Kevin Warsh's ECB Forum Speech & 2H26 Inflation Expectations

• Fed Chair Kevin Warsh maintains a hawkish stance, committed to the 2% inflation target, despite recent moderation in some price risks.
• AI innovation, memory, chip, and software costs are seen as inflationary drivers, impacting core inflation and consumer prices (e.g., Apple, Microsoft).
• Strong H1 market performance (S&P, Nasdaq, Dow, Russell) is noted, but the market is expected to be characterized by rotational shifts and increased dispersion in 2H 2026, benefiting active management.

Liz Ann Sonders discusses Fed Chair Kevin Warsh's hawkish stance on inflation despite some price risk moderation. She highlights the inflationary impact of AI costs on core inflation and consumer prices, suggesting that lower oil prices won't resolve inflation. The market outlook for 2H 2026 emphasizes rotational dynamics and dispersion, favoring active management.