The Warsh Standard

The Fed spent the better part of a decade talking too much.On Wednesday, Kevin Warsh signaled that era is over.His first press conference as Fed Chairman didn't just announce a rate hold. It announced a philosophy — one that's fundamentally different from anything we've seen in the Powell era:Forward guidance: goneWarsh's own dot plot projection: withheld entirelyFive task forces launched to rebuild the Fed from first principlesThe market sold off. That's not surprising — markets have been conditioned to feed off Fed language. Warsh just said the feeding stops.Four years ago we wrote a memo called "The Circular Sentiment Firing Squad." The argument: the Fed was watching the market, the market was watching the Fed, and nobody was actually leading.Warsh said almost exactly the same thing from the podium Wednesday:"Financial market prices are probably the most important source of information to guide central bankers. But when all the financial markets are doing is reflecting back what we've said, then we're taking the most important source of information and being blind to it."That's the whole problem. In one sentence.Read more here: https://insightwealthgroup.com/the-weekly-insight-the-warsh-standard/