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The Fed is poised to raise rates for the first time since 2023, putting Kevin Warsh between stubborn inflation, unforgiving bond markets, and a president demanding cheaper money.
Fed Poised to Raise Interest Rates, Putting Warsh on a Collision Course With Trump
The Federal Reserve is widely expected to raise interest rates by a quarter-point Wednesday, taking its benchmark range to 3.75% to 4% and marking its first rate increase since July 2023. The move would come just two months before the midterm elections and despite President Donald Trump’s repeated calls for dramatically lower rates. Reuters reported Wednesday that markets broadly expect the hike as inflation remains above the Fed’s 2% target.
If Kevin Warsh wanted a quiet honeymoon as Fed chairman, monetary policy apparently had other plans.
Trump said days before the meeting that the United States “should be paying the lowest interest rate in the world,” continuing his public pressure on the central bank. But inflation and the bond market are pulling Warsh the other way. Three Fed officials dissented from July’s decision to hold rates steady, favoring a quarter-point increase instead, and recent inflation data has strengthened the case for tightening. Reuters’ latest polling found a majority of economists expecting Wednesday’s hike and at least one additional increase by the end of March.
The bigger story may be what Warsh says after the decision. Markets will be listening for clues about whether Wednesday represents a one-off move or the beginning of another tightening cycle. Warsh has been skeptical of the Fed’s traditional “dot plot” projections and reluctant to provide detailed forward guidance, making his 2:30 p.m. news conference particularly important. Meanwhile, long-term borrowing costs are already punishing: the Fed’s latest official data put the 10-year Treasury yield at 4.97% on Sept. 14.
That leaves the Fed in an awkward spot. Raising rates risks intensifying political friction with a White House demanding lower borrowing costs; failing to act could undermine the Fed’s inflation-fighting message and unsettle markets. Warsh’s task Wednesday isn’t merely deciding what to do with 25 basis points. It’s convincing investors that the Fed has a credible plan for what comes afterward—without promising something the economy forces it to abandon six weeks from now.
Editor: Trump wants the world’s lowest rates, inflation wants a fight, and the bond market is already charging nearly 5% for the privilege of lending Uncle Sam money. Somewhere in Washington, the aspirin futures are probably looking terrific.
Source: The New York Times
Massie is forcing the House to confront whether Pete Hegseth’s conduct of the Iran war crossed legal and constitutional lines—a farewell gift guaranteed to make congressional leadership’s week considerably less relaxing.
Republican Thomas Massie Moves to Impeach Pete Hegseth Over Iran War
Republican Rep. Thomas Massie of Kentucky has introduced eight articles of impeachment against Defense Secretary Pete Hegseth, accusing him of conducting unauthorized hostilities against Iran and committing other abuses of his office. Massie formally notified the House on Tuesday that he intended to offer the privileged resolution, setting up expedited consideration by the chamber.
One Republican is putting Trump’s defense secretary on the impeachment docket—and forcing Congress to deal with it before heading home.
Massie’s central allegation is that Hegseth violated congressional war powers by continuing U.S. hostilities against Iran without authorization.
“By engaging in hostilities in Iran for more than 90 days without congressional authorization, Secretary Hegseth is breaking the law and must be held accountable,” Massie said.
Those are Massie’s allegations; Hegseth has not been removed or convicted of any offense, and the Pentagon has defended his leadership.
The resolution goes beyond Iran. Massie also accuses Hegseth of disregarding congressional war-powers directives, improperly using military power abroad, and retaliating against critics. The impeachment push comes near the end of Massie’s congressional career after he lost his Republican primary earlier this year. The House’s own floor record confirms that Massie gave formal notice shortly after noon Tuesday of his intention to introduce the privileged resolution.
The result is an unusually public confrontation between a Republican lawmaker and a Republican administration over presidential war powers. The House now has to dispose of Massie’s privileged resolution through its procedures, putting members on record over Hegseth and the conduct of the Iran conflict as Congress approaches the November midterms. Whatever happens to the impeachment effort, Massie has ensured that the constitutional argument over who gets to authorize an American war gets another turn on the House floor.
Editor: Massie may be on his way out of Congress, but he’s apparently declining the traditional farewell package of handshakes and commemorative plaques. Eight articles of impeachment makes for a considerably heavier parting gift.
