{"id":4899,"date":"2026-08-04T16:42:33","date_gmt":"2026-08-04T16:42:33","guid":{"rendered":"https:\/\/crosscountrymovingteams.com\/?p=4899"},"modified":"2026-08-04T16:42:33","modified_gmt":"2026-08-04T16:42:33","slug":"kevin-warsh-told-wall-street-hed-be-sharing-less-goldman-sachs-fears-a-void-of-fed-facts-will-only-amplify-misinformation-and-instability","status":"publish","type":"post","link":"https:\/\/crosscountrymovingteams.com\/?p=4899","title":{"rendered":"Kevin Warsh told Wall Street he\u2019d be sharing less\u2014Goldman Sachs fears a void of Fed facts will only amplify misinformation and instability"},"content":{"rendered":"
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If reaction is welcome, markets delivered: Long-dated bonds spiked after Warsh\u2019s statement and remain elevated, while 2-year Treasuries slumped, reflecting expectations that the Fed would not be tightening financial conditions. The response from investors wasn\u2019t necessarily what Warsh did or didn\u2019t say, JPMorgan\u2019s Alex Wolf told Fortune<\/em>, it was a reflection of newfound uncertainty. <\/p>\n

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Increasing noise in the absence of facts is precisely what Goldman Sachs chief U.S. economist Jan Hatzius is worried about. In a note yesterday, Hatzius highlighted that markets over- or underreacting to data points may confound the very response the Fed is watching closely.<\/p>\n

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\u201cParticipants in short-term interest rate markets\u2014where the Fed matters most\u2014price what they think the Fed will do, not what it should do,\u201d Hatzius reasoned. \u201cThis will remain true if the FOMC provides less information about its thinking, except that markets then have less information and potentially more inaccurate beliefs on which to base their thinking. Such a shift will not provide policymakers with a more reliable source of information about the real economy.\u201d <\/p>\n

Not only does Hatzius believe the new strategy will not achieve its aims, he said it might have two \u201cundesirable\u201d effects. The first is that if markets don\u2019t know which data the Fed deems important, it may not react to updates the Fed later uses as a basis for policy change. As a result, policy will lag the real economy and end up \u201cdestabilizing rather than stabilizing.\u201d<\/p>\n

Secondly, markets may overreact to a piece of data or a policymaker tidbit, pricing in hikes or cuts that the central bank then fails to deliver. \u201cThis implies unnecessary volatility in both financial conditions and the impulse from financial conditions to the real economy,\u201d Hatzius adds. <\/p>\n

A sense of framework<\/h2>\n

Warsh is also garnering criticism for seemingly suggesting that familiar yardsticks are moving. Responding to a question about what measure the FOMC uses when discussing the 2% inflation target, the \u201cproper, standard answer\u201d is PCE, the chairman confirmed, referring to the Personal Consumption Expenditures Price Index, which reports changes in the prices of goods and services purchased by consumers in the U.S.<\/p>\n

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\u201cWho knows, come after next January, what we might say about strategy,\u201d Warsh continued.<\/p>\n

There were hints that a shift may be coming\u2014after all, one of Warsh\u2019s Fed task forces is charged with \u201crevisiting how the Federal Reserve understands and responds to the drivers of inflation.\u201d<\/p>\n

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But the outcome of this work doesn\u2019t explain the blanks being raised at present, argued Professor Jeremy Siegel, emeritus professor of finance at the Wharton School of the University of Pennsylvania. Writing for WisdomTree, where he serves as senior economist, Professor Siegel said the argument to reduce forward guidance is a legitimate one.<\/p>\n

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However, \u201ceven without providing explicit forward guidance, central bankers still have an obligation to explain the economic framework behind their decisions. On that score, this press conference fell well short.\u201d <\/p>\n

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And while Warsh may only be one voice at the Fed, he is the<\/em> voice, added Hatzius. In the absence of his outlook, markets may erroneously rely on insight that doesn\u2019t reflect the view of the entire committee: \u201cIf [Warsh] doesn\u2019t distill the individual views of participants into a coherent message or doesn\u2019t communicate this message to the public, the loudest voices and most frequent speakers on the committee will likely have the biggest impact, whether or not they are representative of the median FOMC voter.\u201d<\/p>\n

Read more Trump called his own housing bill a \u2018yawn.\u2019 Now he\u2019s heading for a west coast tour with a 32% approval rating on the economy<\/a><\/p>\n

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Kevin Warsh has been clear on why he doesn’t like forward guidance\u2014Wall Street and Goldman Sachs are sending their response.<\/p>\n","protected":false},"author":1,"featured_media":4898,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[382],"tags":[],"class_list":["post-4899","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-fed"],"yoast_head":"\nKevin Warsh told Wall Street he\u2019d be sharing less\u2014Goldman Sachs fears a void of Fed facts will only amplify misinformation and instability - Cross Country Moving Team<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/crosscountrymovingteams.com\/?p=4899\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Kevin Warsh told Wall Street he\u2019d be sharing less\u2014Goldman Sachs fears a void of Fed facts will only amplify misinformation and instability - 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