Trump is expected to announce the new Fed chairman in early 2026. And the frontrunner is leading the market to believe that the money printer might return. If that happens, we will enter a very positive liquidity cycle for investments, especially real assets and the stock market.

Today, the favorite to take over the Fed is Kevin Hassett, with a 72% probability according to Polymarket. The second-placed candidate has only 14%. This is not opinion; it's the market pricing in the candidate. And this difference increases every week.

Hassett is a proponent of high nominal growth, controlled real interest rates, and coordination between the Fed and the Treasury. This tends to expand liquidity. And investors believe that inflation may rise again due to the injection of liquidity.

At the same time, the financial system is crying out for help. The SOFR, the central repos market rate, has been above the Fed's desired limit for days, reaching 4.12%, while the ceiling is 4%.

When the market finances above the Fed's ceiling, it signifies stress. The last time this happened was in 2019, resulting in a type of QE.

Another piece of evidence is the use of the Standing Repo Facility. It exists for use in emergencies, not in everyday situations.

In recent days, the SRF has been used for approximately $70 billion. This is like a hospital needing to open ICU beds every morning. It's not normal.

And the main reservoir of excess liquidity simply dried up. In 2022, Reverse Repo held 2.5 trillion. Today, less than 3 billion remain.

This is the lowest level in four years. With the RRP empty, the system has no buffer. It's like driving a truck without engine brakes.

Without this buffer, the Treasury directly used money from banks to rebuild the TGA (Treasury current account), which went from $400 billion to almost $1 trillion. The result: bank reserves plummeted.

When reserves fall too low, banks stop lending and funding freezes, creating a liquidity crisis. Exactly what is happening now.

In 2019, reserves reached $1.5 trillion, and the market felt it. The Fed had to urgently initiate QE to replenish liquidity. Today, although above that level, there is no room in the RRP, so the situation is critical, given that the Treasury continues to issue a lot of debt and has nowhere to get that money from.

And now the Fed has ended QT to avoid crossing that red line.

We then add: • rapidly declining bank reserves • empty RRP (Reserve Reserve Ratio) • SRF (Fed Emergency Line) being routinely activated • SOFR (Interbank Offered Rate) above the target range • US deficit greater than 6 percent of GDP • projected issuance above $1.5 trillion in 2026

This creates political and technical pressure to print money.

With a new Fed possibly more aligned with growth and liquidity, and a financial system demanding an injection of dollars, the next phase is clear.

Liquidity returns, assets rise, debt is inflated, cash loses real value. In cycles like this, those who have assets prosper. Those who hold onto money melt away.