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Happy Friday! The Robot Olympics concluded with a Chinese ‌humanoid running the 100 metres in 8.64 seconds, beating Usain Bolt's world record by almost a second.

More importantly, the robots have finally mastered comedy. (Check out the audience groan at the end.)

In-depth: Fed Chair Kevin Warsh took to the stage at Jackson Hole to reassure markets about his commitment to fighting inflation. Did it work?
Newsbites: US vs Canada, gold and bitcoin surge, and Meta's record settlement.
PensionCraft News: Vanguard’s New ETFs. Are European stocks a huge opportunity? And investing in a world without growth.

IN-DEPTH

The Hole Truth: A Quieter Fed

The summer's nearly over, and we get one last hurrah: the August Bank Holiday. But before you fire up the barbecue and stand over your sausages in the drizzle, spare a thought for the bankers.

Bank holidays only exist because one brilliant British eccentric decided the nation's clerks deserved a day at the cricket.

Before 1834 the Bank of England closed for forty saints' days a year, which everyone agreed was excessive, so it was cut to four, which everyone agreed was miserable. Then in 1871 Sir John Lubbock pushed through an Act of Parliament declaring that banks would shut on a handful of Mondays. And since payments couldn’t settle while the banks were closed, the whole country downed tools too. A grateful public spent decades calling their seaside outings "St Lubbock's Days."

Some claim Lubbock was the Leonardo of Victorian England: banker, MP, cricketer, biologist, archaeologist, friend of Darwin, and the man who coined the terms Palaeolithic and Neolithic. He took a pet wasp on holiday to France and mourned it when it died. He spent years trying to teach his poodle to read, holding up cards marked FOOD, TEA, and BONE, and waiting for a breakthrough that never came. He is also arguably the only banker in recorded history to have given the public something for nothing.

But central bankers are not resting this weekend. Instead, they are gathered at a fishing lodge in Wyoming — surrounded by mountains, elk, and economists — to deliver speeches that keep traders glued to their Bloomberg terminals.

As I write this, Kevin Warsh is delivering his first keynote speech as Fed Chair. Thankfully, we can read the transcript.

Hot take

Inflation has now spent 65 straight months above the Fed's 2% target, and some have doubted Warsh’s commitment to the cause. He was picked by a President clamouring for lower rates, and had even floated moving the Fed to a new way of measuring prices.

At Jackson Hole, he changed his tune.

“There should be no misunderstanding: The Fed's price-stability objective of 2%, as measured by the personal consumption expenditures (PCE) price index, is a firm, fixed target.” — Kevin Warsh

Strange that a Fed Chair should need to say that out loud to a room full of central bankers. But here we are.

PCE inflation remains stuck at 3.7%, coming in above expectations for July, and Warsh didn't pretend otherwise. He was "impressed by the overall performance of the economy," but on inflation stressed "the numbers are more concerning". Weighing up the dual mandate — stable prices and maximum employment — he said “the Fed's predominant focus right now should be on prices.”

Inflation is a bit like a pet wasp. You can carry it around for years, convince yourself it's tame, even grow rather fond of it. But wasps are never tame.

Lost for words

Today’s speech was an improvement on Warsh's last public outing. At his July press conference, he declined to explain the rate decision, gutted the Fed's forward guidance, and swatted away every question about what he'd do if inflation reignites. That's less communication than John Lubbock attempted with his dog.

Bond markets took it as a sign he wasn't serious about fighting inflation, and sold off hard. The initial reaction to today's speech was more positive.

At Jackson Hole, Warsh acknowledged the criticism over his communication style... up to a point. He joked his remarks are an "outline", or a "trail map" — "just don't call it forward guidance."

Whatever the label, markets would rather like to know what the world's most important central banker thinks. No such luck. Warsh remains committed to "a quieter Fed".

“Transparency in communications about future policy decisions is not a virtue unto itself. Communications must be in service to the Fed's paramount responsibility: getting monetary policy right.” — Kevin Warsh

Weimar-a-Lago

Perhaps getting monetary policy right is being made harder by the government itself.

The Treasury has begun supersizing its bond buybacks at the long end in an attempt to improve liquidity and steady yields — a job traditionally reserved for the central bank in the way that flying the plane is traditionally reserved for the pilot.

Warsh needs to demonstrate that the Fed remains in sole command of monetary policy despite someone else having a hand on the controls.

“Short-term interest rates are the predominant tool to achieve the dual mandate. Unconventional policies to spur economic activity may suit genuine crises but should otherwise be used sparingly, if at all.” — Kevin Warsh

Handy, then, that the Treasury is willing to deploy them on his behalf.

Meanwhile, President Trump has identified a gap in the Treasury's toolkit. Asked about the bond sell-off, he offered markets some forward guidance of his own: "The ultimate intervention is our military. And if we have to use that, we will."

Yes, he threatened to bomb the bond market. To be fair, many Presidents must have been tempted.

Warsh favours conventional weapons.

“We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do.” — Kevin Warsh

Nineteen days until the Fed's September meeting. Markets reckon a hike is a coin toss. Bring a helmet.

___

PS. If you're at a loose end this Bank Holiday, why not visit the Natural History Museum? Look carefully and you might just see the remains of Lubbock's pet wasp.

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NEWSBITEs

The US–Canada trade war escalated sharply. Trump’s threatened tariffs suddenly became real after a last-minute breakdown in talks, with $20bn of Canadian goods now subject to 50% duties. Canada said it will match US tariffs “dollar for dollar” from 8 September, taxing 700-plus imported products at 15–50%. "You're at war when you get attacked," PM Carney said. Canada, notably, did not apologise.

European gas prices hit their highest level since early 2023. Dutch TTF futures climbed above €68/MWh as the bloc struggles to refill storage that’s just 63% full, against a five-year average of 82% for the time of year. A cold winter could push prices past €100/MWh for the first time since the 2022 energy crisis. Winter is coming; Qatari LNG cargoes are not.

Gold and bitcoin are having a stellar month. Bullion topped $4,700/oz, up 14% in August and on course for its best month since September 1999. Meanwhile, bitcoin topped $81,000, around a 25% monthly gain. The debasement trade is back, with government intervention in the Treasury market unnerving investors. A lot of fuss over a routine liquidity operation, no?

Nvidia doubled its revenue year on year. Second-quarter sales reached $96.2bn, up 106%, as data-centre revenue beat estimates. Shares rose over 5% after hours on strong guidance. Forget Moore’s law. We’re now running on Jensen's law: revenue doubles every twelve months.

Meta shares rose on a record $18bn settlement with 48 US states. The company agreed to pay $12.7bn over ten years for endangering children, with a further $5.3bn due if rivals YouTube and TikTok agree to pay the same. The settlement eclipses the $5bn Facebook was fined in 2019 for violating consumers' privacy. Investors welcomed the certainty, with the deal far short of the worst-case $1.4tn penalty. Move fast and settle things.