Source: NPR
A federal judge has temporarily barred DHS and ICE from acting on a warning issued to a New York man over an angry email criticizing an immigration official—apparently the First Amendment still comes with some fairly sturdy factory settings.
Judge Blocks DHS From Threatening ICE Critic Over Harsh Email
A federal judge has issued a preliminary injunction protecting David Streever from further federal action tied to a warning notice he received after sending a harsh email criticizing former acting ICE director Todd Lyons. The order prevents DHS and ICE from taking additional steps based on that notice, which warned Streever that he “may be in violation of federal law,” while his First Amendment lawsuit proceeds.
Calling a government official terrible things may make for lousy dinner conversation, but that doesn’t automatically make it a federal crime.
Streever’s email compared Lyons to a Nazi, called him a “monstrous human being” and said he would be tormented by his conscience. Months later, Homeland Security Investigations officers attempted to locate Streever at his home, an airport and a hotel before leaving the warning notice. Streever sued in July, arguing that the government’s response chilled constitutionally protected political speech. Judge Rudolph Contreras concluded that Streever had shown sufficient grounds for preliminary relief, writing that the threat of investigation or prosecution forced him “to self-censor under that threat.”
The government defended its investigation by pointing to increased threats against public officials and said the investigation had been closed before Streever filed his lawsuit. According to NPR, however, the government’s court filing did not contend that Streever’s email constituted a prosecutable violent threat. The injunction blocks officials from taking further action based on the warning notice or issuing substantially similar threats aimed at Streever’s protected expression while the case continues.
“I’m deeply relieved that the court affirmed what I knew all along: That I am permitted to speak my conscience in the United States of America, including when I criticize government officials,” Streever said.
The ruling is preliminary rather than a final judgment on the lawsuit, but it gives Streever immediate protection while the underlying First Amendment claims are litigated.
Editor: The government can investigate actual threats against public officials. The constitutional problem comes when angry criticism gets treated like one without alleging that it actually crossed that line. That’s precisely the boundary this lawsuit is now asking the courts to police.
Source: NPR
J.B. Hunt says third-quarter earnings will drop as hiring costs and brutal diesel prices pile up, and Wall Street responded by backing the truck over the stock.
J.B. Hunt Stock Plunges as Trucking Giant Warns Earnings Will Drop Up to 10%
J.B. Hunt shares plunged more than 10% Wednesday after the trucking company warned that third-quarter earnings are expected to fall 5% to 10% from the second quarter. CFO Brad Delco said a combination of roughly $25 million in additional hiring-related expenses and at least a $10 million fuel-price headwind will weigh on results.
Apparently “preparing for growth” sounds considerably less exciting when it comes with $35 million-plus in new costs.
Delco said J.B. Hunt is spending more on recruiting, advertising, onboarding, training, and sign-on bonuses as it positions the company for increased business. “We kind of want to be transparent with investors and give an update that in light of these costs that are sort of hitting us, we are expecting our Q2 to Q3 earnings to actually drop 5% to 10%,” he told the Morgan Stanley Industrials conference.
Then there’s diesel. Delco described recent fuel-price movements as “some of the most radical and abnormal swings” the company has experienced, with record-high diesel prices creating at least a $10 million headwind. J.B. Hunt expects improving freight volumes to help offset some of those pressures, and Delco characterized much of the earnings squeeze as a timing problem rather than evidence that the company’s growth plans have gone sideways.
Investors weren’t inclined to wait around for the happier part of the story. The stock’s double-digit decline came after an extraordinary run, with J.B. Hunt shares having nearly doubled over the previous year. Delco says the company is still working to repair margins and has “a long way to go.” In trucking terms, then: The destination may be growth, but Wall Street just noticed how much fuel this trip is burning.
Editor: Nothing terrifies investors quite like a CFO saying the company is spending heavily today because tomorrow looks terrific. Wall Street generally prefers tomorrow’s terrific earnings delivered sometime around 9:30 this morning.
Source: CNBC
Europe is considering inventing a new kind of EU relationship specifically for Canada. GOOD.
