning that current state programs are too slow and underfunded to establish true digital autonomy. Because Indian sovereign models currently top out around 100 billion parameters and rely entirely on Nvidia architecture, the ecosystem faces severe structural risk if Washington ever decides to extend advanced computing hardware restrictions to South Asia, making the development of a government-backed computing stack an absolute national security priority.

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