How likely is "Stagflation materializes in US economy"?

Our causal model estimates 75% probability for this factor. This is driven by 3 sub-factors.

How likely is "Trump actively undermines Powell before term expiration"?

Our causal model estimates 95% probability for this factor. This is driven by 4 sub-factors.

How likely is "Kevin Warsh is nominated and confirmed as next Fed Chair"?

Our causal model estimates 5% probability for this factor. This is driven by 3 sub-factors.

How likely is "Political dynamics dominate rate decisions over data"?

Our causal model estimates 72% probability for this factor. This is driven by 4 sub-factors.

← Back to Theses

Can Political Pressure Force the Fed Into Stagflation?

Updated 53m ago· Published Mar 24active

Current Assessment

Our causal model estimates 50% probability. Kalshi markets price the top related contract (How many dissent at the next Fed meeting?: 4+) at 6.5¢, while our thesis implies 35¢ — a +28.5¢ edge. Across 14 tracked contracts, we see systematic mispricing.

Latest evaluation (12h ago): No material change — the Reuters stagnation-vs-stagflation framing is the single most important development, modestly weakening the stagflation pillar of the thesis (n1 trimmed to 0.72) and nudging thesis confidence down 2 points to 0.51. The core political-dynamics story (Trump/Powell/Warsh, n2/n3/

Thesis

Stagflation traps the Fed in an impossible triangle. Powell stays until Warsh confirmation. Trump investigates Powell via DOJ while nominating Warsh. The power struggle between Trump-Powell-Warsh matters more for rate decisions than CPI prints. Fed credibility erodes.

Confidence

50% █████░░░░░

Implied Return

-2.4%

Contracts

15tracked

Track Record

Hit Rate

47%of edges moved toward thesis

Edges Tracked

Avg Movement

0.0¢

Confidence Over Time

Mar 24Mar 31

Implied Returns

What will the Fed rate be at the end of 2026?: 4.0%8.9¢→12¢+34.8%

What will the Fed rate be at the end of 2026?: ≥ 4.5%2.25¢→3¢+33.3%

Kevin Warsh Fed Chair nomination withdrawn by May 15?2.35¢→3¢+27.7%

Fed rate cut by...?: September Meeting47.7¢→38¢+18.5%

How many Fed rate cuts in 2026?: 0 (0 bps)31.15¢→35¢+12.4%

Which party will win the Senate in 2026?: Democratic Party47.5¢→50.5¢+6.3%

Fed rate cut by...?: December Meeting64.5¢→63.5¢+2.8%

Fed rate cut by...?: April Meeting1.9¢→2¢-0.1%

Causal Model

Each factor has an estimated probability. Changes propagate through the tree to update overall confidence.

n1Stagflation materializes in US economy75%████████░░

n1.1Inflation remains persistently elevated85%█████████░

n1.2Labor market deteriorates meaningfully69%███████░░░

n1.3GDP growth stalls or turns negative80%████████░░

n2Trump actively undermines Powell before term expiration95%██████████

n2.1DOJ opens formal investigation of Powell95%██████████

n2.2Trump attempts to fire or force Powell's resignation3%░░░░░░░░░░

n2.3Powell remains as Chair until Warsh is confirmed97%██████████

n2.4Trump's rhetoric alone moves markets95%██████████

n3Kevin Warsh is nominated and confirmed as next Fed Chair5%█░░░░░░░░░

n3.1Trump formally nominates Warsh99%██████████

n3.2Senate confirms Warsh2%░░░░░░░░░░

n3.3Warsh signals dovish shift or Trump alignment20%██░░░░░░░░

n4Political dynamics dominate rate decisions over data72%███████░░░

n4.1Fed holds rates despite data warranting a cut88%█████████░

n4.2Fed cuts rates despite data warranting a hold10%█░░░░░░░░░

n4.3FOMC dissents increase significantly32%███░░░░░░░

n4.4Fed funds futures diverge from dot plot50%█████░░░░░

n5Fed credibility measurably erodes95%██████████

n5.1Long-term inflation expectations become unanchored77%████████░░

n5.2Term premium rises sharply61%██████░░░░

n5.3US dollar weakens despite high rates47%█████░░░░░

n5.4Foreign central banks reduce Treasury holdings30%███░░░░░░░

Market Edge Analysis

Contracts where market price diverges from thesis-implied value. Positive edge = market underprices this outcome.

