Sonu Varghese
A Ceasefire and a Relief Rally, But the Bond Market Isn’t So Sure
News of a potential ceasefire deal hit Tuesday evening, and markets didn’t wait around. The S&P 500 surged 2.5% on Wednesday, the Dow gained 2.85%, and the Nasdaq rallied 2.8%. The S&P 500 is now down less than 1% year-to-date. The Dow is actually in the green. That’s the good news, and it’s worth acknowledging. …
Sonu Varghese
April 9, 2026
The Labor Market Remains Delicately Balanced While an Inflation Crisis Looms
The crisis in the Middle East is in week six right now, and it’s not hyperbole to say that the world is on the edge of an energy crisis. Oil prices have surged over the past several weeks, with the price of WTI (the US benchmark) surging over $100/barrel last week—it was at $65/barrel on …
Sonu Varghese
April 6, 2026
When Your Diversifiers Don’t Diversify
The recent market pullback has offered a useful reminder: in certain environments, traditional safe havens don’t behave the way you’d expect. Since the Middle East conflict escalated on February 27, both bonds and gold have failed to provide much cushion, and understanding why matters more than the headline. Bonds: The Inflation Problem Treasury yields have …
Sonu Varghese
March 20, 2026
It’s All Transitory (On a Long Enough Timeline)
Life is transitory, and so are inflation shocks (caveat: on a long enough timeline). The Federal Reserve (Fed) held rates steady in the 3.50-3.75 range at its March meeting, as expected. But all eyes were on the Fed’s updated Summary of Economic Projections (the “dot plot”), where each of 19 members jot down their estimates …
Sonu Varghese
March 19, 2026
The Fed May Start Thinking About Raising Interest Rates
Let me start here: if inflation averages 2% over 10 years, that translates to an 18% cumulative loss of purchasing power, i.e., $10,000 of a typical basket of goods and services today would cost $12,190 in a decade. If inflation averages 3% over 10 years, that translates to a 26% cumulative loss of purchasing power, …
Sonu Varghese
March 17, 2026
The Fed Has a Big Problem on Their Hands
The February payroll report was an ugly one, and a bit of a mess. The economy lost 92,000 jobs in February, whereas forecasters projected a gain of 55,000. We saw significant revisions for the last two months as well: December payrolls were revised down by 65,000, from +48,000 to -17,000. January payrolls were revised down …
Sonu Varghese
March 6, 2026
The Inflation Outlook Doesn’t Look Good
War tends to be inflationary, period. Especially one in the Middle East that drives up oil prices. Since Friday, WTI crude prices have risen over 10% to $76/barrel, while Brent prices rose over 15% to $83/barrel. That doesn’t sound like a lot given the magnitude of hostilities in the region, but as Ryan wrote in …
Sonu Varghese
March 3, 2026
Will AI Lead to a Productivity Boom AND an Economic and Market Crash?
Last week, Citrini Research and Lotus Technology Management’s Alap Shah published a piece on AI that went viral, titled: “The 2028 Global Intelligence Crisis.” The piece is a thought experiment that highlighted some potential consequences of rapid AI development (even if not base case) that the conventional view might be missing. They wrote a memo …
Sonu Varghese
February 27, 2026
AI Showed Up In A Big Way In 2025 GDP Data
On the face of it, headline fourth quarter (Q4) GDP growth disappointed. The economy grew at an annualized pace of 1.4%, after adjusting for inflation (“real” GDP growth), whereas economists were expecting double that number. A big driver of the underwhelming number was a big pullback in federal government spending, which pulled real GDP growth …
Sonu Varghese
February 24, 2026
The Tariffs Have Been Struck Down. What Next?
The Supreme Court today struck down the use of IEEPA (International Emergency Economic Powers Act) as a valid legal basis for many of the Trump administration tariffs in a 6-3 decision written by Chief Justice John Roberts with Justices Thomas, Alito, and Kavanaugh dissenting. It’s a complicated 170-page decision with concurrences, partial concurrences, and multiple …
Sonu Varghese
February 20, 2026