The week brought a wave of economic developments that paint an interesting picture of where things stand. From Michael Burry issuing warnings about bank stability to the Federal Reserve making strategic leadership decisions, here's what shaped the conversation in economic policy and markets.
Burry Spots Trouble in the Fed's Treasury Purchase Plan
Michael Burry, the investor who correctly called the 2008 housing collapse before it became cool, is raising concerns about the U.S. banking system again. This time, his focus is on the Federal Reserve's decision to restart Treasury bill purchases through what they're calling "reserve management purchases" (RMPs).
Here's the thing: most people might view the Fed buying Treasuries as routine central bank housekeeping. Burry sees it differently. He believes this move reveals growing fragility in the banking system rather than demonstrating strength. When the guy who spotted the subprime mortgage crisis starts talking about banking system vulnerability, people tend to listen.
Trump's Tariff Strategy Delivers Measurable Results
President Donald Trump has been wielding tariffs as his preferred tool for addressing America's trade imbalance, and September's numbers suggest the approach is having an impact. The U.S. trade deficit contracted to $52.8 billion, marking the lowest level since June 2020, according to Census Bureau data.
Whether you view tariffs as smart economic policy or a blunt instrument that raises consumer prices, the math shows the deficit narrowing. Trump's persistent focus on rewriting trade relationships appears to be moving the needle, at least in terms of the raw deficit figures.
The Fed Makes a Strategic Leadership Move
In what might seem like administrative routine, the Federal Reserve Board unanimously reappointed all 12 regional Reserve Bank presidents and first vice presidents. But timing matters in central banking, and this move is being interpreted as something more calculated.
The reappointments lock in the leadership of the Federal Reserve System's operating arm for a new five-year term beginning March 1, 2026. While the Fed followed its standard statutory schedule, observers view this as a deliberate effort to insulate the central bank from political pressure. It's the Fed's version of setting up guardrails before the road gets bumpy.
An Economist Takes Aim at Trump's Price Rhetoric
Economist Justin Wolfers isn't buying President Donald Trump's messaging on prices. Wolfers called Trump's rhetoric on rising prices the "original sin" of economic policy, arguing that promises of price declines were never grounded in reality.
The problem, according to Wolfers, is that prices rarely fall in a healthy economy. Yet Trump's messaging created expectations that contributed to what Wolfers describes as the current "affordability crisis," with many Americans still waiting for price declines that aren't coming.
Cathie Wood Predicts a Historic Economic Boom
ARK Invest's Cathie Wood is considerably more optimistic about the incoming administration's economic agenda. She's predicting a historic economic expansion driven by what she describes as "Reaganomics on steroids," powered by aggressive tax cuts and deregulation under President Donald Trump.
Wood's enthusiasm centers on what she calls "OB3" (One Big Beautiful Bill), a legislative package combining the administration's fiscal priorities. Her view represents the bullish case for Trump's economic approach, standing in sharp contrast to the warnings from figures like Burry about underlying financial system fragility.