	Contract	Market	Model	Edge	Spread	Depth (Bid/Ask)
P	How many dissent at the next Fed meeting?: 4+YES	7¢	35¢	+29¢	7¢	155/3K
P	Who will be confirmed as Fed Chair?: Kevin WarshNO	95¢	70¢	+25¢	0¢	10K/4K
P	What will happen before Kevin Warsh is confirmed?: US x Iran CeasefireYES	49¢	70¢	+22¢	3¢	787/1K
P	Fed rate cut by...?: December MeetingNO	64¢	45¢	+19¢	3¢	72/7K
P	Fed rate hike in 2026?YES	18¢	35¢	+17¢	2¢	10K/8K
P	Which party will win the Senate in 2026?: Democratic PartyYES	51¢	60¢	+10¢	1¢	80K/26K
P	Fed Decision in June?: 25 bps increaseYES	5¢	14¢	+9¢	0¢	9K/15K
P	What will the Fed rate be at the end of 2026?: ≥ 4.5%YES	3¢	12¢	+9¢	0¢	918/961
P	Fed rate cut by...?: September MeetingNO	38¢	30¢	+8¢	8¢	306/64
P	What will the Fed rate be at the end of 2026?: 4.25%YES	3¢	10¢	+8¢	1¢	5K/48
P	Kevin Warsh Fed Chair nomination withdrawn by May 15?YES	3¢	10¢	+7¢	2¢	438/4K
P	How many Fed rate cuts in 2026?: 0 (0 bps)YES	35¢	42¢	+7¢	0¢	592/92
P	What will the Fed rate be at the end of 2026?: 4.0%YES	12¢	16¢	+4¢	1¢	5K/374
P	Fed rate cut by...?: April MeetingNO	2¢	1¢	+1¢	—	—

Settled Contracts

1 contract resolved.

	Contract	Result	Model Said	Verdict
P	Fed decision in April?: 25+ bps increase	NO	YES @ 10¢	✗ wrong

Recent Evaluations

Automated analysis runs every 15 minutes. Major events trigger immediate re-evaluation.

Mar 31 02:0051%(-2%)

No material change — the Reuters stagnation-vs-stagflation framing is the single most important development, modestly weakening the stagflation pillar of the thesis (n1 trimmed to 0.72) and nudging th

Mar 30 08:0054%(-2%)

The most important development is Powell's explicit dismissal of stagflation at his press conference, combined with prediction markets nearly doubling his renomination odds — both materially challenge

Mar 29 12:3163%(-5%)

The single most important development is the reported stall in Kevin Warsh's Fed Chair nomination process, which materially weakens the confirmation arc of the thesis. Confidence drops from 0.68 to 0.

Mar 28 21:4571%(+5%)

Powell's voluntary exit is the single most important development — it both confirms and partially restructures the thesis. The core 'power struggle' narrative is validated (political pressure worked),

Mar 27 17:3163%(-2%)

The single most important development is Sen. Tillis's threat to block Warsh's Senate confirmation unless the DOJ probe is dropped, creating a direct conflict between Trump's desire to keep the invest

Mar 26 02:4556%(+2%)

The single most important development is the confirmed Trump administration criminal indictment threat against Powell, now met by an unprecedented global central bank solidarity statement — this direc

Mar 25 17:4655%(+3%)

The single most important development is the confirmed DOJ criminal investigation of Powell combined with Trump's formal Warsh nomination, which together validate the core thesis that political dynami

Mar 24 06:4738%(+5%)

The two most significant thesis developments have now both confirmed: Trump formally nominated Warsh as Fed Chair AND the DOJ criminal investigation of Powell is active and generating institutional ba

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