Warsh Says the Quiet Part
Nvidia delivered the blowout the bulls needed. Then the Fed chair stood up in Jackson Hole and made clear he isn't done with inflation — and in one speech, the odds of a September rate hike nearly doubled.
It was a week with a hero and a heavy. The hero was Nvidia, which jumped nearly 9% Thursday on a blowout report and outlook, briefly reminding everyone why the AI trade has ruled 2026. The heavy was Kevin Warsh, who used his first Jackson Hole keynote as Fed chair to say the quiet part out loud: he is not convinced inflation is beaten, and he is prepared to act. The S&P slipped 0.25% Friday to 7,711.76 — but still closed out its first winning week in three.
For the week the S&P rose 0.5%, the Nasdaq gained 0.9%, and the Dow added 0.5%. But the number that mattered wasn't an index level — it was the odds of a rate hike. Heading into Friday, futures put the chance of a September increase near 35%. After Warsh spoke, they leapt to roughly 57%. Short-term yields spiked on the news, with the policy-sensitive 2-year climbing more than six basis points to 4.298%, while long-end yields edged lower — the bond market's way of saying it now expects the Fed to hike, and that the hike will bite growth.
The week, day by day
What Warsh actually said
The chair chose his words to leave no comfort. This summer's PCE and CPI readings, he said, were better than expected but “do not tell me that underlying trends have meaningfully improved.” He wants to be “confident that underlying inflation is moving to our objective, clearly and at sufficient speed” — and he pointedly declined to offer forward guidance or describe what would make him ease. Markets read it as a chair keeping a September hike firmly on the table.
Nvidia won the week on the scoreboard. Warsh won it on the thing that actually sets prices — the cost of money.The Friday Recap
Even Nvidia's Thursday pop couldn't lift the broader chip complex: the VanEck Semiconductor ETF fell more than 3% on the week, dragged by Marvell (down over 8%) and Applied Materials (off more than 5%), while design-software names Synopsys and Cadence bucked the trend with double-digit and mid-single-digit gains.
A winning week that ended on a hawkish jolt. The AI trade proved it still has a pulse, but Warsh reset the policy debate — a September hike is now more likely than not. With inflation sticky and growth slowing to 1.5%, next Friday's August jobs report becomes the last major data point before the Fed decides.