Jackson Hole Federal Reserve Symposiun 2026 and Financial Innovation

 Here are the links to the various papers and handouts on financial innovation, tokenism, international monetary system as well as Warsh's opening remarks.

While none of the papers reached out and grabbed at my understanding of these issues, they are worth reading.

Most reporting has focused on Chairman Warsh's remarks which many interpreted as indicating future rate hikes are possible.  I found them to be equivocal floundering in what comprises the best set of indicators to determine appropriate action and particularly fuzzy with respect to the importance or use of forward guidance and transparency which he seems to dislike.  The markets disagree with him while taking the possible hike of interest rates seriously, particularly considering the comments of Federal Reserve regional presidents.

 Here is one article providing takeaways from Warsh's comments and and another international article which includes reporting on his reluctance to provide any forward guidance on rate hikes and how he inexplicably painted a rosy economic picture which is not consistent with recent economic data.

 

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Links in a Time of War and Corruption 8/1/26

Iran plays US weakness

China continues to arm Iran 

Russia continues to provide satellite targeting of US forces to Iran 

Depleting US interceptor stockpiles 

Propping SpaceX falling stock with financial products 

SpaceX earnings August 4 unleashing insider selling August 6

Decline and fall of a superpower 

Driving business to China 

Forced labor and chaos tariffs 

Blanche or money - which will Trump choose 

 Blanche, Trump-Epstein files, and the fraudulent fruits of tax immunity

Senate Finance Committee Republicans block killing fraudulent tax immunity 

The Boss wants His money 

Children do not need to eat 

 Prescription drugs are for people with money 

Great Chinese Oil Mystery 

 Russian Oil speaks Chinese

 

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The Blanche-Trump IRS "settlement" Is Collusion

    On 15-16 July 2026 during his Senate confirmation hearing, Todd Blanche repeatedly violated a court order which prohibited the use of the word "settlement" to be used  in any official hearing of any kind in describing the private resolution of a lawsuit improperly advanced in Federal Court by President Trump by non-adverse parties.  The order also found the resolution made without the knowledge of the Court was a collusion between non-adverse parties who had common goals.

    Additionally, Blanche also wrongly asserted that the resolution's addendum, which essentially gave Trump IRS audit immunity for any past tax returns of his, any of his over 500 business entities, and his two sons up to the date of the document, was common practice.  The IRS has never granted audit immunity.  The you can hope for is a resolution of "No Change", which means there is very little chance of another audit of that tax return --- unless evidence of fraud is later found.

    While politicians and pundits have focused on the unjustified $1.776 billion fund created by the Private Resolution which would be used for distributions to third parties unrelated to the case, because it is US government money being used for purely personal political purposes and has been called a "slush" fund, the Addendum is far worse and more ominous, because it gives the store away in not only

Chaos Tariffs Pass-Through Price Increases Continuing

 The Chaos Tariffs will see future price increases from 44% to 47% of  manufacturing and service businesses.

90% of the burden of tariffs have fallen on consumers and US firms.  How businesses pass-through tariffs to maintain steady profits has long been recognized and the pass-through in 2025 was predictable.

As the sequential roll out, waffling, and TACO approach to Chaos Tariffs, while profitable for Trump's "blind" trust day trading (21,000 trades in 2025), has demonstrated the cumulative effect of tariff pass-through on prices.

 The continued tariff policies, despite what the courts say, is consistent with fundamental dementia thinking.

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Space X stock VWAP almost underwater

 After five days Space X closed at $185 after a 20% decline and now has a volume-weighted average price of  $181.71 making the average post-IPO buyer almost underwater.

This stock is vastly over priced with an actual fair market value of $62.

If you have any etfs or index funds in your 401(k), IRA, or other investment accounts which track the Nasdaq 100, you are now exposed to Space X and increased possible market volatility. 

To refinance a bridge loan used to purchase xAI earlier this year, Space X is preparing to issue $20 billion in bonds, which would be one of the largest corporate debt deals in recent history. 

 

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Avoid Space X IPO

The Space X IPO is priced at $135 per share, which is approximately twice the actual value of the proposed company, and the parts of the proposed company are all high spending revenue losers making the financials very risky, although the data centers may be a revenue producer in the future (do you believe in the AI bubble?).

Elon Musk will have 85% control with a dual class shareholder structure limiting any shareholder voice, creating Musk conflicts of interest combined with a Musk "friendly" board,  and it has a tiered lock up multiple period allowing stock sells well before the usual 180 day lock up: first is 20% two days after its first June 2026 earnings report and another 10% if stock trades 30% above IPO price for five of the ten days leading up to the first earnings release, then an ability to sell 7%, without respect to trading price, on each of 70, 60, 105, 120, and 135 days after IPO, 28% after the September 2026 3rd Quarter earnings report, with the tiered lock up ending after 180 days.

