Macro Landscape: A Fed Leadership Shift - Strategic Redirection Ahead?

If Jerome Powell steps down ahead of schedule, it would mark a profound redefinition of how monetary policy expectations are managed during a political transition.

Should Bessent a figure closely aligned with Trump and bearing clear political leanings be nominated, the Federal Reserve may face intensified politicization. This would stand in direct contrast to the traditional doctrine of central bank independence.

Trump's recent call for a 100-basis-point rate cut may sound aggressive, but it aligns closely with electoral interests and short-term market gains. If the Fed indeed comes under Trump-aligned leadership, two rate cuts before the end of 2025 are not only plausible, they're probable.

This pre-emptive rate cut expectation could push markets to ignore the still-sticky reality of inflation.

While headline inflation has eased, core inflation and wage pressures remain persistent. If the market chooses to disregard this, it signals not confidence in fundamentals, but a speculative bet on policy shifts and renewed liquidity injections.

A. Raw Materials Outlook: The End of the Sweet Spot?

As you aptly put it: "All things united will eventually divide, and all things divided will once again converge. There is no endless decline, nor will there ever be a permanent sweet spot."

This insight is especially timely for raw materials. From my perspective, I analyze the coming shift across three dimensions:

1. Rate Cut Expectations = Reflation Narrative Reignited

With capital costs projected to fall, speculative liquidity is likely to return, targeting tangible assets such as commodities, energy, and precious metals.

This will trigger a rebound from prolonged price suppression, particularly in industrial metals tied to infrastructure and manufacturing: iron, nickel, stainless steel, aluminum, and more.

2. Global Restocking Likely to Begin by Q3-End

The de-stocking phase has stretched over a year. Once policy easing becomes official, or even anticipated, traders and downstream buyers will preemptively restock. 

This will create a wave of perceived demand, especially in Asia, driving prices upward even if true end-user consumption remains moderate.

3. Signals That the Sweet Spot Is Ending:

The "sweet spot" represents the price bottom before visible demand recovery. It will disappear once any of the following events occur:

1. The Fed announces a clear rate cut timeline.

2. China intensifies its shift toward real-economy investments.

3. Major commodity traders or producers are exposed stockpiling aggressively (e.g., LME inventory drops, port stocks depleted).

Just like last night's Strawberry Moon, brief, beautiful, but fleeting, so is this sweet spot. Those who understand timing must move while the red moon still hangs in the sky.

My Conclusion:

1. Q3 (July–September) may mark the critical window for raw material price recovery.

2. If prices remain stagnant by September, it could signal either policy failure or a false recovery narrative.

3. Once the first signs of a price rebound emerge, do not overcommit, this is not a V-shaped recovery, but a tug-of-war led by politics and liquidity.

Deploy with a hedging mindset, secure the margin, protect the downside.