The Fed Should Raise Today. Warsh Probably Won’t.

The Federal Reserve announces its decision today at 2:00 p.m. ET, followed by Kevin Warsh’s press conference at 2:30.

Usually, the outcome is effectively decided before the meeting begins. The Fed leaks its intentions through speeches, friendly reporters, and carefully engineered market expectations. Everyone acts surprised when the statement arrives, even though the decision was telegraphed weeks earlier.

This meeting is different.

The consensus is still for no change. A recent survey found all 104 economists polled expected the Fed to hold. But whispers of a surprise hike have grown loud enough that the possibility can no longer be dismissed as financial fan fiction.

And honestly, a hike is probably the right move.

Inflation remains above target. The economy and labor market have been resilient. Energy prices have reintroduced an inflationary risk that the Fed cannot simply wish away. Even the minutes from the June meeting showed that a few officials believed there was already a case for raising rates.

If the economy is strong and inflation is still a problem, what exactly is the argument for keeping monetary policy loose?

The argument, of course, is that raising rates would upset markets, politicians, borrowers, real-estate owners, and nearly everyone who has become dependent on cheap money. That is why I expect Warsh to cuck out and hold.

He may talk tough. He may warn that inflation is unacceptable. He may emphasize that the Fed is prepared to act in September. He may stare sternly into the camera and attempt to extract 25 basis points of tightening through facial expressions alone.

But talking about fighting inflation is much easier than actually raising rates.

A Hold Isn’t Necessarily Dovish

The headline decision matters, but the language may matter more.

A straightforward hold accompanied by a clear warning that a September hike is coming could be treated as hawkish. A hold with vague language about “monitoring incoming data” would tell the market that the Fed is still searching for reasons not to act.

That distinction matters for my current positions: NUGT, KORU, and BEG.

These are not three unrelated lottery tickets. They are different leveraged expressions of a broader thesis: the Fed will struggle to tighten as aggressively as inflation may require, liquidity will remain easier than the economic data justify, and capital will continue searching for assets outside the most crowded parts of the U.S. market.

That thesis could take a hit today before it pays.

NUGT: The Cleanest Fed Trade

NUGT seeks twice the daily performance of a global gold-miners index. It is not physical gold, and because it resets daily, it can behave badly when the miners chop sideways.

But the macro logic is straightforward.

A surprise hike would probably push the dollar and real yields higher, at least initially. That is the obvious negative scenario for gold and gold miners. NUGT would amplify that reaction.

A hold—especially a soft hold—should be much friendlier. If investors conclude that the Fed is unwilling to get ahead of inflation, gold gains another reason to remain relevant. The miners add operational leverage on top of the monetary thesis, and NUGT then adds financial leverage on top of the miners.

Yes, that is leverage stacked on leverage. That is the point of the trade, and also the danger.

The best outcome for NUGT may not be an openly dovish Fed. It may be a Fed that talks tough but repeatedly fails to follow through. That preserves inflation anxiety while limiting the damage from rising real rates.

KORU: A Bet on Korea—and the Dollar

KORU targets three times the daily performance of the MSCI Korea 25/50 Index.

This is a much more violent instrument. It can deliver spectacular gains when Korean equities trend higher, but the daily reset can destroy value during sustained volatility.

The Fed connection runs primarily through the dollar and global liquidity.

A surprise hike could strengthen the dollar, tighten financial conditions across Asia, and pressure risk assets. That would be a particularly unpleasant combination for a leveraged Korea position.

A hold could produce the opposite reaction. If the dollar softens and investors regain their appetite for non-U.S. equities, Korea offers exposure to semiconductors, exporters, industrials, and a market that can move quickly once capital starts rotating into it.

KORU is not a safe haven from Fed policy. It is a leveraged bet that the Fed will avoid creating the dollar and liquidity shock that would crush the trade.

BEG: Leveraged Clean-Energy Volatility

BEG seeks twice the daily performance of Bloom Energy.

Bloom is not simply a rate trade. Its performance depends on company execution, demand for power, data-center infrastructure spending, margins, financing, and the market’s willingness to pay for future growth.

But interest rates still matter.

Higher rates raise the discount applied to future cash flows and can pressure capital-intensive growth stories. A surprise Fed hike would therefore create another potential headwind for BEG—on top of the ordinary insanity involved in owning a leveraged single-stock ETF.

A hold removes that immediate threat. If Warsh also sounds reluctant to tighten later, speculative growth and alternative-energy names could regain some oxygen.

BEG is probably the least direct Fed trade of the three, but it may be the most explosive. It recently demonstrated exactly how violent the downside can be. This is an instrument for a tactical position, not something to place in a retirement account and rediscover in 2045.

What I Expect Today

My base case is simple:

The Fed holds. Warsh talks like a hike remains on the table. He emphasizes inflation risks without committing to September. Markets initially bounce on the unchanged rate, then spend the press conference trying to determine whether the hold was genuinely dovish or merely a delayed hike.

That outcome should be broadly constructive for NUGT, KORU, and BEG, although the details of the statement and the dollar’s reaction will matter more than the word “hold.”

That correlation is worth respecting. Three ticker symbols do not create diversification when they are all leaning on the same macro assumption.

Still, I understand the bet I am making.

The Fed probably should raise. Inflation has provided enough evidence, and waiting for perfect clarity is how central banks end up chasing the problem later.

But central banks have been trained to protect markets from pain, not protect the currency from slow decay. Warsh has an opportunity today to prove that this Fed is different.

I don’t think he will.

Disclosure: I hold positions in NUGT, KORU, and BEG. These are leveraged products designed around daily performance and can produce losses far greater than the corresponding move in their underlying assets. This article reflects my personal opinion and is not financial advice.