Dan Niles: I have a simple rule, and that is don't fight the Fed

• Fed's Warsh emphasizes AI as a new economic variable and the Fed's firm commitment to a 2% price stability target, suggesting potential further rate hikes.
• Dan Niles advises 'don't fight the Fed' and observes a divergence: big tech (Magnificent Seven) is up, while the Russell 2000 is down, indicating a flight to quality.
• Niles is positioned with more shorts than longs, favoring larger cap tech due to strong cloud infrastructure revenue and operating margin growth, despite political headwinds against data centers.

Fed Chairman Warsh's speech at Jackson Hole highlighted AI as a new variable impacting the economy and monetary policy, emphasizing the Fed's commitment to price stability. Dan Niles, while acknowledging the Fed's hawkish stance, notes the resilience of big tech stocks due to strong cloud infrastructure growth, despite broader market concerns and political headwinds.