1% Insights

#FOMC‬⁩ Fed Chair Kevin Warsh just dropped a line every AI bull should hear:

"Interest rates get in the cracks."

Someone asked him if the AI boom is immune to higher rates. His answer: nope. Rates hit almost everything, directly or indirectly. He even pointed out investors have gotten a lot pickier since early September. That's rates doing their thing.

The Fed held at 3.75%–4% this week, but two members voted for a hike. And Warsh didn't sound like a guy in a hurry to help:
· Inflation is "still too high" and it's on the Fed to bring it down
· No promise on a December hike, but what matters is where rates end up, not when
· Politics played zero role in the call

#FOMCWatch When rates stay high, the rich aren't the ones who get hurt first. The bottom 60% are.

Ray Dalio just broke it down, and it's pretty simple:

The government keeps borrowing, and everyone else gets pushed out of line for credit.

If you've got plenty of money, you're the last to feel it. Families without much cushion and companies that can't easily borrow feel it first.

Then credit gets tight, business slows down, profits drop, and stocks eventually catch up.

Basically, high rates make the strong stronger and squeeze everyone else. The market just takes a while to notice.