Tuesday: Warsh's Jackson Hole Tell Guts Our Cut Call

Rush LindellOh, we've got a problem, people, a big one.

ReaganHere we go.

Rush LindellKevin Warsh opened his mouth in Jackson Hole, and suddenly our rate cut call is standing in front of a firing squad.

ReaganDramatic.

Rush LindellI'm Rush Limbaugh. That's Reagan. This is the show, and today's episode is brought to you by Lear Capital, because apparently the only safe bet left is a pile of metal in a vault.

ReaganSmooth.

Rush LindellI try.

ReaganSo which version of us shows up today? The guys who called this right, or the guys who need a really good excuse?

Rush LindellThat, Reagan, is the whole show. Because we went out on a limb weeks ago and said, "Cut September, done deal."

ReaganWe did.

Rush LindellAnd then the man who's about to run the Fed stands up at Jackson Hole and says a bunch of words, and Wall Street loses its mind trying to figure out what they meant.

ReaganYou say that, like, the words were in code.

Rush LindellReagan, half of Jackson Hole is code. That's the whole event.

ReaganFair.

Rush LindellSo here's the tease. Is Warsh's speech the green light we predicted, or is it a hawkish gut punch dressed up in nice suit?

ReaganAnd there's a second wrinkle nobody's talking about yet.

Rush LindellOh, don't tease that and walk away. I'm not walking away. I'm just saying not everybody at the top reads this the same way.

ReaganInteresting. Interesting. Okay, hold that thought.

Rush LindellHolding it. Okay, so get this. We made a call on this show out loud on tape.

ReaganWe did.

Rush LindellLet's see if it survived Jackson Hole. We made the call on air, cut in September, full stop. No hedging, no wiggle room.

ReaganRight. And this segment is the sequel to that. We're grading the actual thesis against Warsh's own words, not against vibes.

Rush LindellThe receipts segment. I love the receipt segment.

ReaganBefore we get to the receipts, let's set the table. Mark your calendar, September 15th and 16th. That's the FOMC meeting.

Rush LindellTwo days of Fed people in a room deciding my mortgage.

ReaganA meeting tracker site has the decision itself landing Wednesday the 16th, 2 o'clock Eastern, dot plot included.

Rush LindellThe dot plot, every economist's favorite Rorschach test.

ReaganSure. But here's why the calendar matters. Warsh's keynote wasn't some random Tuesday chat. It was three weeks out from that exact vote.

Rush LindellThree weeks. That's not a warm-up act. That's the headliner.

ReaganAnd going into Jackson Hole, posts going around online were already framing it that way, calling the September decision one markets were split roughly 50/50 on.

Rush Lindell50/50, a coin flip. That's Vegas odds for the guy who controls interest rates.

ReaganWhich is exactly why every word out of his mouth got treated like scripture the second he opened it.

Rush LindellCoin flip, Reagan. You don't send the new chair out to a coin flip crowd and expect him to say nothing.

ReaganNo, you don't. Everybody watching knew this speech was the signal, not the noise.

Rush LindellLet's actually sit with that coin flip for a second. That's not just a punchy stat. That's real money getting positioned in advance, mortgage desks and bond traders taking sides before a single word gets spoken.

ReaganRight. And that's why the pre-speech framing matters as much as the speech itself. If the market thinks it's a genuine 50/50 coin flip walking in, then whichever way Warsh leans becomes the tiebreaker everyone was waiting for, not just a data point.

Rush LindellAnd that's the whole reason we're doing this segment instead of just skimming headlines, because a coin flip crowd doesn't forgive a chairman who mumbles.

ReaganNo chance. Everyone in that room needed clarity one way or the other.

Rush LindellSo did we call it right, or are we about to eat crow on national radio?

ReaganHold that thought.

Rush LindellOh, come on.

ReaganNo, seriously. Let's stop guessing and go to the actual transcript. Here's what the man said.

Rush LindellFine. Read it to me straight, word for word. Okay. Transcript's up word for word. This is the Fed's own transcript of the speech.

ReaganAugust 28th, his 100th day as chairman, and he picks Jackson Hole to lay out the whole doctrine.

Rush LindellNot a ribbon cutting. He's out there defining how he reads inflation gauges, how forward guidance works under him.

ReaganRight. This is him saying, "Here's my Fed," basically.

Rush LindellThat's-- And it's not soft language, Reagan.

ReaganNope.

Rush LindellCNBC reported the line that mattered. He said, "This summer's inflation readings do not show underlying trends have meaningfully improved."

ReaganThat's a chairman looking at the same data everyone else has and saying, "Nope, not good enough."

Rush LindellThat's the whole speech in one sentence.

ReaganThere's more, though. A live blog covering the keynote caught the sharper version.

Rush LindellOh.

ReaganHe said, "Absent inflation moving to target clearly and at sufficient speed, we have work to do."

