Editor’s Note: For nearly 50 years, Louis Navellier has studied Federal Reserve cycles and the way they reshape leadership in the stock market. Over that time, he’s developed a reputation for identifying major trends early — especially in smaller, fast-growing companies that tend to benefit most when monetary conditions begin to loosen.
Right now, Louis believes Wall Street may be underestimating what’s developing behind the scenes at the Fed.
I’ve invited him here today to explain why two men connected to one of the most famous trades in financial history — the 1992 collapse of the British pound — may soon play a major role in shaping the next phase of U.S. monetary policy. Louis also explains why he believes this shift could create a rare opportunity in small-cap stocks, and why he’s preparing to discuss it in much greater detail , where he’ll also share one stock recommendation with attendees.
This is your last chance to sign up.
Here’s Louis…
On September 16, 1992, the British government was fighting for its financial life.
For months, currency traders had been circling the British pound. The pound was pegged to European currencies at a rate most believed was indefensible. The U.K. economy was weakening. Inflation was high due to economic growth in Europe after the fall of the Berlin Wall.
The math didn’t work. And one man – George Soros – decided to bet on it.
What followed was one of the most spectacular days in the history of global finance.
Soros shorted $10 billion worth of the British pound.
The Bank of England fought back by buying pounds by the billions. It raised interest rates twice – from 10% to 12%, then to 15% – in a single day in a desperate attempt to defend the currency.
But it didn’t work. By the evening, it was over.
The British government surrendered. It unpegged the pound from Europe and later began a series of cuts, bringing its interest rate down to 6% by early 1993, leading to an economic recovery.
As for Soros, he made more than a billion dollars in a single day. The date went down in history as Black Wednesday.
I’m sure a lot of you folks know that story. But I bet not all of you know who else was in the room.
You see, two of the men connected to that trade are about to be in charge of American monetary and fiscal policy simultaneously. And I don’t think most investors have connected those dots yet.
I’m talking about Treasury Secretary Scott Bessent and Kevin Warsh, the incoming Federal Reserve Chair.
I’ve been at this for nearly five decades. I’ve seen every market cycle and every Fed regime come and go. And I want to tell you directly: I think this combination is very good news for your portfolio.
In this piece, I’ll explain the connection between Bessent and Warsh – and why I think it’s good news for investors. I’ll also give you my prediction for the Fed’s next move and how to be positioned before everyone else catches on.
I’ll also be going deeper at my later today at 1 p.m. Eastern, where I’ll share my highest-conviction picks and a free stock recommendation just for attending. (It’s only a few hours away. )
What the ÃÛÌÒ´«Ã½ Is Missing
Our Treasury Secretary – Scott Bessent – was part of the team that pulled off the Bank of England trade for Soros.
Kevin Warsh comes from the same world. After leaving the Fed in 2011, he went to work with Stanley Druckenmiller, the trader who actually executed the Black Wednesday trade. Druckenmiller and Bessent have remained close ever since.
These two men know each other, they trust each other, and they are operating from a shared playbook. And that playbook calls for lower rates.
Warsh has been a big critic of the Fed for years. He doesn’t like quantitative easing – the money printing that has ballooned the Fed’s balance sheet to nearly $7 trillion. But he also believes AI-driven productivity gains are fundamentally deflationary (meaning they’ll lower prices).
Bessent, meanwhile, is one of the most capable economic minds in Washington. He has publicly called for 150 basis points in reductions — that’s 1.5% — and he is fully aware of the mounting debt burden the country carries.
I believe he and Warsh are going to work together, and I believe they are going to move faster than the market expects.
How We Can Profit From the New Fed Regime
I’ve seen this movie before. Four times, to be precise.
Every time the Fed opens a sustained rate-cut cycle, the same dynamic plays out: smaller, domestically focused companies — the ones most sensitive to borrowing costs and most leveraged to U.S. economic growth — become the biggest winners. Not immediately. But consistently, and dramatically.
Here’s what happened the last four times:
- 1995 Fed pivot: Cisco +2,062%. Ascend +2,800%. AOL +2,900%.
- 2001 rate cuts: Frontline +1,513%. Hansen Natural +1,125%.
- 2008 rate cuts: Lithia Motors +475%. IPG Photonics +665%.
- 2020 COVID cuts: MARA Holdings +1,800%. Moderna +1,200%.
Different stocks. Different sectors. Same dynamic every time.
Now, I’m not naive about what we’re dealing with. There’s a war on. Inflation is still a factor. The Fed moves more slowly than anyone wants, and Warsh will need to build consensus on a 12-person committee.
This isn’t going to happen overnight.
But the direction is clear. The players are in place. And history says this is how it plays out.
The Exclusion List
My Stock Grader system has already been running throughout this early phase of the cutting cycle – and it has flagged 53 stocks showing the same early signals I’ve described in every prior window.
Strong fundamentals. Building institutional buying pressure. Consistent top rankings in my eight-factor model month after month.
I call it the . These are stocks that are too small for the big Wall Street funds to touch — but not too small for you.
Today at 1 p.m. Eastern, I’m going live to share my highest-conviction picks from that list. The are the names I believe are best positioned for what’s coming. I’ll also give away a free stock recommendation just for attending.
Get locked in.
Remember the event is only a few hours away, so this is your last chance to sign up.
I’ll see you there.
Sincerely,
Louis Navellier
Senior Analyst, InvestorPlace
