Thursday: Warsh Holds, Hawks Wait, Voters Watch

Rush LindellSix days. Six days before the midterms, and the Federal Reserve walks in, sits down, and does absolutely nothing. Bold. Fearless. Beige.

ReaganRush, a hold at 3.75 to 4% is the expected move.

Rush LindellExpected. Welcome to the show. I'm Rush Lindell. This is Reagan, and this week's sponsor, Lear Capital, would like you to remember that gold doesn't need a press conference.

ReaganDryly noted. Here's the part that matters. All 100 economists in the Reuters poll expect a hike in December.

Rush LindellAll hundred? Hold on, 100 out of 100? You can't get 100 people to agree on pizza.

ReaganWhich is a little awkward for us. In September, we called a cut.

Rush LindellAnd the Fed hiked. Don't look at me.

ReaganI'm looking at the scorecard. It's ugly.

Rush LindellUgly is generous. It's a crime scene with a bow on it.

ReaganA crime scene we're about to revisit in detail.

Rush LindellSo today, you grade my December call, I grade yours, and somebody walks out of here with a trophy.

ReaganSomebody walks out with a winner declared by the end anyway. Bumper first. How bad was the miss, and what exactly is the Fed doing this month?

Rush LindellLet's start with the part that stings. Reagan, you and I stood on this show and called for a cut. A cut. Then the Fed went the other way, and our scorecard caught fire.

ReaganOh, I remember. You said it with great confidence.

Rush LindellI said it with total conviction. Different thing. Conviction doesn't need to be right, it just needs to be loud.

ReaganMm. Well, the September hike blew up our cut call. That's the plain fact. And CNBC's reporting calls it the first hike since 2023.

Rush LindellTwo years and change of nothing, and the one month we bet on easing, they tighten. Unbelievable timing. I should send them an invoice.

ReaganAccording to that same reporting, it took the range to 3.75 to 4%.

Rush Lindell375 to 4. I'll never forget that number. It's the one on my tombstone.

ReaganFine, a small concession. My cut call wasn't crazy given what we knew in the summer. But Rush, your reasoning was that the Fed always blinks before an election. That was the whole thesis.

Rush LindellWell, here we go.

ReaganI'm asking, did you read a single thing the man said, or did you just assume the calendar was in charge?

Rush LindellThe calendar usually is in charge.

ReaganUsually, and this time a hike landed anyway.

Rush LindellOh, okay, fine. Put a big red X next to my name. I take my lumps, and I'll take them in public with a flourish.

ReaganYou'll take them for about a day.

Rush Lindell24 hours, tops. Then I'm back to being right about everything.

ReaganI'll set a timer. And for the record, a cut call that dies on one hike is a lesson in humility, not a verdict on everything we say.

Rush LindellHumility. I'll put it on a mug right next to my catchphrase.

ReaganPut the practical lesson on it, too. Check what the man actually said before you trust the calendar. A scorecard only means something if we're honest about the misses, and that rule holds for the rest of this show.

Rush LindellHonest about the misses. Fine. The mug gets a second line.

ReaganWell, the hold this month is the easy part. December is where we'll both get graded again.

Rush LindellBumper. Now, the numbers behind the hold.

ReaganRush, the September jobs report. 29,000. The forecast was 84,000.

Rush Lindell29,000 jobs in a country this size? That's a rounding error with a payroll department.

ReaganCNBC's write-up of the report says unemployment rose to 4.2%. It also says that was largely because more people entered the labor force.

Rush LindellOh, so that's the good news footnote.

ReaganA small one. Wage growth was the slowest since May 2021.

Rush LindellHold on. Slowest in five years, and they still hiked in September?

ReaganThe hike came off the earlier data. This report landed after it.

Rush LindellWonderful timing. Reagan, tell me the revisions don't make it worse.

ReaganThey do.

Rush LindellOf course they do.

ReaganJuly got revised to a loss of 10,000. August came down to a gain of 133,000. Together, that's 60,000 jobs erased from the earlier totals.

Rush LindellErased, like a bad tweet. The economy told us one story, then walked it back.

ReaganAnd a Jefferies economist in that same CNBC piece called the report the nail in the coffin for an October hike.

Rush LindellWhich is why the hold is easy. Nobody hikes into that.

ReaganRight. But now add the rest. Gas at $4 a gallon.

Rush Lindell4 bucks? Every driver in America feels that one before they feel any rate decision.

ReaganThe Iran war energy shock is feeding it. Then next Thursday, October 29, the day after the Fed decides, GDP and PCE land.

