the Gist View
The first tremor of December did not come from a battlefield or a ballot box but from Constitution Avenue: President Trump signaled he has chosen his next Federal Reserve chair, and betting markets now price Kevin Hassett as front-runner. Reuters notes that Hassett already commands “above a 50% probability” and could spend five months as a de-facto “shadow chair,” guiding expectations before Jerome Powell’s term expires in May 2026. (reuters.com)
Wall Street reacted instantly. The Wall Street Journal’s real-time market blog recorded traders piling into contracts that hedge a sharper dollar slide and steeper yield curve, fearing a 5-2 pro-Trump majority on the Board will deliver faster rate cuts. (wsj.com)
Why does this matter beyond Washington? History rhymes: Nixon pushed Arthur Burns to loosen in 1971; inflation tripled within two years. Today, headline CPI sits at 3.1 %, while Brent still hovers near $80 despite OPEC restraint. A politicized Fed that “front-loads” easing into an energy-strained supply side risks replaying the 1970s stagflation script. As the late Charles Goodhart warns, “Independence lost is credibility lost—and credibility, once gone, is brutally expensive to buy back.”
The Gist AI Editor
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The Global Overview
Fed Pivot Anticipated
President Trump announced he has selected the next Federal Reserve chair, signaling a significant policy shift is imminent (Bloomberg). The move comes as Trump has consistently advocated for more aggressive interest-rate cuts to boost economic growth. National Economic Council Director Kevin Hassett is widely seen as the frontrunner, a choice markets appear to favor on the expectation of looser monetary policy. This prospective change at the helm of the U.S. central bank, which influences global borrowing costs, suggests a deliberate turn towards prioritizing affordability and easing household financial pressures through lower rates for mortgages and loans.
Airbus Turbulence
Airbus shares plunged as much as 10% following reports of a new quality issue affecting its A320-family jets, compounding challenges from a recent software glitch that impacted roughly 6,000 aircraft (WSJ, Reuters). The European planemaker is now dealing with fuselage panel flaws on dozens of aircraft, which is reportedly delaying deliveries. This dual crisis of software and hardware problems creates significant operational and financial headwinds for Airbus, with analysts estimating the financial fallout from the software issue alone could range from $651 million to $2.5 billion (MarketWatch).
Consumer Relief at the Pump
U.S. consumers are seeing relief as the national average price for gasoline has fallen to a four-year low, dipping below $3 per gallon in some areas (Bloomberg, GasBuddy). This decline is attributed to a combination of cheaper crude oil and flat demand, providing a modest boost to household discretionary income. While this development eases some of the cost-of-living pressures, the price remains above President Trump’s pledged target of under $2 per gallon. The sustained lower prices depend on stable market conditions, with U.S. oil production and refinery output being key factors.
UK Watchdog Head Resigns
In the U.K., the head of the Office for Budget Responsibility (OBR), Richard Hughes, has resigned after a critical review found the watchdog failed to prevent the premature release of its market-sensitive economic forecasts (WSJ). The incident, described as the “worst failure” in the OBR’s 15-year history, has raised serious questions about the security of vital economic data that can significantly impact financial markets. The resignation underscores the immense pressure on fiscal institutions to maintain flawless control over information that underpins market confidence and government credibility.
Stay tuned for the next Gist—your edge in a shifting world.
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The European Perspective
Europe’s AI Lag
Former ECB chief Mario Draghi delivered a stark warning on Europe’s innovation deficit, pointing to the continent’s risk of prolonged economic stagnation. At a Milan conference, he noted that in the last year, the US produced 40 foundational AI models, China 15, and the entire EU a mere three. This isn’t just about tech leadership; it’s a direct threat to future prosperity. Without scaled adoption of frontier technologies, Draghi projects that based on the last decade’s productivity growth, the EU’s economy could be the same size in 25 years as it is today. For a bloc already grappling with demographic decline, this trajectory points toward managed irrelevance, not dynamic growth. My takeaway is that capital and talent will continue to flow to jurisdictions that foster, rather than stifle, frontier innovation.
UK Credibility Test
In London, the head of the UK’s independent fiscal watchdog, the Office for Budget Responsibility (OBR), resigned following the premature release of its economic analysis last week (Politico). Richard Hughes’s departure is more than a personnel change; it strikes at the heart of institutional credibility, which is critical for market stability. Fiscal guardrails and predictable governance are paramount, and this event raises uncomfortable questions about the integrity of processes within one of the UK’s key economic bodies. For investors, such missteps create uncertainty, undermining the very confidence that Chancellor Rachel Reeves’s government aims to project.
Energy Market Breather
European natural gas prices provided a rare glimmer of positive economic data, offering a modest reprieve for industries and consumers. Futures on the Dutch Title Transfer Facility (TTF)—the continent’s benchmark—opened down 1.9%, trading at €28.28 per megawatt-hour (Ansa). While seasonal fluctuations are expected, any sustained downward trend in this key input cost helps ease inflationary pressures and supports the competitiveness of Europe’s energy-intensive manufacturing sector. The move reflects current market sentiment on supply and storage levels, but it remains a volatile indicator sensitive to geopolitical shifts and weather patterns.
Catch the next Gist for the continent’s moving pieces.
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The Data Point
In the global AI race, Europe lags significantly.
Last year, the U.S. produced 40 foundational AI models, while the European Union developed only 3, highlighting a critical technology gap and risking future economic stagnation.
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The Editor’s Listenings
MJ Lenderman – You Have Bought Yourself A Boat (2024)
A heartfelt and sprawling slice of indie rock with a raw, anthemic quality.
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