Traders are on edge about Kevin Warsh’s first meeting at the Federal Reserve. Predictions markets expect him to announce the FOMC will keep interest rates unchanged today.
The real fireworks come later.
You may have seen one of these charts over the past few days, showing how markets have sold off when a new central bank head has come into office:
Although the markets often face a moderate decline within the first year of a new Fed Chair, the worst of those declines happened during the Depression. (Source: Bloomberg)
Alan Greenspan took over just in time for the Crash of ‘87. And despite the market’s one-day decline of 22%, the stock market ended the calendar year higher.
It’s Eugene Black (1933 to 1934) and Eugene Meyer (1930 to 1933), who juice the stats in terms of negativity.
Meyer caught the market in freefall from the Crash of ‘29, and although stocks hit their lows in 1932, they were hardly back to a V-shaped bounce that investors are used to today.
Warsh has some radical ideas about restructuring the Fed. But he needs to walk a fine line. Headline Inflation rose to 4.2% in May, the highest print since 2023. Warsh’s restructuring will directly address the Fed’s inability to impact or “control” inflation at all.
We’ll know more this afternoon, but after the wild ride markets have had this year, even a small pullback would be welcome to squeeze the speculative capital out of the markets.
Today’s Grey Swan Pro covers a company that pays investors growing income. It’s structured to increase its revenues as inflation rises, but shares could also pop if interest rates go lower. It’s the perfect way to stay invested for whatever happens next in this market — details here.
~ Addison
P.S. Tomorrow on Grey Swan Live!, Ian King joins us to discuss the latest in the AI trade, what it means for our Dollar 2.0 thesis and what America’s future looks like we prepare to celebrate America’s 250th.
