Warsh at Jackson Hole, Retail Roundup, and Treasury Trouble? 8/28/26

**SPEAKER_1** (0:00)
The Mighty Dollar. Once upon a time, it had a whole menu named after it. No, no more. But $1 a day lets you add Progressive Renters Insurance to your auto insurance. Definitely something your younger self would roll their eyes at, but your current adulting self appreciates. Learn more at progressive.com. Progressive Casualty Insurance Company affiliates and other insurers. Average premium cost based on Progressive Home data from 2025 Product and prices may vary by state.

**SPEAKER_2** (0:27)
This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information-packed daily market preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com/marketupdatepodcast, or find Schwab Market Update wherever you get your podcasts.

**SPEAKER_3** (0:56)
You're listening to The Exchange. Here's today's show.

**Brian Kelly** (1:01)
Welcome to The Exchange, everybody. Happy Friday. I am Brian Kelly. We'll be back on Monday. Fed Chairman Kevin Warsh has spoken and the bond market has reacted, yields up. After Warsh said more work may be done, need to be done on inflation. Also, on that move, rate hike odds, now more than 60 percent chance for a hike next month. It was at 35 percent before the speech. You just heard Dom tell you stocks mixed to a little bit lower at this hour. But, lest we accelerate these declines, the three major indexes are still on track for a weekly winning streak. We'll see what the next three hours or so has to bring. Some of yesterday's biggest gainers like the cyber stocks, among the bigger decliners today, we will stay on that trade, and the CEO of a big cyber player will join you in minutes. We have got a big hour. There is a lot to do on this Friday, and we begin with Kevin Warsh in a rather hawkish speech. Now, it was a speech that really talked about two types of hikes.
One of them was starting off by talking about going on a mountain hike, and the kind of partners you would have while hiking through the mountains. It is a Wyoming event.
Then it ended with markets thinking that there is more of a chance of an interest rate hike. Let's bring in Eric Rosengren, former president of the Boston Fed. A man, I don't know your predilections to hiking, Mr. Rosengren. Maybe, I was wondering where Kevin Warsh was going with that metaphor when he began the speech. What was your feeling? What was your top takeaway on that talk?

**Eric Rosengren** (2:38)
Yeah. I thought the speech was much better than the press conference, and it made clear that the chair is very concerned about inflation. He highlighted that he is using total PCE as his measure of inflation, and that he thinks it's the Fed's job to try to control inflation with its policy, target the federal funds rate.
I think he provided much more clarity than he had to date. So, I think that was all positive. I think when he laid out where he thought the economy was, well, he gave no forward guidance. He made pretty clear that most of the indicators he's looking at were not showing a substantial improvement in the trend towards getting to the 2% target. So, I think the market is quite right in interpreting that as a very hawkish speech.
I think if previous chairs had given this speech, we would be close to 100% for September, but I think people are still waiting to make sure that this chair is actually going to have actions that are as strong as his words.

**Brian Kelly** (3:48)
Lot to unpack there. Go back to one part you made where you talked about no forward guidance. He not only did not give forward guidance, Eric, he expressed repeatedly a great distaste and distrust and dislike for forward guidance. Do you agree with that position or would you rather continue to see the Fed be a little, maybe not keep the quote unquote dot plots, but give that guidance?

**Eric Rosengren** (4:14)
Well, I think the Fed should be very clear when it takes an action or doesn't take an action, why it did what it did. But I don't think it's important for the Fed to try to predict what it's going to be doing six weeks later.
The reason is because just too many events can occur from one meeting to another. So I actually agree with his view that providing clear forward guidance made a lot of sense during the financial crisis and made sense during the pandemic. But during a period where interest rates are well above zero, I don't think you need to be predicting what you're going to do with the next meeting.