Rush LindellWe have work to do. That's not a guy teeing up a cut.

ReaganAnd in the same breath, he's talking AI and productivity. Like, he's building the case that the economy can run hotter without him blinking.

Rush LindellWait, so he's threading strong growth from AI into an argument for staying tight?

ReaganThat's how the live coverage frames it, yeah.

Rush LindellSo if I'm reading this right, he's basically saying the economy can grow hot because of AI, and normally that would be the excuse to relax, but he's flipping it into a reason to stay tight instead.

ReaganThat's exactly the inversion. In a normal cycle, strong productivity gives a chair cover to ease up because more output without more inflation is the dream scenario. He's using it the opposite way, as permission to keep holding the line.

Rush LindellDude, that's, that's a Fed chair telling you inflation isn't done, and He's not scared of growth numbers bailing him out.

ReaganAnd every phrase he chose was doing work. Clearly, sufficient speed. Those aren't filler words in a Fed speech.

Rush LindellNo, they never are.

ReaganThis is the guy who spent his career picking apart Fed communication for a living. He knows exactly what work to do does to a trading floor.

Rush LindellUh-huh. Oh, he knows

ReaganSo he's not hedging. He's not doing the two-handed on one hand, on the other hand thing chairs usually do at Jackson Hole.

Rush LindellHe picked a lane.

ReaganHe picked a lane.

Rush LindellThat's rare, honestly. Most Fed chairs, especially early on, wanna leave themselves wiggle room in every direction.

ReaganWarsh clearly decided ambiguity wasn't worth it here. He'd rather be criticized for being too hawkish than be misread as promising a cut he's not ready to deliver.

Rush LindellAnd then get this, Wall Street heard him loud and clear.

ReaganOh, I heard him.

Rush LindellFast. Reagan, the market didn't sprint. It sprinted, tripped, and got up faster than before.

ReaganCNBC had the number by the afternoon. Rate hike odds for September jumped to Fifty-five point Seven%.

Rush LindellIn one day?

ReaganIn one day. Roughly Twenty points gone just like that. Traders read Warsh's line about inflation trends and started repricing everything.

Rush LindellTwenty points in an afternoon. That's not a market adjusting. That's a market flinching.

ReaganIt gets bigger. By the following Monday, CME FedWatch had that same hike odds figure at Sixty-six point One%.

Rush LindellWait, Sixty-six?

ReaganSixty-six point One, nearly double where it stood before he opened his mouth at Jackson Hole.

Rush LindellSo we went from a coin, from a genuine tossup, to two-thirds of the trading world betting on a hike.

ReaganThat's the CME read, yes.

Rush LindellSay that slow for the person driving right now. This time last month, Wall Street thought a hike was basically off the table.

ReaganAnd by Monday, it's the base case for most of them.

Rush LindellI love this business. Nobody agrees on anything for more than four days.

ReaganWell, hold that thought because they don't actually agree here either.

Rush LindellWhat do you mean?

ReaganThere's a separate tracker published September 1st, and it's telling a quieter story. Hike odds near 55%.

Rush Lindell55, not 66.

ReaganRight. Up from about 40% a week earlier. Real movement, no question, but nowhere near the CME number from the day before.

Rush LindellSo we've got two trackers, same week, same speech, and they're 11 points apart on where the market actually stands.

ReaganWhich tells you something. These aren't oracles, Rush. They're different books, different traders, different weighting.

Rush LindellSo which one do we even trust going into the actual decision three weeks from now?

ReaganHonestly, neither one in isolation. You watch the direction of travel across both trackers, not the exact digit because the exact digit is gonna keep drifting right up until the 16th.

Rush LindellA car with two speedometers telling you two different speeds.

ReaganAnd you're still doing 70 either way.

Rush LindellFair, but even the conservative number, the 55, that's still a coin that landed on hike.

ReaganFor now, and that's exactly where I want to slow down.

Rush LindellSlow down? We're finally getting somewhere.

ReaganWe are, but before we crown this thing settled, there's a wrinkle you need to hear. Not everybody on that trading floor is buying the hike story.

Rush LindellNot everyone because here comes the guy holding the purse strings.

ReaganTreasury Secretary Bessent, yeah. He's out there on August 31st basically waving his hands at the whole hike parade.

Rush LindellWhat's he saying?

ReaganHe calls this a supply shock, says core inflation is still restrained, so hiking into it doesn't make sense.

Rush LindellA supply shock. So his argument is the Fed shouldn't punish the economy for a problem that isn't actually a demand problem.

ReaganRight. You raise rates to cool off spending. If the spending isn't the issue, you're just breaking something for no reason.

Rush LindellOkay, but he's the guy in the administration. Of course, he wants a cut. His boss wants cheap money.

ReaganSure, weigh that, but the actual substance of the argument, restrained core inflation, that's not a talking point. That's a number people can check.

