FOR PEOPLE WHO WANT TO SEE WHAT BREAKS BEFORE IT BREAKS
Warsh's preferred inflation gauge reads a full point below the committee's measure, the Blackwell loophole may have moved frontier chips to Chinese subsidiaries at scale, and Hormuz may only return to 60-70% of prewar traffic even with a deal.
THE SETUP
Core PCE for April came in at 3.3%. The Dallas Fed's trimmed mean came in at 2.3%. Warsh told lawmakers he wants the Fed to focus on gauges that filter out extreme moves. The measure he picks determines whether the hike majority binds or bends.
Blue Origin's New Glenn exploded Thursday at Cape Canaveral. SpaceX's roadshow opens June 4 with its only heavy-lift competitor offline. Commerce closed a loophole Sunday that may have let Chinese subsidiaries receive Nvidia (NVDA) Blackwell chips. And a senior energy advisor said Iran will control Hormuz for the foreseeable future.
PMD LENS
PMD built the Warsh rate framework across five days. The FOMC minutes named majority hike support. Waller said remove the easing bias on day one. Now the incoming chair signals a different yardstick. June 16 is not about which path. It is about which number they read.
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WHAT MOST WILL MISS
The trimmed mean failed in 2021 for the same reason it may fail now. It filtered out the biggest price increases. Those increases were the signal.
The Dallas Fed's own economist cautioned this week against trusting the trimmed mean's level. The gauge's publisher questions it.
Sunday's guidance closed the Blackwell subsidiary channel but left a second gap. Taiwan foundries still lack due diligence on high-end chips.
Hormuz has no bypass route. Any traffic ceiling becomes a permanent input, not a shock.
Amazon (AMZN) already filed for a 24-month FCC extension on its constellation deadline. Losing New Glenn launches Thursday made the gap permanent.
IN FOCUS
The Ruler Is the Rate Decision
The One-Point Gap
One month. Two readings. Core PCE says 3.3%. The trimmed mean says 2.3%. That gap separates a committee that hikes from one that holds.
Warsh told lawmakers he wants the Fed to watch the trimmed mean. His case: tariffs, AI capex, and energy shocks are one-off events the trimmed mean filters out. If he is right, inflation is near target. If he is wrong, the gauge hides the signal.
The 2021 Problem
The trimmed mean failed before. In 2021 it understated the surge by excluding the biggest price jumps. Those jumps were the signal. Dallas Fed researchers acknowledged the flaw.
The same conditions hold now. Tariffs push up goods. AI capex pushes up chips. Energy pushes up everything else. If those forces persist, the trimmed mean filters out exactly the prices that matter.
The Committee Gap
Waller said May 22 he can no longer rule out hikes. The FOMC minutes documented majority support. The committee runs on core PCE. Warsh favoring the trimmed mean before his first meeting opens a gap between the new chair and the committee.
That gap has a date. June 16.
The Inflation Ruler Test
Every rate assumption in your book depends on which reading the Fed uses. Before June 16, name the one your model runs on. If it assumes the trimmed mean, your position needs Warsh to be right. If it assumes core PCE, the hike majority binds. Name it. Size accordingly.
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SIGNALS IN MOTION
The signals below are not forecasts. They are mechanisms already in motion. Each one reveals the same pattern: duration is being financed before economics are fully proven.
Signal 1: The Blackwell Loophole Just Closed
Commerce posted guidance Sunday closing a Blackwell export gap. Chinese subsidiaries may have received Nvidia's most advanced chips without a license. One source estimated hundreds of thousands moved through the opening.
PMD named H200 approved buyers with zero deliveries as the China chip framework. Blackwell names a parallel channel. Formal approvals, no shipments. No formal channel, possibly large-scale movement already done.
The Chip Assumption Check
Every China AI model built on limited frontier chip access just shifted. If Blackwell moved at scale, Chinese AI outpaces the H200 binary. Reprice any China competitive analysis this week. The restriction may not have held.
Signal 2: Hormuz Has a New Ceiling
A senior energy advisor told CNBC that Iran will control Hormuz for the foreseeable future. Even with a deal, traffic may only hit 60-70% of prewar volumes.
PMD named Iran's regulatory authority Wednesday. This names the endpoint. A bifurcated waterway where access depends on alignment.
The Resolution Baseline Test
If any energy or rate model assumes full Hormuz restoration, this week names a ceiling. Model at 60-70% recovery. If the holding clears, keep it. If it needs prewar volumes, you hold a resolution bet. Not a fundamentals bet.
Signal 3: Blue Origin's Pad Is Gone
Blue Origin's New Glenn exploded Thursday. The explosion destroyed the pad. Engineers expect six months offline.
SpaceX's roadshow opens June 4. Its only heavy-lift competitor just lost its launch facility. Amazon needed New Glenn for half its constellation. The moat widened on its own.
The Competitive Moat Read
If any allocation prices SpaceX against a competitive launch market, reprice before June 4. The only heavy-lift alternative went offline Thursday. That turns market share risk into structural monopoly.
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THE PLAYBOOK
Watch Warsh's first statement for a named inflation metric before June 16.
Watch for Blackwell chip volume data before the roadshow closes June 11.
Watch whether diplomacy addresses Iranian control of Hormuz.
Watch for Amazon adding SpaceX missions before the roadshow closes.
Watch the Dallas Fed's next trimmed mean release for methodology notes.
CAPITAL DISCIPLINE
Which inflation number the Fed uses determines whether the hike majority is a ceiling or a floor. Core PCE at 3.3% and the trimmed mean at 2.3% produce two rate paths from the same data.
Before June 16, run this test. Take your most rate-sensitive position. Rerun the model twice. Once with core PCE and hikes. Once with the trimmed mean and a hold. If it clears both, it hedges against the metric. If it clears one only, you bet on which reading Warsh uses. Name it. Size accordingly.
THE PMD REPOSITION
The number picked determines the meeting. The loophole may have moved.Hormuz has a ceiling. The pad is gone.
Watch which measure Warsh names before June 16. Watch whether diplomacy addresses Iranian control. Watch whether Amazon confirms SpaceX additions.
The assumptions haven't changed. The inputs just did.
