Fed Chair Kevin Warsh is walking a careful line. 

He explicitly said in his speech in Jackson Hole, Wyoming on Friday that he wasn’t giving “forward guidance” … but the markets certainly reacted like he did.

Warsh was unexpectedly hawkish, hinting that the Fed may have to adapt policy to handle inflation trends. And now, FedWatch puts the chance of an interest rate hike at 66%. 

So … what happens if rates do go up? 

Today, we’ve also got a look-ahead at what we can expect from Friday’s jobs report, how the markets are responding to the first strikes on Iran in a month, and a peek into dark money in the midterms. 

Plus, who could possibly be so corrupt to get the first-ever lifetime ban from Kalshi? 

For the next two weeks while Tony’s soaking up the sun somewhere, you’re stuck with me. Stay awhile! – Rachel Kahn, temp newsletter editor

At the Kansas City Federal Reserve’s annual symposium in Jackson Hole, Wyoming, last week, Fed Chair Kevin Warsh said inflation trends have not “meaningfully improved.” That means, he said, that the Fed has “work to do.”

In response to that characterization, FedWatch predicted Monday that there’s a 66% chance the Federal Open Market Committee will hike by a quarter-point at its upcoming September meeting. By tracking ‘target rate probabilities’ on short-term interest rates, FedWatch also predicted a roughly 50% chance of another 25-basis-point rate hike at the December FOMC meeting.

Inflation hawks, like senior economist Dan North at credit insurer Allianz Trade, think the futures market has it exactly right about the Fed’s next interest-rate move.

“There’s been no progress on inflation. We’re right back to where we were before the war started,” North said. He pointed out the personal consumption expenditures price index is nowhere near the Fed’s 2% target.

“Without an interest rate hike, you’re going to have a hard time reaching that,” North said. “We’re still quite a ways from it, and it’s been very, very sticky. An interest rate hike is certainly warranted.”

But what if the Fed does hike rates soon. Would that be a crisis?

A decade ago, it looked like independent bookstores might go the way of the dodo due to online sales and e-books. But now, the internet is one of the main drivers of physical book sales – and of physical bookstores.

Taylor Capizola, manager at romance bookstore The Ripped Bodice, said part of the store’s success is due to social media: specifically, BookTok, a community on TikTok where people review and discuss what they’re reading. 

And when a book goes viral online, it can sell out in person.

Not one to miss out on an opportunity for fraud, former Republican Representative George Santos is the lucky winner of Kalshi’s first-ever lifetime ban for betting on his own attendance at the State of the Union. 

In addition to the ban, the disgraced former congressman has been fined $71,356 by Kalshi, and in July settled with federal regulators over the same issue to the tune of $35,000. 

“Hey @Kalshi thanks for the lifetime ban from your gambling platform,” Santos wrote on X. “Let’s see how much longer you guys are around for. 💋” 

Santos was sentenced to seven years in prison for wire fraud and identity theft in 2024, but had his sentence commuted by Trump last year. Good to see him getting back on his feet!