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We Have a New Fed Chairman, What Does That Mean for Our Investments?

  • This week we’re focused on three major topics: the new Federal Reserve chairman, Nvidia’s surprising market reaction, and what’s being called the “K-shaped consumer.” 
  • Kevin Warsh is now the new Federal Reserve chairman after replacing Jerome Powell. 
  • President Trump wants lower interest rates to help boost the economy. 
  • The challenge is that Kevin Warsh has historically been known as an inflation hawk. 
  • In other words, he has generally favored higher interest rates, not lower ones. 
  • When this process first began, markets expected aggressive rate cuts this year. 
  • In fact, markets had already priced those expected cuts into stock prices. 
  • But everything changed after inflation started heating up again following the Iran conflict. 
  • Last week’s CPI and PPI numbers showed inflation accelerating across multiple sectors. 
  • Because of that, the futures market is now signaling more than a 50% probability of rate hikes by December. 
  • That is a dramatic shift from where investors were just a few weeks ago. 
  • We’ve gone from asking “when will rates be cut?” to asking “will they raise rates instead?” 
  • A lot now depends on whether the war and oil-related inflation pressures ease. 
  • If oil and gasoline prices come down, inflation could cool and rate cuts could come back into play. 
  • But right now, there is a lot of uncertainty surrounding what the Fed will do next. 
  • The second big story this week was Nvidia. 
  • Nvidia tripled its earnings in a single quarter, which by almost any measure should have been incredible news. 
  • Yet despite those massive earnings, the stock price actually fell. 
  • That is important because Nvidia is essentially the poster child for the AI boom. 
  • Historically, when the best company in the hottest sector reports incredible results and the stock still falls, that can be a warning sign. 
  • It suggests expectations may have become unrealistically high. 
  • We saw similar behavior during the dot-com era. 
  • Early in a bull market, investors are irrationally exuberant. 
  • But eventually reality starts catching up with expectations. 
  • That does not mean AI is not transformative. 
  • AI could absolutely become one of the biggest productivity advances in history. 
  • But even great technologies can still experience major market corrections along the way. 
  • So Nvidia’s reaction may represent a small dark cloud on the horizon that we need to monitor carefully. 
  • The third important topic is the rise of the “K-shaped consumer.” 
  • The upper part of the “K” represents wealthier consumers. 
  • Higher-income households are generally doing very well because their investments and net worth continue rising. 
  • The lower part of the “K” represents middle and lower-income consumers who are struggling more with inflation. 
  • Rising gasoline prices and higher everyday costs are eroding purchasing power for many Americans. 
  • Major retailers including Walmart, Target, Home Depot, and Lowe’s are now warning about potential financial distress among consumers. 
  • Since the consumer drives roughly 70% of the economy, that is something we take seriously. 
  • If consumers begin pulling back spending, that can become recessionary. 
  • When you combine weakening consumer spending with potentially higher interest rates and elevated AI-related stock valuations, we begin to see potential storm clouds building. 
  • That does not mean we are panicking or making drastic moves right now. 
  • We still believe there is room for the market to run further from here. 
  • But it does reinforce why having a disciplined process matters. 
  • Our Invest and Protect strategy is designed specifically to help protect retirement portfolios from catastrophic losses. 
  • Large losses near or during retirement can dramatically impact your ability to retire comfortably or stay retired. 
  • That is why protecting principal remains so important. 
  • We want you to have peace of mind knowing there is a process in place if conditions deteriorate. 
  • Our goal is for you to enjoy your Second Childhood Without Parental Supervision while we do the worrying for you. 

