Episode 006: Fed reform & US National Security Strategy

After a brief hiatus, the Thematic Edge is back! In the first half of this week’s episode, Mark queries me on Fed reform, a consistent theme of senior Trump officials that hasn’t received sufficient attention given its immense implications: what do they want to do and what can they do without Congress. In the second half we switch roles as I pull from Mark the real international relations implications of the abrupt turn in the latest US National Security Strategy paper.

0:00 Intro

2:23 Who will be the next Fed chairman?

3:23 Fed reform and financial deregulation is more important than low interest rates

8:16 Trump as Mafia don and not as an insult

11:38 Why Warsh stands out: early proponent of Fed reform

16:10 Why we need to do a podcast on the Global Financial Crisis response sometime...

17:04 Why regulatory reform is critical to slimming down the Fed’s balance sheet

20:32 Fed reform is a consistent Administration priority

22:16 The role of regulation in extending banks’ and central banks’ asset duration

24:51 How bank regulation can be unwound by the Fed

27:19 First-order effects of bank deregulation: US banks versus foreign; small versus large banks

29:13 The role of the Reserve Banks in implementation of deregulation

31:12 Implications for bank stock prices

33:20 Yield curves and broader stock prices

35:22 The US National Security Strategy

36:42 Clear continuity of NSS with think-tank analyses showing the need for the US to pull back from imperial overstretch to a more defensive position

38:29 A live war in Europe forces a change in framework: the US no longer can be as transparent as in a period of peace

39:44 Look to Asia for a live example of how this new framework will work

41:18 China’s blockade contingency forced Japan’s hand

42:14 US not withdrawing, but shifting its focus to be a strategic reserve force

44:48 NSS in a nutshell “Quality adjustment, not quantity adjustment”

49:16 Definitive message to China: we don’t want war...but are preparing if you do

52:40 What investment themes arise from the NSS

54:50 Stepped-up euro and European asset risks

57:50 Increasing US pressure on Northeast Asian currencies

59:04 Investment themes for 2026

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit thematicmarkets.substack.com/subscribe