Investor Sentiment on the Fed and New Chair Kevin Warsh
At the end of June, we ran a mid-year survey of Bespoke’s client base of incredibly smart investors (of course!). It’s a helpful way to get a near real-time gauge on investor sentiment across a number of important topics. If you’re not yet a Bespoke subscriber and want to read the full summary report, you can start a trial to any of our three membership levels. One section of the survey that’s timely because of recent changes at the top is the Fed. We asked clients for their opinion on new Fed Chair Kevin Warsh, how much credibility the Fed has, and whether the Fed’s next move will be a rate hike or cut.
Below we share the results of our Fed questions and how they compare to readings taken at the end of 2025 when Chair Powell was still in charge.
In terms of job expectations for Chair Warsh, 61% expect him to do a better than average job, with 45% saying “good” and 16% expecting “excellent.” 32% said Warsh will do an average job, while just 7% think he’ll do a below-average job. Those are pretty solid expectations for the new Fed Chair.
At the end of 2025, 61% also said Powell was doing an above-average job, while 15% said below average.
While futures markets are pricing in odds of a hike later this year, our survey-takers think the opposite will occur first. We asked clients which will happen first when it comes to the Fed’s interest rate policy, a hike or a cut?
As shown below, 56% of investors think a cut will happen first compared to 44% that chose a hike.
In addition to asking about Warsh’s job expectations, we asked clients for their current view of the Fed as an institution.
At the end of 2025, 23% said the Fed was “highly competent and independent.” That number came in roughly the same as of mid-year at 22%. The percentage that said the Fed is “generally competent but occasionally political” received the highest vote count at 46%, up 7 percentage points from a reading of 39% at the end of 2025. 18% said the Fed does an average job that does more harm than good sometimes. That’s down from 24% at the end of 2025.
In terms of direction, the numbers show that the Fed received a small bump in confidence in the first six months of the year as leadership at the top changed.
Our final question asked survey-takers to rank the Fed’s credibility with markets and investors. A reading of 1 equals zero credibility compared to 10 for rock-solid credibility.
As shown in the chart below, comparing results from the end of 2026 with mid-year 2026, Fed credibility has jumped a bit as Warsh takes the helm. We saw a slight uptick in 8s and 9s compared to a downtick in 7s, and the number of 1s, 2s, 3s, and 4s went down while 5s and 6s jumped.
Based on our mid-year survey, investors appear to be giving the Fed a clean slate as Warsh takes over for Powell with generally positive expectations. Our client base of investors also appears to have a different view on the future direction of the fed funds rate than current futures pricing, with a higher percentage expecting the next move to be a cut rather than a hike. If we don’t end up getting cuts, Fed sentiment could certainly change quickly.
If you’re already a subscriber, you can read our full Mid-Year Investor Survey report here. If you’re not yet a subscriber and would like to read it, simply start a 30-day trial to any membership level here or by clicking the thumbnail below.
Bespoke’s Morning Lineup – 7/10/26 – Slow Friday
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“A well adjusted person is one who makes the same mistake twice without getting nervous.” – Alexander Hamilton
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
With the July 4th weekend behind us, summer is in full-swing, and the season of slow summer Fridays is upon us. Futures on the S&P 500 are down less than 0.1% while Nasdaq futures point to a decline of less than 0.4%. The 10-year yield is unchanged at 4.54%, crude oil is up less than 1%, and gold is down less than 1%. The only thing really moving this morning is Bitcoin, which is up 2% to $64,400.
Asian markets were mostly positive overnight with Japan rallying 1.2% and South Korea rising 2.5%, but the gains were not enough to bring either index into the black for the week. Chinese stocks bucked the positive overnight trend, falling 1%, but that only took the weekly decline to 1.2%.
In Europe, stocks are modestly higher across the board, putting a dent into the weekly losses. Outside of Italy, which is on pace for a decline of less than 0.5%, other major benchmarks in the region are down at least 1.5% for the week.
Earnings season kicks off in earnest next week as 31 companies in the S&P 500 will report earnings. Of those, 18 are from the Financials sector, and based solely on the sector’s performance to start the quarter, expectations are relatively high. With a gain of 3.49% QTD through yesterday’s close, Financials are the top performing sector this quarter, edging out Communication Services and Energy. Along with those two sectors, four other sectors have managed gains, indicating that breadth has been decent. To the downside, Industrials have been a weak spot, falling 2.28%, while Materials, Technology, and Utilities all have losses of between 0.5% and 1.0%.
Of the Financials reporting next week, all six of the major banks and brokers will report Tuesday and Wednesday. Except for Wells Fargo (WFC), all of these stocks are up YTD with Citi (C), Goldman Sachs (GS), and Morgan Stanley (MS) all rallying roughly 20% or more.
Looking at each stocks performance over the last year shows a similar pattern where most of them have been in steady uptrends with all of them just marginally below 52-week highs. Again, the one exception is WFC which always seems to be bringing up the rear when it comes to the banks stocks.
