May 17, 2026, 1:52 PM EDT. Federal Reserve Chair Kevin Warsh aims to aggressively reduce the Fed's $6.7 trillion balance sheet, ending 15 years of market support through quantitative easing (QE). This policy shift could cause bond prices to drop and yields to rise, increasing borrowing costs for companies and pressuring stock valuations, especially in high-multiple sectors like technology. Warsh argues that the Fed's large balance sheet has disproportionately benefited asset holders and prefers interest rates as a monetary tool instead. Investors are advised to reduce exposure to QE-dependent stocks and consider sectors like financials, which may gain from a shrinking Fed footprint. This marks a psychological shift for markets accustomed to Fed intervention as a financial safety net.