Canada Could Become the EU’s First ‘Associate Member’ as Trans-Atlantic Alliances Shift
European Commission President Ursula von der Leyen says she wants Canada to become the European Union’s first “associate member,” potentially creating an entirely new relationship between the 27-nation bloc and one of America’s closest neighbors. The proposal would deepen Canadian-European ties in defense, energy, technology, critical minerals and economic security without making Canada a full EU member.
Canada isn’t moving to Europe, but politically and economically, the Atlantic suddenly looks a lot narrower.
Von der Leyen made the proposal Wednesday during her annual address to the European Parliament, with Canadian Prime Minister Mark Carney in attendance. “We must urgently reimagine our partnerships. And build global coalitions for our resilience and democracies,” she said, adding that she wanted to open the door for Canada to become the EU’s first associate member. EU lawmakers responded with a standing ovation. The idea remains a proposal, and exactly what “associate membership” would entail has yet to be negotiated.
The possibilities are substantial: Integrating defense supply chains, expanding Canadian energy exports to Europe, cooperating on AI and digital rules, linking cloud and data infrastructure, and potentially creating new travel and work arrangements. Canada and the EU already have extensive ties, including their trade agreement and growing defense cooperation. Canada’s government said earlier this month that the two sides are working on economic security, defense-industrial cooperation, critical minerals, and a digital trade agreement.
There are major hurdles. Access to the EU single market normally comes with obligations involving EU rules, budget contributions and worker mobility, and Canadian officials have indicated they aren’t prepared to accept all of those conditions. Canada’s opposition Conservatives have also criticized the associate-membership concept over sovereignty and regulatory concerns. So nobody is sewing a maple leaf onto the EU flag just yet. But the proposal itself is significant: Canada and Europe are openly exploring a new institutional relationship as both seek to diversify their economic and security partnerships.
Editor: Canada becoming Europe’s first “associate member” sounds like somebody clicked “It’s complicated” on the geopolitical relationship status. The details aren’t written yet, but Ottawa and Brussels clearly think the old trans-Atlantic operating manual could use an update.
Source: The Wall Street Journal (free)
The Kennedy Center closed its main building after a judge again blocked putting Donald Trump’s name on it, while Trump says the planned renovation won’t proceed unless the naming fight ultimately goes his way—a cultural institution now featuring more courtroom drama than stage drama.
Kennedy Center Closes as Trump Ties $257 Million Renovation to Fight Over His Name
The Kennedy Center’s board voted Tuesday to immediately close its main building for a roughly two-year renovation, hours after a federal judge again ruled that President Donald Trump’s name cannot be placed on the national memorial without congressional approval. Trump subsequently said the renovation won’t begin while the ruling is on appeal and said it won’t proceed if the courts ultimately reject the naming plan.
The building is closed, the renovation is on hold, and the president’s name is still not going on the wall—Washington has discovered its own performance art.
The board cited safety concerns in ordering the immediate shutdown. Kennedy Center officials pointed to deteriorating structural components, water intrusion and a recent incident in which a section of ceiling plaster fell roughly 60 feet into the Grand Foyer without injuring anyone. Critics have disputed management’s characterization of the danger, while center officials say major construction cannot safely proceed with the building occupied. Programming is expected to continue at the Reach and other venues.
Then there’s the name. U.S. District Judge Christopher Cooper ruled that the board cannot install memorials honoring Trump at the Kennedy Center without Congress authorizing the change. “Simply put, Defendants cannot install memorials for President Trump or anyone or anything else at the Kennedy Center without Congress’s blessing,” Cooper wrote. Trump responded that if the appeals court rules against the center and the Supreme Court doesn’t reverse that decision, the renovation “will not take place.” Congress has already appropriated $257 million for the project.
Meanwhile, the Kennedy Center is dealing with a serious financial squeeze. Internal documents cited by The Washington Post said the institution could soon struggle to meet payroll and routine maintenance expenses, while ticket sales and fundraising have declined. Center leadership says Trump’s involvement can attract new donors; critics argue the upheaval surrounding his takeover and the naming dispute contributed to the losses. Those competing claims are now tangled together with the safety problems, renovation and litigation—leaving one of America’s best-known performing-arts institutions closed while its future gets argued over in court.
Editor: The Kennedy Center needs repairs, needs money, and needs a federal judge to explain who gets to put whose name on the building. The curtain is down, but the backstage drama appears fully funded.
Source: The Washington Post (free)