Bloomberg Businessweek: "Fed Minutes Show Several Officials Nod to Rate-Hike Scenario"

Date: February 18, 2026
Hosts: Carol Massar & Tim Stenovec

Episode Overview

This episode unpacks the Federal Reserve’s January 2026 FOMC minutes, revealing a much more nuanced debate about the future direction of interest rates — with a minority of Fed officials even considering potential rate hikes. Bloomberg’s Michael McKee delivers deep analysis live from Washington, D.C. The episode also features two major interviews: Mike Wilson (Morgan Stanley) on equity markets and economic cycles, and Kamini Lane (Coldwell Banker Realty) on the US housing market. Later, Bloomberg tech reporter Kurt Wagner details Meta’s high-stakes trial over youth social media addiction. The episode weaves together macroeconomic policy, market strategy, real estate dynamics, and the regulatory crossroads of tech and social media.

Key Discussion Points & Insights

1. Federal Reserve January 2026 Meeting Minutes

[02:11–10:12]

• Fed Minutes in Focus:
  Michael McKee reports the main takeaway:

  • For the first time in years, "several participants indicated that they would have supported a two-sided description of the committee's future interest rate decisions, reflecting the possibility that upward adjustments could be appropriate." [02:45]
  • Inflation, rather than jobs, was the primary focus; concerns lingered that progress toward the 2% target could be "slower and more uneven than generally expected."
  • The pace and durability of disinflation were debated, with some citing company anecdotes about planned price hikes and the ongoing impact of tariffs, though these effects are projected to wane.
  • Productivity growth from tech and automation might help dampen inflation.
  • The labor market, center stage last year, is seen as more stable, though risks remain as labor supply tightens.
  • The booming consumer spending and tech-driven business investment continue, but gains are uneven: "A lot of that was due to spending by higher income consumers. Lower income spending was soft." [04:34]

• Market Reaction:
  Minimal market movement followed the release.

  • "If I look at the treasury curve, you are looking at pretty much the 10 and 5 where they were... the shorter end of the yield curve, slight uptick." [05:27]

• Rate Hike Talk:

  • "This is the first commentary from anybody at the Fed about the possibility of rate increases... an idea that we haven't seen in years." — Michael McKee [06:16]

• Question on Disinflation Pace:

  • Risks include slow fade-out of tariff costs, demand driven by AI spending, and tax refunds, which “might also push prices higher.” — Michael McKee [07:02]

• Tariff Impact and Hassett Critique:

  • Mike rebuts Kevin Hassett’s claim that the Fed overstates American exposure to tariff costs:
    “A study by University of Chicago found 99%. Study by the CBO found 95%. The Kiel Institute in Germany found 94%. ...Americans are paying 90% or more of the tariffs.” [08:24]

• ‘Jobless Boom’ & Productivity:

  • The episode touches on concerns over job market stagnation, with the Fed minutes highlighting the potential risk of a "jobless recovery", but also optimism that technology-driven productivity gains might help.
  • “The concern about the labor market and the jobless recovery is reflected in these minutes... although... inflation was their number one concern this time.” — Michael McKee [09:44]

Notable Quotes:

• “This is the first commentary from anybody at the Fed about the possibility of rate increases...something that we haven't seen in years.” — Michael McKee [06:16]
• “Most participants... judged that the risk of inflation running persistently above the committee's objective was meaningful.” — Michael McKee (summary) [04:22]

2. Equity Markets Outlook with Mike Wilson (Morgan Stanley)

[13:17–23:25]

• Bull Market Confirmation:

  • "We are in a new earnings and economic cycle, and the market has figured it out." — Mike Wilson [14:34–15:58]
  • Points to double-digit median earnings growth across the Russell 3000 for the first time in four years.

• S&P 500 Outlook:

  • Wilson reiterates a 16% rally forecast for 2026, targeting 7,800 on the S&P 500, with an expected “good second half” after new Fed leadership settles in.

• Catalysts and Risks:

  • Two main uncertainties:
    1. The market’s reaction to the nomination of Kevin Warsh as the new Fed chair (“the market always tests the new Fed chair”) [16:19]
    2. How the AI investment cycle may disrupt labor markets.
  • Risks that would reverse bullishness:
    1. Deteriorating earnings cycle.
    2. New Fed chair proving more aggressive on shrinking the balance sheet.
    3. “Another exogenous shock” or an AI-driven labor-market disruption.

• The Rotation Beyond Big Tech:

  • "Our view is not that tech earnings are going to collapse, it's that the rest of the market's earnings are going to improve. And that's what usually drives relative performance." [19:33]

• Preferences in the Market:

  • Favors the equal-weighted S&P 500 and sectors such as consumer goods, financials, select industrials, and small/mid-caps.

• White House and Fed Independence:

  • Expects the administration to “stay the course” with economic rebalancing, causing some volatility but supporting productivity and earnings.
  • On Fed independence: “The said independence has been sort of fading for the better part of 20 years really, since the financial crisis.” [21:39]
  • Sees closer Treasury–Fed cooperation akin to the WWII period.

