Weekly Macro Outlook: The End of "Easy Money"
The market’s recent aggressive pivot away from high-growth stocks isn't just a fluke—it’s a warning shot. As we look at the shifting landscape, the "Free Money" era is officially hitting a wall.
The Warsh Factor
The nomination of Kevin Warsh as Fed Chairman is a regime-shift signal. Unlike his predecessors, Warsh is a known skeptic of Quantitative Easing (QE). His leadership likely signals:
The death of the "Fed Put": No more liquidity injections at the first sign of a dip.
Structural Headwinds: High-growth stocks, which thrive on low discount rates, will face significant valuation pressure.
A "Higher for Longer" Reality: Without the crutch of QE, capital discipline becomes the new mandate.
The Great Rotation: RSP vs. SPY
This isn't a prediction—it's already happening. If you look at the performance since October, the Equal-Weighted S&P 500 (RSP) has been consistently outpacing the Market-Cap Weighted S&P 500 (SPY).
October – January: The trend is clear; the market is broadening out.
The Verdict: Value stocks and cyclicals are finally taking the driver's seat as the tech-heavy "Magnificent Seven" trade cools off.
Expect this trend to be the dominant theme for the remainder of the year. The era of "growth at any price" is over; the era of value has arrived.