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The Closer – Fed Task Force, Golden Cross, Housing – 7/9/26
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- The first insights into Fed Chair Warsh’s planned “task forces” examining Federal Reserve communications, balance sheet policy, data, productivity, and jobs and inflation frameworks have been released.
- Today saw a rare instance of multiple sectors, Financials and Health Care, simultaneously experiencing golden crosses.
- Existing home sales slumped in June as sales volumes remain abysmally low despite rising inventories and improving affordability.
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Bespoke’s Weekly Sector Snapshot — 7/9/26
Chart of the Day: AI Indicators
Selling Winners, Buying Losers
As shown in the snapshot below from our Trend Analyzer tool, Technology has fallen 4.8% in the first week of the second half (5 trading days), ranking it as the worst performing sector so far this month.
Industrials (XLI) is down the second most at -2.6%, followed by Consumer Discretionary (XLY) at -1.7% and Materials (XLB) at -1.3%. On the flip side, Consumer Staples (XLP), Communication Services (XLC), Health Care (XLV), Financials (XLF), and Energy (XLE) have all gained more than 1%, led by Energy (XLE) at +4.7%.
July’s action has been purely rotational thus far. There were 22 stocks in the S&P 500 that more than doubled in the first half. So far in July, these 22 stocks are down an average of 16.3%, with 20 of 22 in the red. The remaining 478 stocks in the S&P are up an average of 0.9% this month.
As shown below, the six S&P 500 stocks that gained more than 250% in the first half are down at least 10% so far in July for an average drop of 18.3%!
There were 29 S&P 500 stocks that fell 20%+ in the first half, and as shown below, 26 of them are up so far in July for an average gain of 5.3%. Only one of the 16 worst performing stocks in the first half is down so far in July, and that’s Lululemon (LULU) with a small drop of 0.5%.
The six stocks that were more than cut in half in the first half have all bounced at least 3% in the second half, with Accenture (ACN) up the most at 10.2%.
Given the huge performance divergences seen so far in July, it’s pretty clear that a lot of the move can be attributed to large investors and ETFs rebalancing their portfolios by selling winners and buying losers. We wouldn’t read too much more into it.
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Bespoke’s Morning Lineup – 7/9/26 – Roles Reversed
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“The most successful people in the world aren’t usually the brightest. They are the ones who persevere.” – Ross Perot
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Even with the US launching a new round of airstrikes overnight and Iran responding with drone attacks on US bases in the Middle East, Us equity futures are mostly higher this morning with the Nasdaq rallying more than 75 bps and the S&P 500 up a more modest 0.2%. Treasury yields are little changed, while crude oil is only fractionally higher with WTI trading at just under $74 per barrel. Worried about the Middle East, the markets are not.
Asian markets were mostly higher overnight with South Korea finishing 0.6% higher. It isn’t often lately, that the index hasn’t experienced a daily move of at least 1%, so that’s noteworthy itself. Japan rallied 1.4% while Chinese stocks led the move higher with the Shanghai Composite rising 1.7% after CPI for June showed a larger than expected decline.
In Europe, most indices are seeing fractional gains. The STOXX 600 is barely higher, but Spain is more than 1% higher after President Trump softened his tone on the country in a gaggle with reporters on Air Force One last night.
In the US today, there’s not a lot of earnings news to speak of yet, although Pepsi (PEP) is lower even though the company reported better than expected EPS on inline revenues. The only reports on the economic calendar today, and the remainder of the week for that matter, are jobless claims at 8:30 and then Existing Home Sales at 10 AM.
How you feel about the market after the first few days of Q3 says a lot about how you did in the first half. If you’re starting to feel a renewed sense of optimism, you probably had a rough first half, whereas any doubts or nervousness likely means you had a great first half.
Let’s start with sector performance. The table below, a snapshot from our Trend Analyzer, shows the performance of each sector ETF on a YTD basis and over the last five trading days (the first five trading days of Q3). Three of the four worst performing sectors so far in Q3 are among the top four performing sectors YTD. The only exception is Consumer Discretionary which is the third worst performing sector QTD and the second worst performing sector YTD. At the other end of the performance spectrum for Q3, most of the top performing sectors have been laggards on a YTD basis. The only exception here is Energy. Not only is it the best performing sector on a QTD basis, but it’s also the best performer on a YTD basis.
The scatter chart below provides a visual representation of this trend. With the x-axis showing YTD performance and the y-axis showing performance QTD, there is a clear trend from the top left to the bottom right. Again, the outlier here is Energy in the top right.
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The Closer – Credit Down, Ags Up, Stockpiles – 7/8/26
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- At the margins, today’s release of the Fed Minutes showed more hawkish tones than markets expected.
- Federal Reserve estimates for total consumer borrowing came in far below estimates as balances fell by $182mm MoM versus the $17.5bn growth expected.
- Crude oil continues to experience historic drawdowns as product exports register record surpluses and production remains well below historically strong levels.
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