Rush LindellSo the Fed holds on Wednesday and gets its report card Thursday.

ReaganWeak jobs pull one way. Energy prices pull the other. PCE is where you'd see whether the pull is on inflation.

Rush LindellSo what does the Fed do with a soft jobs market on one side and energy costs on the other?

ReaganThat's the squeeze. Soft hiring argues for patience. Higher energy costs argue against getting comfortable. Neither one settles it alone, which is why Thursday matters so much.

Rush LindellSo a cold jobs number and a hot price number put them in a corner.

ReaganIt makes a December hike harder to wave off and harder to promise. And I can't tell you what the GDP and PCE numbers say because they haven't been released yet.

Rush LindellAnd the man running the meeting is going to sit there and tell us what exactly?

ReaganProbably nothing, Rush.

Rush LindellBumper. So why won't the chairman tell us what he'll do? Reagan, I've got a theory about the chairman, and you're gonna hate it.

ReaganI hate most of them. Go.

Rush LindellCommunications problem, full stop. You run the most watched central bank on Earth. You're at the IMF meetings in Bangkok, and he won't say if you'll hike again? That's not strategy. That's a man hiding behind a podium.

ReaganHe declined to signal. That's all the CNBC report says. Declining is a choice.

Rush LindellA choice to leave everybody guessing.

ReaganWhich is the point. Forward guidance boxed his predecessors in. Say another hike out loud, and the market prices it before the data shows up. Say nothing, and the data gets to talk.

Rush LindellOh, the data gets to talk. Meanwhile, traders are reading tea leaves.

ReaganAre they, though?

Rush LindellGo on. Finish the trap.

ReaganBloomberg's piece from October sixteenth says he did nothing to dispel expectations of a hold at the end of the month. If silence were chaos, that would have moved something. It confirmed what everyone already thought.

Rush LindellFine. Fair. But confirmation by accident isn't communication. He got lucky the market guessed right.

ReaganLucky, or the market understood the reaction function? I'll give you this much, Rush. Silence works when the audience already agrees with you.

Rush LindellHuh. Write that down. She conceded something.

ReaganA small something. Keep going.

Rush LindellHere's my problem. CNBC says CME FedWatch showed about a seventy-two percent chance of a hold. Seventy-two? That's not a lock.

ReaganRoughly three in four. If I told you there was a seventy-two percent chance of rain, you'd bring the umbrella.

Rush LindellAnd the other twenty-eight percent is people betting he does something nobody's ready for. That's what no guidance buys you, a market that can't sleep.

ReaganSame report says most traders expect a twenty-five basis point hike in December. That's not a market that can't sleep. That's a market that's made up its mind without being told.

Rush LindellWhich proves my point. Nobody's telling them. They're inventing it.

ReaganOr reading the same jobs report and the same gas prices you spent the last segment on. Discipline means you don't narrate what the numbers can say for themselves.

Rush LindellThen why not say so? One sentence in Bangkok would have cost him nothing.

ReaganIt would have cost him flexibility, and flexibility is what he's protecting. Once you say it out loud, you own it.

Rush LindellDiscipline is a nice word for a press blackout six days before an election.

ReaganMm. Now you're arguing politics, not communication.

Rush LindellCan it be both?

ReaganIt can. I just want you to say which one you're selling.

Rush LindellBoth. Bumper. Time for the parody because the chairman has finally given us something to work with. Nothing. Ladies and gentlemen, the chairman approaches the podium. Flashbulbs, cameras, ninety reporters leaning in with pens up, and he adjusts the microphone and says nothing.

ReaganOh, we're doing the bit. Fine. I'll be the reporter. "Mr. Chairman, will rates go up?"

Rush LindellSilence. Eleven full seconds of it. A cough somewhere in the back.

ReaganA follow-up. Is that silence hawkish or dovish?

Rush LindellHe sips water. Water is data dependent. Water is not committing to anything.

ReaganStop. Okay. Next question. "Sir, are you aware this is a press conference?"

Rush LindellHe slowly slides a card across the podium. Everybody leans in. It says, "Please see prior silence."

ReaganWait. That's actually a fair parody of the position. Brevity, no promises, no hostages.

Rush LindellReagan, the markets are hanging off a water glass. Bond desks are zooming in on a man's eyebrows.

ReaganEyebrows are very reliable. A raised left one, three-quarters of a percent.

Rush LindellHold on. Now the chairman stands. Reporters gasp. He reaches for the mic. He leans in.

ReaganAnd?

Rush LindellHe taps it twice. "Is this thing on? Nope. Doesn't matter. Nothing was gonna come out anyway."

