On The Deals Shaping Our Economy
Ika here. Kevin Warsh, the Fed's new chair, used his first Jackson Hole address on Friday to signal Washington isn't done raising rates, a line that shot September hike odds from 35% to 62% within hours. The same night, Trump announced on Truth Social what he called the biggest oil deal in history: majority US control of more than 65 billion barrels in Venezuela, with Chevron reportedly close behind on its own expansion. In Nepal, the death toll from Wednesday's glacial flood crossed 600 overnight, with 2,400 more still missing along the Chinese border.
1 big thing: Warsh bares the hawk
New Fed chair Kevin Warsh used his first Jackson Hole speech to tell markets the central bank isn't finished raising rates, and traders believed him.
Why it matters: The Fed has missed its 2% inflation target for 65 straight months, holding rates at 3.5% to 3.75% along the way. Patience, per Warsh, is running out.
What he said: Warsh described the labor market as broadly healthy, arguing its odd calm (few hires, few fires) reflects post-pandemic rematching rather than weakness.
On inflation, he was blunter:
"The Fed's predominant focus right now should be on prices."
By the numbers:
September rate-hike odds: jumped from 35% to 62% within hours of the speech, per CME data.
Two-year Treasury yield: rose as much as 0.11 percentage points, to 4.34%.
The dollar: up 0.5% against a basket of six peers.
What they're saying: JPMorgan's Priya Misra framed it as Warsh's cleanup act after a muddled July press conference. Aberdeen's Matthew Amis was blunter still: skip a hike now, he warned, and Fed credibility takes another hit.
The intrigue: Warsh also wants a quieter Fed, one that forecasts less and lets markets do more of the guessing.
The backstory: Warsh's hawkish turn lands inside a bigger, messier fight over the bond market itself.
Treasury Secretary Scott Bessent has leaned on expanded buyback programs to talk yields down, an effort critics call far too small to shift a market trading $1 trillion a day.
Asked last week whether he'd escalate further, Trump named the country's ultimate leverage:
"The ultimate intervention is our military."
US debt has now crossed $40 trillion, and for the first time since World War Two, Washington spends more on interest than on defense.
Bottom line: Warsh cleaned up his worst rhetorical stumble. The harder question, how the Fed actually reacts, stays open.
2. Trump's Venezuela oil grab
Trump announced Friday night that Washington had struck a deal for majority control of more than 65 billion barrels of Venezuelan oil, over a fifth of the country's total reserves and more than triple ExxonMobil's entire proven reserve base.
Why it matters: Rising Venezuelan output has helped offset lost Iranian barrels during that ongoing war, a rare bright spot for Trump's affordability push heading into November's midterms.
"THE BIGGEST OIL DEAL IN WORLD HISTORY!"
What he's saying: Trump claims it would more than double American oil reserves and push gas prices down for years.
The details: The new joint venture gives Washington 55% of effective output, with 100-year concessions on fields holding 63 billion proven barrels.
Secretary of State Marco Rubio pegged the expected private investment at close to $100 billion, aimed at rebuilding Venezuela's economy.
Yes, but: Critics call it a land grab dressed as diplomacy.
Meanwhile: Chevron, the only major US oil company that never left Venezuela, is in advanced talks to expand its own footprint there, with an announcement possible within days.
3. "In a flash, everything was gone"
Nepal's death toll from Wednesday's glacial flood hit 626 by Saturday morning, with the missing count above 2,400 after hydropower firms finally reported their own worker tallies.
Catch up quick: An ice and rock avalanche near the Chinese border triggered a flash flood down the Bhote Koshi river valley, destroying the Gyirong crossing that carries more than three-quarters of Nepal's exports to China.
Damage estimates already top $1.3 billion, including 80 destroyed bridges and 40km of highway.
What's next: A new barrier lake formed by the landslide threatens a second flood; Chinese officials warned its volume could double within days from forecast rain.
Nepal has turned down foreign search-and-rescue teams, saying its own security forces can manage, while asking instead for outside help rebuilding infrastructure and restoring communities.
By the numbers: Washington has sent $500,000 in emergency aid.
Bottom line: The UN's disaster-risk chief called it a mountain hazard unlike anything seen in living memory. Recovery could take years.
This is a private newsletter, if you’d like a colleague added, please reach out with their email.
If you’d like to support the work, there are several options. Cancel anytime.