The ongoing cost of ICE raids on Latino entreprenuers

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**Kristin Schwab** (0:32)
Riddled Me This is an outline the same as a trail map, the same as forward guidance from American Public Media. This is Marketplace.
In New York, I'm Kristin Schwab in for Kyra's Doll. It's Friday, August 28th, and it's great to be here with you. When some people picture Jackson Hole, Wyoming, they think beautiful mountains and wildlife. When we picture Jackson Hole, we see Kevin Warsh in a suit talking economic policy. The Fed chair gave a 30-ish-minute speech this morning about AI, the job market, and inflation. And we're going to take some time now to sort it all out. Catherine Rampel is at The Bullwork and MS Now. Stacey Vanek-Smith is at Bloomberg. Hey, you two. Hey, Kristin.
I want to start with how Warsh more or less started his speech today, or how he set up his speech. Let's give it a listen.

**Kevin Warsh** (1:32)
You can call it an outline and call it a trail map, but please just don't call it forward guidance.

**Kristin Schwab** (1:40)
Stacey, I alluded to this in the top of the show. I'm not sure I really understand the difference between these words, but I'm wondering what you would call the kind of information Warsh gave us this morning.

**Stacey Vanek-Smith** (1:51)
Well, I really appreciated the trail map because I feel like it's very on-brand with Jackson Hole and the great outdoors.
It was forward guidance of a sort. I think maybe, I mean, the market certainly reacted that way. Interest rates rose on his speech. It certainly reacted as if it were forward guidance. It may be that he's just signaling that his style of forward guidance is going to be different, that the market's not going to get as much transparency, as much information, as much disclosure as it did under Ben Bernanke, Janet Yellen and Jerome Powell. So it may be that he's easing us off of forward guidance, but this definitely seemed forward guidance adjacent if not full-on forward guidance.

**Kristin Schwab** (2:35)
Catherine, what about you? What do you think about Warsh cracking the door open this morning?

**Catherine Rampell** (2:42)
Well, Markets certainly heard the speech as hawkish. I mean, I don't know if I would call it forward guidance or anything else, but he talked about how inflation is above target, which everybody obviously knew, but also indicated that he did not think that financial conditions were particularly restrictive right now, which implies at the very least that he thinks maybe they need to be tighter. And if you look at how Markets reacted, the chance of a rate hike at their September meeting went from something like 35% yesterday to 60% today. So again, they, Markets clearly heard this as hawkish. I don't know if Warsh intended it to be because, as Stacey pointed out, he kind of doesn't want to sound like anything, right? He doesn't want to, he doesn't want to indicate one way or another where he is heading.
But Markets seem to hope, at the very least, that this is the plan for getting inflation under control.

**Kristin Schwab** (3:45)
Yeah. You know, Stacey, another thing I picked up on this morning is that, you know, the word transitory is a very scary word we don't like to use anymore. Warsh has started using the phrase upside down, or upside, sorry, inflation risks.
Is there a difference here and does history matter?

**Stacey Vanek-Smith** (4:06)
I think there is a difference and it is funny.
Every Fed share comes in with different turns of phrase that they like to use. Upside inflation risk is essentially just, you know, a chance that inflation is going to come in higher than we expect.
Whereas transitory was more like, oh, don't worry, this is going away. This is not a fundamental, nothing fundamental is happening that's raising prices. This is just, you know, supply chain snags in the case of the pandemic. Today, when he mentioned upside inflation risk, he was talking about commodity prices specifically. So I took that to mean oil and Iran. So it may have been signaling, you know, there's a conflict with Iran, it's pushing up oil prices, oil prices can push up everything, but hopefully that will be resolved soon. Although now, you know, we've got a potential trade war in the works with Canada, also a huge supplier of oil and natural gas, especially to us. So, I don't know, upside inflation risk to me, it just, it signaled to me that he was just warning, like inflation might come in higher than we want.