 

 

Transcript:

Hello everyone, and welcome back to our weekly market alert video for today, which is may 22 2026 And I hope this video finds you healthy, wealthy, and wise. We have three very important topics to talk about. The first one is we have a new Fed chairman, Kevin Warsh. What’s that all about? Is he going to do what President Trump wants, or is he going to do what the market wants? We’ll see who wins out in that, and he’s stuck in the middle. The market wants this, Donald Trump wants that. What to do? I’m so confused. So we’re gonna talk about that. The other thing that was very interesting this week is that Nvidia came out, and get this, they tripled their profit, tripled, I mean, in one quarter, bam, and yet their stock price went down. How on earth did that happen? And what does that mean going forward? And then finally, we’re going to talk about a term that you’re going to hear more and more of, if you haven’t already, and that is that we have now a K-shaped consumer. So I want you to visualize a consumer and see how on earth would a consumer be K-shaped. Well, I’ll answer that one, because it is important, since the consumer is 70% of our economy, and how they spend drives profits and everything else. So, we got a show chalk, or a weekly market alert, chock full of info for you. But before we get going, and I apologize for this in advance, but you’re going to have more fun with this than a human being is allowed to have. So, my wife, my beloved and most beautiful, and she’s the smartest person in the world. And what other things can I say nicely, so I don’t get in trouble for this? Right, you got to butter her up before you deliver the so yeah, she is so smart, she’s so beautiful, she’s such an incredible person, and against my significant protestations, has decided that she’s going to get a cat, and I’m like, at this stage of our life, what on earth do we need a cat for? Well, she apparently thinks that it’s really important, so she got a maine coon or a maine coon, and I think last week we showed you a picture of what a maine coon looks like. These are small dogs, okay? They’re not cats, they’re this big, and the one we got is a kitten, and he’s already like this big. But I want to share with you a video here that I think you’ll get a kick out of, where my dog, Noodle, who is a 75 pound Schnoodle, meets Toby the main coon, and by the way, just in case you didn’t know, the his, his name is Toby, you know why, because he has six toes, so get it, Toby. Anyway, so Toby and Noodle get to meet each other, and I just want you to see it’s actually quite comical, so I’ll give it this a moment, so you can watch it, okay? So now you see they actually get along with each other, so that’s not bad at all, is it? It’s a good thing. So, anyway, let’s talk about, okay? And by the way, I just want to, before we get started, I want to give a shout out to SCWPerS Nation out there, all of you who are enjoying your retirement. I hope this summer you are going to go out there and SCWPerS your little tails off, and don’t worry about it. We got a crew to clean up. We’ll go get all those tails. We’ll give them back to you later. You just go enjoy, have fun, enjoy your second childhood without parental supervision. And for all you clients that are still toiling and working away, our goal is to get you to retirement, to make you a squipper, so that you can go and have as much fun as is humanly possible with all the things that you want to do, so we have that all we want to do that for you. So, let’s talk about the new Fed chairman. So, Kevin Warsh, on may 15, Jerome Powell was out, and Kevin Warsh is now the new Federal Reserve chairman. So, who is this guy? The interesting thing about Kevin Warsh is that President Trump wants him to be the Federal Reserve chair. He nominated him, and he’s just been appointed. He’s the Fed chair now. Trump wants him to lower interest rates. Kevin Warsh is notoriously what’s called a hawk. He’s a guy that thinks we should raise interest rates all the time, so we start off with a guy that Trump wants that has a history of not doing what Trump wants him to do. The other thing is that when he was put in there, the expectation when all this process started was that we’re going to lower interest rates, and that he’s the guy that’s going to come in and slash rates left and right boost the economy, and we’re going to see all kinds of growth, and this is fantastic. And in fact, the stock market actually priced that in, as we’ve talked about on previous Mark Alert videos. So here we have a situation where he was brought in to lower interest rates, we had the possibility, the 60% chance of. Lower interest rates, and everything looked like it was headed in the right direction until the Iran war, and now all of a sudden inflation is heating up in all sectors. We talked about that last week when the CPI and the PPI numbers came out, so all of a sudden now the futures market, there’s an over 50% probability that they’re actually going to raise interest rates in December. Okay, not lower them. So, we’ve gone from when will they cut to are they going to raise, and you know, with inflation rising and all that, the chances are that interest rates will go up. So, we have a stock market that priced in lower costs of money, higher profits because of that, and now that’s slowly being taken off the table with the inflation we have. So the question is, will the war end? Will the embargo end? Will oil prices come down? Gas prices