ReaganOh, man. And then he leaves through a side door, and the anchors spend an hour decoding the door.

Rush LindellThe door was dovish. Sources say the door leaned left.

ReaganOkay. I'll stop. Put the water glass down, Rush. Your sponsor's waiting.

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ReaganThose are the terms as stated. One per person, new customers, and a twenty-four-hour window.

Rush LindellBumper. Now, the real committee, which does have a view on December. Reagan, here's what the whole circus hides. Inside that building, they mostly agree. The September dots showed most participants favoring only one more hike in twenty twenty-six. One.

ReaganOne. Not a march. A single step.

Rush LindellWhich makes my Warsh is the mystery man routine a little less fun, doesn't it?

ReaganA little. The direction is settled. The argument is about the clock.

Rush LindellOh, the clock. Walk me through who's holding the clock.

ReaganA preview from FXStreet names three vice chairs: Williams, Jefferson, and Bowman. They want more data before hiking again. Their reason is tighter financial conditions.

Rush LindellHold on. Tighter financial conditions? So the market is doing some of the Fed's work for it?

ReaganThat's their logic. If conditions already tightened, maybe you don't need to swing the bat yet.

Rush LindellOr you're a committee that loves a reason to wait six days before an election. I'm just saying it out loud.

ReaganYou say it every time, and all can see the optics are awful. But that same preview says Waller is flexible on timing.

Rush LindellFlexible, the most dangerous word in central banking.

ReaganMaybe. Flexible means he isn't locked to a date, and Kashkari wants only one more hike, full stop.

Rush LindellSo one hawk who wants one hike, three who want more data, and one who will move the date.

ReaganWhich is a coalition for waiting, not a coalition for stopping. That difference matters.

Rush LindellDoes it? To a guy filling his tank, a delay and a deal look identical.

ReaganTo the guy filling his tank, yes. To the bond desk, no.

Rush LindellSo what flips December? Give me the trigger.

ReaganThe reporting doesn't hand us a trigger, so I won't invent one. But the logic is visible. Three vice chairs want more data before hiking again. If what comes in, including next Thursday's GDP and PCE, makes the case for a hike, they've got what they asked for. If it doesn't, the case for waiting gets stronger.

Rush LindellSo the vice chairs aren't against a hike. They're against a hike without homework.

ReaganThat's a fair summary, and the dots point the same way. Most participants favor one more hike in 2026. So on paper, the question is when, not whether. The data decides when.

Rush LindellFine. So who's actually calling December from the outside?

ReaganGoldman's Hatzius is one voice. He reads Warsh's stance as a pause in October, and he still expects a second and final hike in December.

Rush LindellSecond and final. I love that. Final, like a season finale that always gets renewed.

ReaganOnly if the data cooperates. That's the whole point, Rush. December depends on what comes in between.

Rush LindellWhich brings us right back to Thursday's numbers, and I'm not gonna pretend I'm calm about it.

ReaganYou never pretend. Your December call is out there on the table, and so is mine.

Rush LindellThen let's see who flinches. Bumper, now I grade yours and you grade mine.

ReaganBring a red pen.

Rush LindellReagan, you called a December hike. I called a December hike, so grade me. Go ahead. I can take it.

ReaganFine. Your call is a B-minus. The direction is right. Your timing story is the problem.

Rush LindellTiming story? My timing is a masterpiece.

ReaganYour claim is that the Fed holds now to protect itself, then hikes after the voters have gone home. That makes the hold political.

Rush LindellYes. Hold now, hike after. Six days out, they tiptoe. Prudence is just politics wearing a sensible coat. And the hike lands after the vote, so voters never feel it before they cast a ballot.

ReaganHold on. A hold in October doesn't prove motive. The committee could hold for no reason except it wants another look at the data.

Rush LindellOh, come on.

ReaganI'm serious. If prudence and politics produce the same hold, you can't call it politics just because the calendar is ugly.

Rush LindellSix days, Reagan. Six. I'm not saying a smoke-filled room. I'm saying nobody at that table is blind to a calendar.

ReaganMaybe, but you've given me a motive and no evidence. Now, your logic cuts the other way too.

Rush LindellHow?

ReaganIf voters feel gas at four dollars right now, a December hike doesn't land before they feel anything. It lands on top of pain they already feel.

Rush LindellHuh, say that again.

ReaganVoters feel prices first. The hike only adds the cost of borrowing. My call, December lands after the vote and after voters have already felt the pain.

Rush LindellThat's a cute dodge.

