It’s Warsh’s world; we just live in it.

The Federal Open Market Committee (FOMC) meets for the first time this week under new Federal Reserve chair Kevin Warsh. With the labor market looking solid but inflation jumping to a three-year high of 4.2% in May, a rate cut likely isn’t in the cards. As of Friday, CME FedWatch puts the probability of the Fed holding rates steady at nearly 99% for this meeting, and 92% for the one in July.

But it’s not necessarily the direction of interest rates this month that investors, economists and all the experts in between will be paying attention to. It’s what Warsh says about where rates are heading, and how he says it.

Quiet, Please

For eight years, Wall Street navigated a Jerome Powell-led Fed as he “revolutionized the way Fed chairs communicate with the public,” David Rubenstein, co-founder of the Carlyle Group recently said in an interview with CNBC. Former Fed Chair Ben Bernanke held the first post-FOMC press conference in 2011, kicking off a quarterly tradition. Powell was the first Fed head to talk to the media after every meeting. “Jay Powell has brought transparency to the Fed and I think that’s a good thing,” Rubenstein said.

Not everyone agrees. During his confirmation hearing, Warsh criticized FOMC members for essentially talking too much about which direction they think interest rates should go. He didn’t say he would get rid of the press conferences, and one is slated for Wednesday, but it wouldn’t come as a surprise if he keeps the public at arm’s length.

Time will tell, but all eyes will be on the central bank by mid-week:

• John Luke Tyner, portfolio manager at Aptus Capital Advisors, tells The Daily Upside Warsh will likely spend most of this week’s press conference trying to clearly communicate what the market is pricing in (“no cuts, but [he] may try to talk down hike expectations”). Separately, Warsh is going to have to spend time and his political capital in driving consensus across the Fed board, since his talking points diverging significantly from the overall committee could spook markets, he added.
• JPMorgan Wealth Management’s chief investment strategist Phil Camporeale predicts “an explicit move away from a bias toward easing to a neutral stance on rates.” Market watchers will also be homing in on the dot plot, a quarterly chart that shows where policymakers expect the federal funds rate to be at the end of the year, in the next few years and in the long run.

If Not Now, Then When? A majority of economists surveyed by Reuters believe the Fed will hold the federal funds rate steady throughout 2026. Goldman Sachs now expects rate cuts in June and December 2027, compared with the December 2026 and March 2027 cuts it had previously predicted.

Just in time for the World Cup, FanDuel parent company Flutter has renounced its dual citizenship, leaving the London Stock Exchange and pledging its allegiance to the US with a sole listing on the New York Stock Exchange.

As far as soccer (or, umm, football) fandom is concerned, it’s not exactly a good move: England has +750 odds to win the cup, per FanDuel on Friday, while Team USA sits at a longshot +6000. But the company hopes that the London delisting announced Friday can save it a few pennies, win back a few more fans on Wall Street, and reverse a negative narrative at a critical moment for the sports gambling world.

Prediction Market Parlay

The 2026 World Cup might be the biggest event in sports betting history. Flutter told Barron’s last week it expects to manage 100,000 bets per minute at peak World Cup times, and experts project $50 billion total will be wagered during the 104-game-long tournament. Meanwhile, legalized sports betting has proliferated in the US since the last time Americans decided to try and care about soccer; around 65% of the US adult population now lives in states with legalized sports betting, up from around 40% during the 2022 Qatar-hosted tournament.

So why is Flutter entering the World Cup already down a couple goals? Since 2022, legalized gambling has proliferated … and been utterly disrupted by prediction markets like Kalshi and Polymarket. Flutter’s NYSE-listed shares have fallen more than 60% since an all-time peak in August of last year, though the company has worked diligently to hedge its bets as prediction markets rip pages out of its book:

• Prediction markets now process more action than the sports books. In April, Polymarket processed $9 billion in trading volume, according to onchain data platform Dune Analytics. In its most recent earnings call, Flutter said FanDuel’s monthly handle came in at about half of that, and was down 9% year-over-year.
• But Flutter is now in on the prediction market action, launching FanDuel Predicts with CME Group in December. It also now acts as a “market-maker” on rival platforms, providing liquidity by offering event contracts; in May, the company told the Financial Times that market-making, fueled by “world-class proprietary pricing capabilities,” has become “a good contributor” to its revenues.

Book Busters: At a time of stalled-out user growth, the company is hoping the World Cup can draw in some new users. In the meantime, existing users are on a heater. An overwhelming amount of money was wagered on the underdog New York Knicks to defeat the San Antonio Spurs heading into the NBA finals, creating something of a massive liability for sportsbooks, according to one BetMGM analyst. The Knicks became NBA champions on Saturday, snapping a 53-year title drought and a lifetime undefeated streak for the House that used to always win.

The best defense is a partnership with the defense industry. Last week, German auto giant Mercedes-Benz inked a partnership with Munich-based startup Tytan Technologies to make vehicles for a mobile air-defense system to take out small drones.

With the German car industry mired in structural disarray, the pivot to the thriving defense sector has fast become a sign of the times.

Follow the Money

“The entire German automotive industry is undergoing a profound structural transformation: the loss of foreign markets, expensive overcapacities, high software investments, and a slow ramp-up of electromobility are all weighing on earnings,” says Constantin Gall, a managing partner at EY, which documented a worrying slump in company margins earlier this month.

EY analysts found profits at the three major German carmakers — Volkswagen Group, Mercedes-Benz Group, and BMW — declined 23% in the first quarter. US manufacturers, focused on higher-end models and relatively insulated from Trump administration tariffs, increased their profits by 83%. The average margin of the German automakers fell year-on-year from 5.7% to 4.6%, which is down dramatically from 13.2% in the first quarter of 2022. At home, Germany’s big three are also fending off ambitious Chinese carmakers. In the first four months of the year, Chinese firms accounted for roughly 6% of EU car registrations, close to double their 3.2% market share a year earlier, according to the European Automobile Manufacturers’ Association.

Small wonder German and European automakers are looking to the booming defense industry to deploy their manufacturing capacity. The Stockholm International Peace Research Institute estimates combined defense spending among the 29 European NATO members rose to $559 billion in 2025, with German spending rising 24% to $114 billion. And so in roll the carmakers:

• In 2024, German auto supplier Continental partnered with tank maker Rheinmetall to retrain skilled workers for the defense industry. Volkswagen is in talks to let Israeli missile producer Rafael take over one of its plants, while tank manufacturer KNDS has expressed interest in a Mercedes plant. Porsche SE, the holding company of VW’s founding families, invested €100 million ($116 million) in a defense fund last year.
• The trend’s not limited to Germany, either: In January, French automaker Renault partnered with defense group Turgis Gaillard to manufacture aerial drones for France’s armed forces and said it was developing a ground-based drone in partnership with Belgian firm John Cockerill.

Leaving Breadcrumbs: Mercedes-Benz has supplied the Bundeswehr, Germany’s armed forces, with vans and trucks since the 1950s, including a multi-year, €1.3 billion order for up to 5,800 of its G-Class off-road vehicles placed in 2024. The joint system from Mercedes and Tytan, however, marks a deeper step into defense tech and manufacturing, which CEO Ola Källenius hinted could be “a growing niche” in an interview with the Wall Street Journal last month.