Warsh’s Death March Hiking Trip
Happy Friday! Today marks the start of the world’s key conference on monetary policy, rounding off a week steeped in discussions about bond markets, interest rates, and Federal Reserve strategies.
We wish we could share that we’re writing this while fishing, hoping for Teton trout to bite our lines. Unfortunately, we’re stuck on opposite coasts—Alex is out west, while John is on the east. Still, that hasn’t stopped us from rolling out a video edition of Breitbart Business Digest, which you might want to check out.
So, let’s dive in!
Warsh Discusses Hikes
On Friday, Fed Chairman Kevin Warsh delivered his first speech at the Kansas City Fed’s annual symposium in Jackson Hole, Wyoming. For those who lean towards a softer monetary stance, his opening remarks about “hiking” were a bit ominous. He mentioned the word “hike” no less than three times in the initial three paragraphs of his address.
So, has Warsh abandoned his ambition to eliminate forward guidance? Not at all. He was referring to actual hiking—like, in the mountains near Jackson. He described his hikes in the Tetons alongside former Fed Vice Chairman Don Kohn as “steely marathon death marches,” noting the most striking aspect was, well, his survival.
Take that, trading algorithms!
On a more serious note, Warsh’s speech came off as quite hawkish. He characterized the economy as robust, citing trends that readers of Breitbart Business Digest would recognize—business capital investments are thriving, consumer spending is growing steadily, and employment levels are at full capacity. The ongoing borrowing to finance AI expansion indicates that current monetary policies aren’t really restrictive. However, the situation with inflation is “concerning.” It’s higher than desired and doesn’t seem to be approaching the Fed’s target of two percent any time soon.
He also made a point to assert that inflation is not “mean reverting,” suggesting that if it’s going to decrease, it’s going to need a nudge from the Fed.
All of this, basically, hints that the Fed is likely to consider increasing rates later this year. Now, this doesn’t mean we’re embarking on a cycle of relentless rate hikes akin to “steely marathon death marches,” but it’s clear rates are set to rise in the coming meetings.
Lake America
For years, Americans have been told to drop our traditional names, spellings, and pronunciations of foreign locations in favor of convoluted forms that seem odd in English and don’t resonate with native speakers. For example, Bombay has become Mumbai, Peking is now Beijing, and Kyiv, while still spelled that way, must be pronounced as Keev. They even removed the article from Ukraine, and nobody really knows why. The rationale seems to be that American elites enjoy perplexing the rest of us while elevating foreign preferences over our own.
President Donald Trump, however, is flipping the narrative! Names are still changing, but they’re more authentically American now. First, he renamed the Gulf of Mexico to the Gulf of America. And just this week, following stalled trade discussions with Canada, he announced that Lake Ontario should be referred to as Lake America. The reasoning behind this particular name change is unclear. Why not Lake Erie or Lake Huron? Or even Lake Superior, which was named by the French? Maybe it has to do with the fact there’s a whole Canadian province called Ontario, and perhaps Trump just wanted to simplify things.
It’s an amusing and somewhat innocuous new approach to foreign policy. If a country crosses us, maybe we’ll just rename the nearby water feature! Are you still calling it the Strait of Hormuz? You probably won’t be for much longer. How about calling it the Strait of Karoline after the former White House Press Secretary?
Republicans Are Concerned About the Economy
In August, consumer sentiment took a dip, primarily among Republicans. The University of Michigan’s sentiment index dropped from 88 to 82 for Republicans, with independents and Democrats showing only minor declines. Earlier this week, the Conference Board reported a similar trend in consumer confidence.
What’s behind Republicans’ gloom regarding the economy? We suspect it’s related to the upcoming midterms. Most opinion polls suggest that the chances of Republicans retaining control of both the House and Senate are slim. And even though Election Day is still a couple of months away, early voting is just around the corner, and many voters have likely formed opinions about the country’s conditions and how they will cast their ballots. If Democrats secure control of even one chamber of Congress, it could lead to unending inquiries, impeachment efforts, and a halt to Trump’s economic initiatives. So, it’s not surprising that Republicans are feeling uneasy about the economy.
The Red Phone
Is there any invention more significant than the first telephone? How about the second telephone?
This little twist of humor comes to mind with the arrival of a notable day in diplomatic communication history. On August 30, 1963, a direct hotline from the White House to the Kremlin was established to avoid misunderstandings or delays during critical confrontations between nuclear powers, just less than a year after the Cuban Missile Crisis.
As far as we know, that phone is still functional! When we inquired if it could handle text messages, we didn’t receive a response. We were just left with a busy signal. What can we say? We’re on a roll today.
