Why Are Markets Tanking On Fed's Jackson Hole Speech? Major Surprise Revealed | Collin Martin

**David Lin** (0:00)
It's a market bloodbath today on Friday, August 28th. As risk assets sold off sharply at pretty much exactly 10 a.m. Eastern time. Gold is now intraday down 3.5%, Bitcoin is down 3%, both the S&P 500 and the NASDAQ are down. And yields are up, the 10-year and 30-year treasury yields are both up. So what happened? Well, Kevin Warsh, Fed Sheriff Kevin Warsh, made his speech at the Jackson Hole Symposium. What did he say that spooked markets and caused this sell off? And importantly, what's next for monetary policy? Let's find out. Our next guest, Collin Martin, is here to break down not just today's news, but also the longer term trend for inflation, yields, Fed and Treasury policies. He is the head of fixed income research and strategy at Charles Schwab. Right now on prediction markets, in particular Couchie, the biggest one in the US, there is a trade for when the next rate hike could be.
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Couchie is CFTC approved and available in all 50 states, including California and Texas. Collin, welcome to the show. Exciting day today, lots to discuss. Welcome. Thank you for being here.

**Collin Martin** (1:58)
Absolutely, David. Thank you so much for having me.

**David Lin** (2:00)
This morning at the Jackson Hole Symposium, Fetcher Kevin Warsh said that this summer's PCE and CPI readings were better than expected.
He made a number of announcements and he went at length about governance at the Federal Reserve overall. But specifically in regards to his comments about inflation, he said something that spooked the markets and prompted the markets overall to believe that a Fed rate hike in September is coming, which is why gold went down 1% and it's now down 3% on the day. Bitcoin's down 3% on the day, and the S&P 500, which was previously in the green, is now in the red following the Jackson Hole speech. What happened today, Collin?

**Collin Martin** (2:45)
Yeah, well, just in general, his speech was a little bit more hawkish than I think a lot were expecting, including myself. And frankly, I didn't really know what to expect, but we were hoping to at least get some sort of update from Kevin Warsh himself about how he views the economy, not necessarily how he views the current stance of monetary policy or what he might do down the road, but just what does he think about the labor market? What does he think about inflation? And he finally gave us that. But to your point, he made it pretty clear that inflation is high right now.
It's been high for 65 months. He talked about that. He talked about communications and now maybe forward guidance played a role in the surge in 2021 and 2022
But he went out of his way to talk about the recent trends as well, where over the summer, clearly, that was good news. But it doesn't seem like the underlying trends have shifted too much. And he threw a few stats at us where he talked about the percent of sub-end indexes in the PCE reports that were above 3% and where we stand right now in 2026 relative to recent history, as well as relative to the past few decades, making the case that it's clearly too high. So when you hear from him about how high inflation is, how he isn't taking too much solace from the June and July readings, that clearly has a hawkish tilt. I don't think it means he's necessarily ready to act just yet. I do worry a little bit that maybe it boxes him in because he was clearly hawkish here. But I think the committee and Warsh himself still has time to see what the next few months bring. Because if we look at the past few months, if the Fed held in June and July, and since then we've seen weaker labor market data, and I'd call it encouraging inflation data, unless it really picks up, it'd be kind of a surprise if they were to hike in September.