Hello there.

TGIM (we’re trying to be more positive). So this Warsh guy: We’re totally sure he’s not Powell in disguise?

It’s starting to seem like once someone gets in the Fed and actually looks at the data, they keep coming to the same conclusion. It do be like that sometimes. 🤷

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The Fed just wrapped its first meeting under new chair Kevin Warsh, and surprise, surprise: they’re not cutting rates… and they might even raise them.

The Fed kept rates right where they are (between 3.5% and 3.75%), which wasn't a huge surprise. But now, nearly half of the Fed's voting members said they'd be down to raise rates before the year ends. That's a complete 180 from just a few months ago when most of them were planning to cut rates. Stocks immediately took a hit, with the S&P 500 dropping over 1% and the Nasdaq falling even harder.

Warsh also made the Fed's statement way shorter (like, Tweet-tier) and got rid of that language that basically said: "we're probably gonna cut rates eventually." He's calling it a simpler approach. SO, the Fed isn't making any promises about what they'll do next, and they want you to stop trying to predict their moves, thank you very much.

The real issue here is inflation. It's been stuck above that 2% target for over five years now, and the Fed just raised its year-end inflation forecast from 2.7% to 3.6%. That's... not great! Warsh says they're committed to getting prices under control, but with energy prices still elevated from that 3-day excursion in Iran, it's gonna be a bumpy ride.

To sum it up: rate cuts are no longer the default expectation from the new Fed. If your portfolio was built on the idea that cheaper money was right around the corner, it might be time for a quick reality check.

Speaking of energy prices, there's actually some decent news for once. After months of pain at the pump thanks to the Middle East conflict, oil prices have started sliding back down. The ceasefire deal between the US and Iran sent prices tumbling to a three-month low, and analysts are saying supply should recover faster than expected.

That’s a big deal. As you’ve no doubt felt by now, oil isn’t just about what you pay at the pump. It feeds into airline tickets, shipping costs, groceries, basically everything. When oil spikes, inflation follows. When oil cools off, it gives the Fed a little breathing room (theoretically, see above).

Now, before you start celebrating, the experts are warning that getting back to normal is gonna take a long time. The infrastructure across the region took a beating, and rebuilding supply chains isn't like flipping a switch. Goldman Sachs and other big banks have cut their oil price forecasts based on faster-than-expected recovery, but "faster" is relative when we're talking about one of the most complicated industries on the planet.

So (again, theoretically) gas prices should keep trending down, which helps consumers and businesses, and even the Fed’s efforts to tame inflation. But don't expect prices to magically return to pre-war levels overnight. Oil headlines move fast. One week, it’s global chaos. The next week, analysts are trimming forecasts. Staying flexible matters way more than reacting emotionally to every spike.

Right now, the market is trying to decide which story wins: sticky inflation and higher rates, or cooling energy prices and a less aggressive Fed.

Whiplash summer, boys.

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That’s all for today. Write us and let us know your thoughts on the market, the newsletter, or the weather—we’d just love to hear from you.

Till next time,
— Brandon and Blake with Invested Inc.