Jasper has a trick…
When he wants a treat but knows he's not supposed to have one, he doesn't beg.
He just sits by the cupboard door… perfectly still… staring at it.
Not asking, just waiting.
Like if he's patient enough, the treat will decide to give itself to him.
That's roughly the strategy Wall Street has been running on the new Fed chairman for the past three months.
Kevin Warsh took over the Federal Reserve in May.
He was Trump's pick, and Trump made no secret of why - he wanted someone who'd cut rates, and do it quickly.
The market priced that in almost immediately… because lower rates mean cheap money mean rising stocks.
Then Warsh held rates, not once but twice.
Now JPMorgan's economists are telling clients something that would have sounded absurd just a few months ago…
Rates might not move again until mid-2027… and when they do move, the next direction could be up, not down.
Which puts investors in a sticky situation…
Because rates aren’t high enough that a flight to safety becomes a no brainer…
Fidelity and Schwab’s money market funds are paying around 3.5%… with 3 month T-bills paying a tad more at 3.78%…
So you’re at the barely-keeping-up-with-inflation level…
But rates aren’t getting towards the sub 3% dreamland that many people expected…
However you gotta zoom out more than 5 years for some proper context here…
The current Fed rate is 3.63%, that’s historically very low. Entire bull markets have run when rates have been at that level.
Plus you’ve still got over $2 trillion of retail investor cash sitting in the money market now looking for somewhere to go…
If that ain’t bullish then I don’t know what is.
Plus in the meantime, if you’re a Schwab or Fidelity customer you can use that money market cash to secure put options… giving you an extra bump in income. Seems like a no brainer to me…
Oliver