come down? Inflation come down? And now we go back to lowering interest rates. Too much for me. I don’t know. We’ll just have to wait and see what happens, but that’s kind of the drama that’s happening right now on the Federal Reserve. What do they do? So that’s the first thing we have. The second thing, as I mentioned, is Nvidia. Now you know Nvidia is like the poster child for the whole AI thing, right? Their stock price has gone up, you know, massively over the last few years, and it’s the, like I said, the poster child for the whole artificial intelligence boom, and all the chips and everything else that’s going on. So they came out and announced their earnings, they tripled, tripled their earnings, and yet what happened was, I mean, by every measure their stock price should have gone up, right? It was a surprise, it was a shock. Nobody expected triple, but yet the stock price went down. Why? Well, when the best company in the hottest sector of the stock market comes in, and their stock falls. Usually, what that means is, is that expectations are so far over here that they came in here, but because they missed expectations, people said, you know, these guys suck, let’s sell the stock, we can’t do, and this historically is not the beginning of a bull market, it’s usually the story that comes towards the end of a bull market. Why? Because at the beginning everybody’s super, you know, they’re they’re irrationally exuberant, they think all this good stuff is going to happen, and then little by little, as reality sets in and these overly high expectations start to not be realized, then we start seeing the stock market pull back on these stocks, and that’s exactly what happened with Nvidia. So that’s a little dark cloud on the horizon that we need to watch now. The other thing that you’re going to hear a lot of, and it’s apparently something that you know I’m hearing it all the time, but maybe you have it, and that is that the consumer is now K-shaped, all right. So, I want you to picture the letter K and picture how can a consumer be K-shaped. Well, the reason why they’re saying that is because what’s happening is that if you think of the K, there’s an upward line and there’s a downward line, and the upward line is the higher income consumers, they’re doing very well, stock markets doing well, they’re making lots of money, their stock, their net worth is rising, and they’re spending more money on the lower end of the economic spectrum, you see that going down, why, because inflation is affecting the smaller consumer, shall I say, the less wealthy consumer, and so that consumer is slowly seeing, with inflation, gas prices, all that kind of stuff, it’s eroding their purchasing power, and so they’re starting to come down, and in fact, Walmart, Target, Home Depot, Lowe’s, pretty much all of them said that we may be navigating financial distress. Okay, very politically correct way of saying guys, we’re headed for rough waters now. Again, the consumer is 70% of our economy, and if they’re starting not to shop at Walmart and Target and Home Depot and Lowe’s or less, because they’re feeling the pinch that could be recessionary, that could be bad news. You couple that with the Fed raising interest rates, and you couple and you triple that with the stocks that are driving the stock market, which is, you know, the AI stuff. We can see some dark clouds here appearing on the horizon that may come home to roost, so what does that mean to us? Well, it means that we’re going to stay put for the time being, because we still think there’s there’s room to run, and so we’re not going to panic or anything and try to get ahead of this, but the good news for us is what gives me peace of mind is. Is we have our invest and protect strategy, our process of protecting your retirement from catastrophic losses, and to me that’s the most important thing. You know, if you experience a large, large loss in your retirement portfolio, then your ability to retire when you want to, your ability to stay retired, all of that is impacted negatively, and we want to protect you from that, and I hope it gives you the peace of mind that I have, knowing that we have this process in place, and if bad things come, we’re going to take evasive action to the extent that we can to protect you, and that way you can go out and enjoy your SCWPernesS, your second childhood without parental supervision. Go play, let us get the gray hair for you, don’t worry about it. Let us worry about it for you. So that’s our weekly market alert for this week. I hope you enjoyed the video of Noodle and Toby. It’s great. So thank you for watching. I hope this video found you healthy, wealthy, and wise. Make sure you share this with your friends, your family, anybody that you think could benefit from it, and we’ll talk soon. 

 

Economic indicators and stock market performance cannot be predicted. Opinions expressed regarding the economy and the stock market belong solely to employees of RPOA on behalf of Retirement Planners of America and may not accurately portray actual future performance of the economy or stock market outcomes. Opinions expressed in this video is intended to be for informational purposes only and is not intended to be used as investment advice for individuals who are not clients of Retirement Planners of America. All content provided is the opinion of employees of RPOA Advisors, Inc. (d/b/a Retirement Planners of America ) (“Retirement Planners of America”, “RPOA”). ©Copyright 2026