Why he might surprise us tomorrow. Hello and welcome to the newsletter, a grab bag of daily content from the Odd Lots universe. Sometimes it’s us, Joe Weisenthal and Tracy Alloway, bringing you our thoughts on the most recent developments in markets, finance and the economy. And sometimes it’s contributions from our network of expert guests and sources.

We are hosting our first ever Odd Lots live show in Los Angeles this Thursday! Join us on the evening of Sept. 17 at The Vermont for some live episode tapings and a chance to hang out with us and fellow Odd Lots listeners. Tickets will probably sell out so make sure to get yours today!

Tomorrow we’ll get the highly-anticipated September FOMC decision and traders basically have a lock on a hike, with market-implied odds of a rate rise currently sitting at more than 90%. As my Bloomberg colleagues point out, history has shown that the Fed tends to deliver hikes when market expectations are that high. That said, it’s clear to me that the past might not have much application here. And there are some reasons to believe that the Fed, under new Chairman Kevin Warsh, could surprise markets. Here’s Standard Chartered analyst (and Odd Lots guest) Steve Englander arguing that there is a logical case for the Fed to hold rates tomorrow.

There are other reasons not to hike too. As we’ve said plenty of times on the show, the real world works through incentives. And there are a couple of important incentives at play right now (even ignoring any political pressure from the upcoming midterms). Perhaps the worst outcome for a Warsh-led Fed would be to hike tomorrow, only to be forced to backtrack shortly after with a cut as the data improves — a scenario which could create concerns over a “very unsteady hand on the tiller” of US monetary policy, as Englander puts it.

Then, there is Warsh’s whole view of the market itself, with the Fed Chair explicitly pushing back on a co-dependent relationship between markets and the central bank: “If markets rely materially on the Fed’s guidance and the Fed relies on market prices, we are all more likely to be blinded to new developments,” Warsh has said. Being seen to ‘validate’ market expectations at a time when there’s still a decent amount of debate about what the data is showing, would be a strange thing for Warsh to do so early into his tenure. To sum it up, the market seems to be screaming for hikes, the data still shows some wriggle room for a hold, and the Fed Chair says he’s not here to just agree with the market. That seems less like a lock and more like a very open question to me.