ReaganIt's a grade, and I'll grade yours honestly. You get credit for the direction, nothing for the conspiracy.

Rush LindellFine. Now my turn. Your call is a C-plus.

ReaganGenerous.

Rush LindellYou keep saying the Fed holds out of discipline. Discipline? Six days before an election, and it's pure coincidence the quiet week is also the safe week?

ReaganI never said coincidence. I said the evidence supports prudence and doesn't prove politics.

Rush LindellThat's lawyer talk.

ReaganThat's the difference between a hunch and a case.

Rush LindellA case? The case is a calendar with six days left on it.

ReaganA calendar is a coincidence until someone shows me a memo. Show me one and I'll change your grade.

Rush LindellMm. Okay, here's my concession, and it hurts. You're right that I can't prove motive.

ReaganWrite it down.

Rush LindellBut my position stays put. The hold is safe, and the hike lands after the vote, so voters feel the hold and never the hike. You say they feel it first through the pump. I say the ballot box decides before the Fed does.

ReaganSo who wins?

Rush LindellYou do, by a hair. Your logic held up, and mine ran on volume.

ReaganWait, you're conceding?

Rush LindellI'm conceding the scorecard, not the thesis. Never the thesis.

ReaganThere it is. Okay, I'll take the win.

Rush LindellBumper. Last up, the election scorecards, and those have real seats on the line.

ReaganAnd no podium to hide behind.

Rush LindellBumper's done. Senate scorecard. Reagan, I'm going first because I like pain.

ReaganGo ahead.

Rush LindellOn October sixth, Cook moved Kansas to toss-up. New Hampshire went to lean Democrat. North Carolina went to likely Democrat.

ReaganAnd that raised Democrats' possible Senate pickups from two seats to six, according to Cook.

Rush LindellSix. Oh, man. My seven-seat Senate bets just got a lot more interesting.

ReaganKeep the date attached, Rush. Those are ratings as of October 6th. They may have moved since.

Rush LindellThey did. Hold on, you know they did.

ReaganI do. The CNN live blog had October 20th. Cook moved South Carolina to lean R, Mississippi to likely R, and Minnesota to lean D.

Rush LindellWait, Mississippi? Mississippi is getting a rating with the word likely in front of it?

ReaganTwo of those moves went toward Democrats and one toward Republicans. It's mixed, which is why a scorecard needs honesty.

Rush LindellHonesty on a talk show. Fine, self-grading. My Senate bets, some look sharp, some look like I threw darts at a map while wearing oven mitts.

ReaganI'll go first on mine. A few Senate calls held up, a couple didn't, and I won't pretend the ratings shifts rescue the ones that missed.

Rush LindellOoh, no excuses.

ReaganNone. A rating move is not a result. Only election day is a result.

Rush LindellSo what is a rating then? Just a vibe with a logo?

ReaganIt's a forecaster's read of how competitive a race looks on a given day. Useful for a scorecard, but it moves as the picture moves, which is exactly why we date stamp it.

Rush LindellFine, then here's my honest grading rule: I don't get credit when a rating moves my way, and I don't get a pass when one moves against me.

ReaganSame rule here. Results only. Everything before that is commentary.

Rush LindellAnd the five House seats?

ReaganMine are a mixed bag, and I'm grading them that way. Two feel solid, the rest are lean and pray.

Rush LindellMine are a coin collection. Loud coins. Some of them land heads.

ReaganThat's a grade, I suppose.

Rush LindellIncomplete, pending voters. Bumper, let's wrap it. Verdict time. Reagan wins the December argument by a hair. I'm saying it out loud so nobody can say I dodged.

ReaganWrite that down. Somebody get a pen.

Rush LindellAnd remember the cold open? I promised a scorecard embarrassment. Folks, I delivered. My cut call is in the shredder, and the shredder is smoking.

ReaganIt was a good shredder, but I'll take the win, and the reason is simple: voters were already feeling the gas pump before any December hike, and that argument held up. If you think we both missed something, tell us. Rush's thesis can take it.

Rush LindellTell us which of our scorecard calls you'd grade differently, too.

ReaganSeats, rates, or the thesis, all of it's fair game.

Rush LindellHold on, my thesis is sitting right here fully intact.

ReaganSure it is. Subscribe so you catch the next round, leave us a five-star review, and tell one friend who argues about the Fed at dinner.

Rush LindellNew episodes every weekday. Reagan, go ahead, last word.

ReaganDisagree with us on the merits. That's the only way anyone gets better at this, including me.

Rush LindellBumper out.