 While Musk and "certain large investors" are locked up for 366 days and no insider can sell into the IPO.

About 4,400 current former Space X employees will become millionaires and there are at least several Trump government officials who hold Space X shares as well as Trump Jr through 1789 Capital which owns xAI and Space X stock.

While it is normal for at least 10% of stock to be available for retail purchase, Musk has insisted 30% be available (with retail investors required to be qualified with as little as $2000 in their account) which should create a great sucking noise in the Market.

Musk's money losing companies need money and Musk is willing to take your money on his very sparse terms and if you keep your mouth shut and suck it up. 

 

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Trump Accounts Cannot Fund Retirement

 If you go to the government Trump Accounts website, you will find misleading unrealistic results for contributions, such as just $1000 growing to over $200,000 by age 55.  This assumes a 10% annual rate of return.  Forecasts of annual stock market rate of return range from 3.1 to 6.7% (as of January 2026) over the next ten years.  The government projection does not adjust for inflation or taxes upon withdrawal.

Assuming a very optimistic 6.7%, after adjusting for inflation and 12% tax upon withdrawal, a $1000 contribution would yield $46,000 at age 55, which would be only $8000 in today's purchasing power.

 Additionally, mathematically, the 10% annual rate of return is economically unsustainable.  This can be determined by using the reciprocal of the PE ratio.  The reciprocal of the current PE ratio of 40 would be a sustainable return (earnings yield) of 2.5%.  The PE ratio would have to be substantially better to provide a 10% annual return.

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Trump Savings Accounts Are Inefficient

We have previously written on the rules and limits of Trump Savings Accounts.  It has become quickly apparent that people, even low income families if they have the disposable income, would be better off contributing to a 529 Plan or, when the child works, to a Roth IRA.

Contributions are not tax deductible and any withdrawals before age 59 1/2 are taxable.

If the government is going to fund $1000, if you apply for it, to newborn children within a limited time period to advance one individual's political advertising, you should take advantage of it, but that amount alone will only grow to about $5800 by age 18.  

How may low income families are going to go to a brokerage where no one who makes their living selling has any time to place them in an indexed fund with an expense not above .1%?  How many low income families would go on line or call to a fund provider like Fidelity or Vanguard to set up a Trump Account?

 The efforts by the Administration to cajole business leaders, wealthy individuals, and other organizations who want to stay or be in the good graces of a current president to make contributions to other people's Trump Saving Accounts is consistent with political corruption.

It is totally inappropriate for a current President to attach their name to any government program, government building, government check, or banner hanging on a government building or property in a republican constitutional democracy.  The President is not the Government.  It is illegal government subsidized political advertising.

Morningstar has a concise article on the 6 reasons a Trump Savings Account is not an efficient investment vehicle.

 

 

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Is the Federal Reserve Approaching the Neutral Nominal Policy Rate?

The economist Tom Lawler had an interesting article in the Calculated Risk Newsletter on R* -- the Neutral Interest Rate.

Basically, if one looks at the average best guesses for the current neutral real  rate of interest, a 25 basis point cut in  target federal funds rate range, it would be approximately close to a neutral nominal policy rate.

This would  leave little room to tolerate any future increase in inflation without requiring an increase in the federal funds rate range.

A 25 basis point cut has been baked in the market for this December meeting which would make the federal funds target rate range 3.50-3.75%.  Personally, I would vote to hold for more data as tariffs seep into prices, but the 25 basis point cut is very probable.

Here is the article at Calculated Risk Newsletter. 

 

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Looking for the Missing Economic Federal Data

 During the shutdown everyone has been forced to seek sources to take the place of the US government missing economic data reports and the problem will continue briefly as the White House stated today (Wednesday 12 November) that October labor data may never be released and the Department of Labor is being urged to prioritize November data.

There are a variety of sources for alternative estimates and information and here are a few of them:

for labor market indicators Guy's Substack 

for economic takes on published pieces from variety of sources providing an alternative critical analysis  there is Beat the Press

 for some proprietary economic indicators there is Carlyle

for a variety of very professional economic data with a variety of technical graphs there is Econbrowser

for national and international economic information there is S&P Global 

 Jared's Substack provides professional economic analysis and political economy

the Federal Reserve Beige Report is a useful source of anecdotal economic information from the different Federal Reserve districts 

The Bonddad Blog provides economic analysis from a market perspective

there are several Federal Reserve blogs at different Federal Reserve Districts like Liberty Street Economics, On the Economy Blog, and Macroblog providing economic and macro monetary as well as banking and liquidity information

 CalculatedRisk is a valuable source of economic information and housing information

 for longer professional economic information and analysis there is the excellent Paul Krugman's Substack

 

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