The Men Who Broke the Pound May Now Break Interest Rates Lower

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Editor’s Note: For years, mega-cap tech dominated nearly everything in the market.

Louis Navellier thinks that leadership cycle may be starting to change. The legendary growth investor believes a new Fed backdrop — combined with improving liquidity and falling rates over time — could create a powerful setup for smaller growth stocks.

In the essay below, Louis explains why two men linked to George Soros’ legendary British pound trade may soon play a major role in shaping that environment. More importantly, he explains why his Stock Grader system is already seeing early signs of rotation beneath the surface.

You can learn more — including the stocks Louis is watching most closely — in his Fed Shock replay here.

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 went deeper at my Fed Shock event earlier this week, where I shared my highest-conviction picks and a free stock recommendation just for attending. (Check out the replay.)

The Warsh-Bessent Fed Pivot Investors Should Watch 

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.