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☕ DrinkCoffeeAndProfit
Smart money moves before breakfast
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Inspiration Quote for the Day
“The big money is not in the buying and selling, but in the waiting.”
— Charlie Munger
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The Morning Ritual
You Spent Two Years Waiting for a Rate Cut. This Week It Got Cancelled.
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My neighbor leans over the fence most Saturdays while I finish my first cup of coffee. Same question since last winter. When does the Fed finally cut? He wants to refinance his house. He has been waiting for cheaper money the way you wait for a bus that already pulled away.
I did not have the heart to tell him this week. The cut is not running late. It got cancelled. And starting tomorrow, the people who set that rate stop talking for `10` straight days.
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In One Sip
► June inflation cooled hard. Prices fell `0.4%` on the month. The yearly rate dropped to `3.5%`, its biggest one-month drop since 2020.
► It changed nothing at the Fed. The target rate still sits at `3.50%` to `3.75%`. A rate cut is off the table.
► The only argument left is hold or hike. Futures put July-hike odds near `10%` now, down from `46%` when oil spiked last week. September odds sit near `63%`.
► Kevin Warsh runs the Fed now. That is the new chair, a hawk sworn in this May. He says inflation is still too high and will not signal his next move.
► Tomorrow he goes quiet. The Fed enters its pre-meeting blackout: no speeches, no guidance, nothing until the July `29` decision. You get one last day of signal, then silence.
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Why It Matters for Your Money
Start with your neighbor and his refinance. A cut was supposed to lower it. Picture a `$300,000` mortgage. At today’s rate near `6.55%`, the payment runs about `$1,906` a month. A point lower, near `5.5%`, would have cost about `$1,703`. That gap is close to `$200` a month. Call it `$2,400` a year he had already spent in his head.
Now your credit-card bill. The average rate floats above `23%`, and it moves with the Fed. A cut would trim it. A hold keeps it pinned. A hike lifts it. On a `$6,000` balance, one point higher is `$60` a year, before you touch what you owe.
So the borrower waits and pays. Here is the flip most people miss. For once, the saver is on the winning side.
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The Wealth Angle
I think the stock market and the bond market are watching two different movies. Stocks sit just off record highs. The VIX, the market’s fear gauge, reads a sleepy `16`. But the `10`-year Treasury yield near `4.6%` says the bond crowd is not relaxed at all. When those two disagree this loudly, I trust the bond market. It has more money and less ego.
There is a reason Warsh will not celebrate one cool month. June prices fell partly because oil got cheap in June. Then the Strait of Hormuz flared up again and oil climbed back toward `$85` a barrel. The relief that cooled the number is already reversing.
So here is the edge. Cash is the one thing that wins whether the Fed holds or hikes. A hold keeps the best savings yields near `4%`. A hike pushes them higher. For the first time all cycle, sitting still pays you. That is not fear. That is getting paid to wait.
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☕ Key Insight:
Everyone is still waiting for the Fed to make money cheaper. This week it hinted it might make money more expensive instead. Park your cash where a hike would help you, not where it would hurt you.
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Coffee Break Move
If you have breathing room: check what your cash actually earns. Money in a big-bank account pays almost nothing. The top online savings accounts pay near `4%` now, fully insured. Move your emergency fund there and keep it liquid. Do not lock a long multi-year CD the week before a possible hike. That freezes out the better rate it would bring.
If you are stretched: stop waiting for rescue rates. Pull up the card with the highest rate and throw every spare dollar at it this month. That balance is not getting cheaper on its own.
My neighbor will lean over that fence again this Saturday. This time I will tell him the truth. Stop watching the Fed and start watching your own savings rate. Then I will finish my coffee while it is still warm.
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