Rush LindellFine. Fine. So we've got Warsh's own words pointing one way, the market odds pointing the same way, and now Bessent pumping the brakes.

ReaganAnd it gets messier because there's a guy on the other side telling Bessent he's not going far enough.

Rush LindellOh, come on.

ReaganFormer Fed Vice Chair Roger Ferguson reported September 1st. He's not just saying one hike.

Rush LindellDon't tell me.

ReaganTwo?

Rush LindellTwo hikes this year?

ReaganThat's his call, and he's explicitly pushing back on the idea that a cut is still the base case at all.

Rush LindellSo we've got Bessent saying, "Don't touch it," Ferguson saying, "Hit it twice," and Warsh's own speech sitting in the middle looking like he already made up his mind.

ReaganWhich is the whole problem with calling this settled.

Rush LindellOkay, so here's where I plant the flag. I'm calling this the kick in the teeth moment for our cut thesis. We said cut back in whenever we said it, and every signal since Jackson Hole is dragging the other way.

ReaganI'd slow down before you bury it.

Rush LindellSlow down. Lear, the guy who runs the actual bond market view, says, "Hike twice."

ReaganOne guy. And Bessent, who's arguably got more institutional weight than a single dissenting former Vice Chair, says, "Don't." A split expert reaction isn't a verdict, Rush. It's a split expert reaction.

Rush LindellWow. Groundbreaking.

ReaganI'm serious. You want to declare us wrong? Declare the Fed decided? Neither has actually happened yet.

Rush LindellFine. Then here's the honest version. Two questions, same knot. Is it a cut or a hike? And were we right or wrong? As of right now, those are the same question, and nobody's answered it.

ReaganThat's fair. That's the version I can sign off on.

Rush LindellProgress.

ReaganDon't get used to it.

Rush LindellSo what do we do until the 16th?

ReaganWe wait, and we watch our money not get eaten alive in the meantime.

Rush LindellOoh, setting something up.

ReaganAll right, quick break, because whatever the Fed decides, some things hold their value no matter how confused Jerome Powell's successor gets up on that podium.

Rush LindellAnd that, Reagan, is exactly why I've got my eye on something shiny.

ReaganHere we go.

Rush LindellMy friends at Lear Capital are doing something I've never seen before. They're selling a one-ounce silver American Eagle below spot price.

ReaganBelow spot, as in less than silver is actually worth right now.

Rush LindellThat's right, below what silver is actually trading for right now, and Lear is covering the shipping and taxes.

ReaganOkay, what's the catch?

Rush LindellNo catch, just rules priced below spot. Because Lear is selling this one at a loss just to get silver into your hands, limit one per person, new customers only.

ReaganAnd?

Rush LindellFree shipping, fully insured by Lear. But this is a 24-hour offer only.

Reagan24 hours. That's tight.

Rush LindellIt is, and here's why that matters. Spot price doesn't even include what it costs to mint the coin, ship it, or the dealer's overhead.

ReaganSo buying at spot is already a good deal.

Rush LindellBuying below spot almost never happens, and we're not talking about some obscure bullion piece nobody's heard of. The Silver American Eagle's one of the most recognized coins in the world. One of the most recognizable and sought-after coins in the world, backed by the US government for weight and purity. One ounce, point nine nine nine fine silver.

ReaganIRA eligible too, right?

Rush LindellIRA eligible, and it's a tangible asset, something you can actually hold in your hand. Not a screen, not a ticker, an actual coin.

ReaganWhich, given the week we've had with the Fed, sounds appealing.

Rush LindellGo to www.rushcoinoffer.com right now. This is a 24-hour offer. The URL goes dark after that, and when it's gone, it's gone. www.rushcoinoffer.com.

ReaganThere it is.

Rush LindellI mean it, though. Go do that before we finish taping.

ReaganNoted. So where were we?

Rush LindellOkay, back to the Fed. Because I don't want anybody thinking this is just some trading desk story for guys in Manhattan with three monitors.

ReaganIt touches actual households.

Rush LindellThis isn't just a trading desk story. It's a kitchen-table story. Your mortgage, your car payment, your grocery bill, all of it's sitting downstream of whatever happens on September 16th.

ReaganAnd with an election on the other side of it.

Rush LindellExactly. So let's talk about what this actually does to people who don't watch CNBC for fun. So walk into any kitchen in America right now. Mortgage rate, car payment, credit card minimum, every single one of those numbers moves depending on what happens September 16th.

ReaganAnd the baseline everybody forgets is the Fed's last actual move wasn't a hike. It was a cut back in December.

Rush LindellRight? December 2025. So this whole hike conversation, isn't the Fed doubling down? Is the Fed doing a full reverse?

ReaganWhich is a bigger swing than people are pricing in emotionally, even if the odds have been drifting that way for weeks.

