Skip to main content

Stephanie Pomboy: Has The Grand Game Just Changed?

Adam Taggart | Thoughtful Money® Sep 1, 2026

Summary

Kevin Warsh's 'non-interventionary' Fed may be ending the four-decade 'Fed put,' with Treasury Secretary Bessent stepping in as the new market intervener.

The 30-year yield near 5.2% is the highest in roughly two decades, and rising Treasury supply is squeezing leveraged corporate borrowers.

America's Venezuela oil lease could lock in decades of cheaper fuel long term, but the supply impact is likely a decade away.

Japan's rising yields threaten the yen carry trade, a major funding source for leveraged bets across global markets including AI hyperscalers.

AI capex, reshoring manufacturing, and bond income are currently cushioning the economy from the gravitational pull of higher rates.

Adam Taggart's takeaways

  • Top takeaway Taggart frames the discussion as 'has the grand game just changed,' listing long-end yields at two-decade highs, a non-interventionary Fed under Warsh, Treasury intervention under Bessent, and the Venezuela oil deal as potential game-changers for investors
  • He cites Dr. Art Laffer's prediction that Warsh could be one of the most meaningful Fed chairs of his lifetime and may serve roughly 25 years, restoring the Fed to a lender of last resort rather than first
  • He draws an echo of the summer 2007 asset-backed commercial paper unravel in current hyperscaler credit stress and rising CDS, warning the credit market is sniffing out trouble even as equities remain complacent
  • He argues the Venezuela agreement, combined with Canada and potentially Iran, cements the US as the 'gas station to the world,' displacing the Gulf as the dependable supplier to global energy markets
  • He floats the question of whether the Fed put has effectively migrated to the Treasury given Bessent's yen intervention and Treasury buyback program

Stephanie Pomboy's takeaways

  • Top takeaway Pomboy argues we are eliminating the Fed put under Warsh and compares his hawkish stance to Greenspan's 1986 setup, warning that unlearning four decades of Pavlovian Fed support will require repeated market shocks without dovish relief
  • She frames financial crises as occurring at successively lower yield levels as leverage built up over decades, and points to the largest wave of corporate bankruptcies since the global financial crisis plus private-credit haircuts as evidence of hidden stress under 5%+ long-end yields
  • She credits AI capex, the reshoring/manufacturing boom, and interest income flowing to older bondholders as the three forces currently cushioning the economy from higher rates, while warning AI capex could reverse if expected returns disappoint
  • She calls Bessent's yen intervention a 'reckless gambit' certain to fail, invoking the Soros-Bank-of-England lesson that a central bank cannot push its currency higher indefinitely against fundamentals
  • She characterizes Bessent's roughly $1 trillion TGA buyback threat as theater to spark a short-covering rally, and proposes revaluing the US gold reserve from $42/oz to market price as a way to unlock real sustainable firepower

Kevin Warsh's takeaways

  • Top takeaway Warsh is portrayed as a committed hawk who, in his Jackson Hole speech, pushed to restore market signal integrity so the Fed reacts to the market rather than the other way around
  • Per Dr. Laffer as cited by Taggart, Warsh could rank among the most meaningful Fed chairs of his lifetime and potentially remain at the Fed for decades

Scott Bessent's takeaways

  • Top takeaway Bessent is depicted as pursuing an interventionist Treasury playbook in direct contrast to Warsh's hawkish Fed, including a yen intervention with Japan and a Treasury buyback program stepped up from $2B to $4B per auction
  • He threatened to deploy up to roughly $1 trillion of Treasury General Account balances to hold down the long end, a move Pomboy calls a short-squeeze scare tactic rather than sustainable policy since the funds must be replenished amid a roughly $2 trillion deficit
  • Per Dr. Laffer as relayed by Taggart, Bessent ultimately serves Trump ('yes, sir') rather than operating from an independent monetary-policy mandate, explaining the apparent Fed-Treasury tension
  • Pomboy suggests Bessent could sustainably fund long-end purchases by revaluing the US gold reserve from $42/oz to market price, shifting the reserve value from roughly $10B to roughly $1T overnight

Dr. Art Laffer's takeaways

  • Top takeaway Laffer tells Taggart he expects Warsh to be one of, if not the most meaningful Fed chair of his lifetime and suggests Warsh could remain at the Fed for around 25 years
  • Laffer dismisses the apparent Fed-Treasury tension as not a battle but two officials serving 'different masters,' with Bessent ultimately reporting to Trump