Fed Chair Kevin Warsh Wants to End the Era of Easy Money. These Stocks Could Thrive in the New Market Reality.

New Federal Reserve Chair Kevin Warsh has called for "regime change" at the Fed. One of his top priorities could be shrinking the central bank's $6.7 trillion balance sheet. Warsh has advocated for quantitative tightening, which involves the Fed selling bonds or allowing bonds that it owns to mature.

One effect of quantitative tightening is that it removes liquidity from financial markets. Another repercussion is that it can drive interest rates higher. Both outcomes from ending the era of easy money create a dynamic for investors. However, here are three stocks that should thrive in the new market reality if Warsh can dramatically reduce the Fed's balance sheet.

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1. Berkshire Hathaway

Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) just might be the biggest winner from quantitative tightening. And the reason why the conglomerate could prosper if the Fed shrinks its balance sheet has a lot to do with Berkshire's own balance sheet.

As of March 31, 2026, Berkshire Hathaway's cash, cash equivalents, and short-term investments in U.S. Treasury bills totaled over $397 billion. That's the biggest cash position in Berkshire's history. It's also the largest cash stockpile ever for any U.S. company. If rates rise, though, Berkshire will earn more interest income.

Berkshire is also a major player in the insurance industry, with its GEICO, Guard Insurance, and General Re units. Insurers make money from their float -- the money they hold onto between the time a customer pays premiums and files a claim. Higher rates translate to higher income for Berkshire's insurance operations.

Warsh's quantitative tightening could cause some stocks to sink. That's good news for Berkshire Hathaway, too. The conglomerate's chairman, Warren Buffett, and its new CEO, Greg Abel, would love to put more of the cash stockpile to work buying great stocks at attractive prices.

2. JPMorgan Chase

Big banks tend to perform well during periods of quantitative tightening. JPMorgan Chase (NYSE: JPM) is the top-ranking bank on the list of the world's largest financial stocks by market cap. The company serves millions of customers and many of the leading corporate, institutional, and government clients.

JPMorgan Chase expects to generate a whopping $103 billion in interest income this year. However, if interest rates rise as Warsh pursues his goal of shrinking the Fed's balance sheet, the financial services giant will make even more money going forward.

Sure, like other banks, JPMorgan Chase will have to pay depositors higher interest rates, too. But the big bank's net interest income will almost certainly grow during a period of quantitative tightening. In addition, JPMorgan Chase could benefit from competitive dynamics created by higher rates.

In theory, all banks should profit from rising interest rates. However, smaller banks could face challenges. Some hold assets that could decrease in value as rates increase. They can also face pressure to keep up with larger rivals who can pay more attractive interest rates on deposits without hurting their profit margins too much. JPMorgan Chase could be in a position to take customers away from some struggling banks under a Warsh-led Fed.

3. UnitedHealth Group

UnitedHealth Group (NYSE: UNH) is another likely winner from quantitative tightening. It's the largest health insurer based on market cap. UnitedHealth also operates one of the largest pharmacy benefit managers (PBMs) and a growing technology, data, and health services business.

Although UnitedHealth's health insurance differs in many respects from Berkshire Hathaway's property and casualty insurance, the two companies benefit from higher interest rates in a similar way. UnitedHealth can earn more on its float when interest rates are higher.

Americans could cut back on some spending if interest rates rise, especially for big-ticket items that are often financed. The health insurance market, though, is largely insulated from these headwinds.

There's also one other bonus with UnitedHealth Group. The health insurance stock remains roughly 40% below its 2024 peak even after a solid rebound in recent weeks. This depressed valuation could make UnitedHealth more attractive to investors if Warsh succeeds in aggressively reducing the Fed's balance sheet.

JPMorgan Chase is an advertising partner of Motley Fool Money. Keith Speights has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Berkshire Hathaway and JPMorgan Chase. The Motley Fool recommends UnitedHealth Group. The Motley Fool has a disclosure policy.