Rush LindellA full reverse, Reagan. That's not a small adjustment. That's a U-turn on a highway.

ReaganSure, but let's be honest about what a hike actually does to a normal family. Credit card APRs move fast. Mortgage rates slower, because those track longer bonds.

Rush LindellCar loans, though. Car loans move almost overnight. You walk into a dealership in October, that payment's different than it would have been in August.

ReaganDifferent, yes. Catastrophic? I don't think we know that yet.

Rush LindellUh, I'll tell you what it does politically. Midterms are November of next year, but the campaign is now. Every, uh, incumbent's opponent is gonna be waving a rate chart at every town hall between here and then.

ReaganThat's the piece I actually buy, because whichever way this breaks, one party gets to say, "See? Inflation's still a problem," and the other gets to say, "See? They choked off the recovery."

Rush LindellAnd both of them will be right for about six weeks and then completely wrong.

ReaganThat's mostly political commentary, honestly.

Rush LindellBut here's where I actually wanna push it. You keep hedging, like this could go either way cleanly. I don't think it's clean. I think Warsh tips hike.

ReaganI'm not saying it's clean. I'm saying the confidence on this show, and everywhere else, is running way ahead of the actual data. Two dissenting voices, two trackers that don't even agree with each other. That's not certainty. That's noise dressed as certainty.

Rush LindellNoise that costs somebody their car payment.

ReaganWhich is exactly why we shouldn't be cocky about calling it. Families don't get a mulligan if we're wrong on air.

Rush LindellUh, Fair. But you know, I'm still leaning hike.

ReaganI know. You've leaned that way since the keynote.

Rush LindellGuilty.

ReaganSo where does that actually leave us going into the decision itself? Because we've got one number left that matters more than any tracker we've quoted so far.

Rush LindellThen let's lock it in. So here's the board going into the 16th.

Reagan2:30 in the afternoon, Everybody's watching the same clock. 2:00, Reagan, 2:00, Fed announces, and the dot plot drops in the same breath. Right. The projections come out alongside the decision. That's when we find out if this is a one and done or the start of something.

Rush LindellI am locking in my call right now on the air. No wiggle room.

ReaganGo.

Rush LindellThey cut 25 basis points Warsh talks tough in August because a chairman has to sound serious before he moves. Then he moves anywhere.

ReaganThat's a bold read after everything we just walked through. It's the read. Write it down. I'm not writing anything down yet because the odds we've been tracking all show are still shifting under our feet. That's not a settled number. That's a number still finding a floor.

Rush LindellFine. Hedge it if you want.

ReaganIt's not hedging. It's honesty. Nobody on any trading desk knows this outcome right now. Not CNBC, not CME, not us.

Rush LindellBut somebody's going to be right in two weeks.

ReaganSomebody's going to be right in two weeks, and I want us on record either way. Cut or hike. No do-overs.

Rush LindellNo do-overs. My money's on the cut.

ReaganAnd I'll say, genuinely, I lean the other way. I think Warsh holds, and if he moves, it's smaller than people expect.

Rush LindellA hold isn't even on my bingo card.

ReaganIt should be. He didn't sound like a man in a hurry.

Rush LindellHe sounded like a man daring the market to test him.

ReaganSure, and daring the market and actually pulling the trigger are two different jobs.

Rush LindellWe'll know who's right in, what? Two weeks.

ReaganTwo weeks, and we come back on this show and grade it live, no spin.

Rush LindellNo spin. Whoever's wrong buys the coffee.

ReaganI'll hold you to that. You better. September 16th, cut, hike, hold. We're calling it, and we're owning it. One question on the table till then: Does Warsh actually believe his own inflation talk, or was Jackson Hole just cover for a move he's already planning?

Rush LindellThat's the question. All right, that's the call of the board. Let's wrap it up. All right. Before we go, remember that thing I said about my teeth?

ReaganFaintly.

Rush LindellStill standing by it. If Warsh hikes on the 16th, I'm buying a mouth guard.

ReaganUh, Please don't actually do that on air.

Rush LindellNo promises. But Reagan, seriously, strip away my dental health. What are you actually watching that day?

ReaganThe dot plot, not the decision itself. The vote will tell us what they did. The dots tell us what they think happens in 2027.

Rush LindellBecause the vote could be a hold that's secretly hawkish.

ReaganExactly, or a cut that reads as a one-time concession, not a trend. That's the thing worth grading, not just cut or hike.

Rush LindellFair. That's a sharper watch than mine.

ReaganWe'll see whose coffee money is safer.

Rush LindellIf you're new here, subscribe. Leave us five stars. Tell a friend who actually cares about their mortgage. New episodes drop every weekday.

ReaganSee you Wednesday, September 16th, 2:00, for the verdict.

Rush LindellAnd if I'm wrong, well, at least the mouth guard's reusable.