Where Global Money Goes After The Fed Pauses

Every bull market runs on a clock. The Fed’s latest rate hike cycle just gave us a good read on what time it is.

The Fed kicked off this cycle on September 16. It now looks set to pause at the next meeting on October 28.

That pause has me excited. It tells us roughly where we sit in this equity cycle.

It also points to where the biggest pools of capital on the planet are likely headed next. I think one corner of the market will soak up most of that money.

I expect that corner to put on a full blowoff before this bull market is done. A blowoff is the steep, fast run higher that tends to close out a cycle.

I want you positioned there before that run starts.

The dollar holds the key. Once you see how this rate hike cycle pulls money into the U.S., the destination becomes obvious.

Let’s start with the pace of these hikes, since speed matters as much as direction here.

Why A Slow Rate Hike Cycle Is Good News For Stocks

History shows a slower rate hike cycle tends to be more bullish for stocks.

Look back at 2022. The Fed launched its most aggressive rate hike cycle since the early 1980s.

It took its benchmark rate from near zero to a range of 4.25% to 4.50% by December. That run included four straight 75 basis point hikes, or 0.75% at a time.

It wasn’t pretty for stocks.

The S&P 500 fell about 25% from its January high to its October low. The Nasdaq Composite lost 33% for the year.

Drawdowns are a normal part of every market cycle. A Fed in a rush made that one far more painful.

This rate hike cycle is moving at a walking pace by comparison.

The pause also tells us where we are in time. Rate hikes typically show up in the later stages of the equity market cycle.

By my read, we’re somewhere in the late third or early fourth quarter of this game.

The game is far from over. Rest assured, there will be fireworks before the final whistle.

Still, we’re closer to the end of this game than the beginning.

How This Rate Hike Cycle Brings Global Money Home

Fed policy isn’t the only clue about how late we are in this bull market. The most consequential one is dollar strength, since everything falls downstream from there.

Remember, when foreign investors want to purchase U.S. assets, they need to convert their currency to dollars first.

When the global equity party gets late, investors feel safer in U.S. assets.

They’re significantly more liquid compared to the rest of the world, and there’s just more confidence in the U.S. system (for now).

I won’t rule out some short-term weakness in the dollar as the Fed gets ready to pause. Even with this rate hike cycle on hold, U.S. rates sit well above what Japan and Europe pay.

Money flows toward the currency that pays more. That’s carry trade 101.

That rate gap keeps the dollar in a bull market on the bigger timeframe.

This rate hike cycle also reaches well beyond currency markets. It changes how money moves between countries.

Global investors now have a bigger incentive to park their capital in the United States. That makes U.S. assets the most likely to outperform from here.

International stocks have beaten U.S. stocks since the start of 2025. I feel good about calling that trade dead now that a new rate hike cycle is underway.

The Final Leg Belongs To Mega Cap Tech

Put yourself in the shoes of a fund manager in Asia or Europe with billions of dollars to put to work during a U.S. rate hike cycle. Your options look something like this:

• Treasuries are a complete mess right now. They’re off the table.

• You’re sure as hell not buying some tiny, unprofitable small-cap name.

• Mega cap tech names can take the whole order without breaking a sweat.

That money ends up in the Magnificent Seven, or the Mag 10 if you widen the net.

Names like Apple (AAPL), Google (GOOGL) and Microsoft (MSFT) can handle billions of dollars’ worth of trades in a single day. A foreign fund can build a huge position in them without chasing price all over the board.

That’s why I expect the final phase of this bull market to look like a complete blowoff in mega cap tech.

The trade is already underway. These few stocks have done their part to keep the S&P 500 and Nasdaq near all-time highs.

It isn’t finished, either.

If the dollar softens into the October 28 meeting, I’ll treat it as noise inside a bull trend.

Keep your eye on the dollar over the next few weeks. As long as it holds its bull trend, the money keeps coming home.

Mega cap tech stays first in line to catch it.

Knowing where the money is headed only gets you halfway. You also need to know when to act and when this party starts winding down.

I’ll be tracking the dollar, the mega caps and this rate hike cycle inside Trinity Trades. You won’t have to watch any of it on your own.