Notable Quotes:

• “...that broadening out is the real story...the earnings growth for the median stock in the Russell 3000 is now running double digit growth year over year.” — Mike Wilson [15:25]
• “Absolutely. [We like the equal-weighted S&P 500]. That was our one of our lead calls in the November outlook and that has worked so far.” — Mike Wilson [20:47]
• “Fed independence has been sort of fading for the better part of 20 years really, since the financial crisis.” — Mike Wilson [21:39]

3. U.S. Housing Market Dynamics with Kamini Lane (Coldwell Banker Realty)

[24:22–35:05]

• State of the Market:

  • Housing starts hit a 5-month high at the end of 2025; both single-family and multi-family starts up.
  • The central challenge is inventory, not lack of demand.
  • “More than 85% of people believe that home ownership is central to the American dream...But we need inventory.” — Kamini Lane [25:06]

• ‘Lock-in’ Effect:

  • Previously record-low mortgage rates have “locked in” many homeowners, dampening resale supply.
  • As mortgage rates normalize and sellers adjust price expectations, this lock-in is easing across demographics.

• Regional Variations:

  • Texas (especially Austin) and Florida see rising inventory and year-over-year price declines.
  • San Francisco’s housing market is rebounding on the back of the AI boom: "We’re seeing a really strong price increase in the city of San Francisco, both in terms of rent and in terms of single family homes." [28:15]
  • Los Angeles has stabilized: “Prices are really steadying out...supply and demand are starting to even out.” [28:27]

• Market Dynamics:

  • It's a seller’s market where inventory is tight (e.g., New England), and a buyer's market where inventory is abundant (e.g., Austin, TX).

• Agent Commissions:

  • Contrary to expectations, commissions have edged up in many markets as agents become better at articulating their value to clients.

• AI & Real Estate:

  • AI is seen as an empowering tool, not a threat: “AI can make that human more powerful...At the end of the day, real estate really is about relationships.” — Kamini Lane [34:25]
  • Not a replacement for real estate professionals.

Notable Quotes:

• “More than 85% of people believe that home ownership is central to the American dream...But we need inventory.” — Kamini Lane [25:06]
• “AI can make that human more powerful...real estate is fundamentally human.” — Kamini Lane [34:25–34:59]

4. Meta on Trial: Youth Social Media Addiction

With Kurt Wagner, Bloomberg Senior Tech Reporter
[38:05–46:46]

• The Case:

  • Mark Zuckerberg testifies in a landmark trial alleging Instagram addiction by design targets youth.
  • Trial compared to historical tobacco and opioid litigation regarding corporate responsibility for harmful products.

• Enforcement of Age Limits:

  • Meta admits enforcement is difficult; debate over whether it’s Meta or app store providers’ role.
  • Large portion of lawsuits alleges weak enforcement, with 1,000s of similar suits on deck.

• Broader Social Media Regulation Trends:

  • Other countries (Australia, India, Ireland, across the EU) are imposing or proposing youth social media bans or age restrictions.
  • Movement towards warning labels and regulatory actions against social platforms is accelerating globally.

• Looking Ahead:

  • Early trial outcomes could trigger further settlements for Meta or shape legal strategies globally.
  • Parental and societal pushback is at an all-time high; discussion of ‘dumb phones’ as an off-ramp for youth.

Notable Quotes:

• “This is a real, you know, signature moment...to defend [Meta] against these accusations... This is just really the first of more than 1,000 potential trials.” — Kurt Wagner [39:07]
• “I think this is important. It could also be the kind of thing, if Meta loses a case early on, do they choose to start to settle some of these cases down the line to avoid...every time?” — Kurt Wagner [42:39]
• “It’s a massive theme...This is not a storyline that’s going to go away.” — Kurt Wagner [46:20]

Timestamps of Key Segments

• Fed Minutes Recap and Analysis: 02:11–10:12
• Mike Wilson (Equity Outlook): 13:17–23:25
• Kamini Lane (Housing Market): 24:22–35:05
• Kurt Wagner (Meta/Social Media Trial): 38:05–46:46

Memorable Moments & Quotes

• On Fed Policy Shifts:
  “This is the first commentary from anybody at the Fed about the possibility of rate increases...something that we haven't seen in years.” — Michael McKee [06:16]

• On New Earnings Cycle:
  “The earnings growth for the median stock in the Russell 3000 is now running double digit growth year over year.” — Mike Wilson [15:25]

• On Home Ownership:
  “More than 85% of people believe that home ownership is central to the American dream...But we need inventory.” — Kamini Lane [25:06]

• On Tech & Regulation Reckoning:
  “This is a real, you know, signature moment... This is just really the first of more than 1,000 potential trials.” — Kurt Wagner [39:07]

Tone & Style

The tone is direct, analytical, and engaging, blending live reporting with expert panel discussion and industry interviews. The conversation is brisk and data-driven, occasionally lightened by in-studio camaraderie.

Summary

This episode offers a nuanced look at regulatory and economic crosscurrents shaping markets and society in early 2026:

• The Fed is wrestling with sticky inflation and even discussing possible rate hikes amid persistent price pressures;
• Investors should note a broadening of economic and earnings recovery, with opportunities beyond Big Tech as the new cycle gains ground;
• The housing market is highly regional, with inventory — not just rates — now the decisive factor, and AI entering as a tool, not a disruptor;
• Tech’s giants face trial over their responsibility to young users, signaling a coming era of heavier regulation.

Listeners leave with an informed sense of evolving risks and opportunities across the US economy, markets, and public policy.