On Friday morning, President Trump formally announced his nomination of Kevin Warsh to serve as the next Chair of the Federal Reserve, ending weeks of intense speculation and a last-minute surge on Polymarket by Rick Rieder.
Whether the dip in stocks and metals was a reaction to the announcement is anyone’s guess. Conventional wisdom argues that leadership changes increase market uncertainty, yet the historical record doesn’t support that view. Incoming Fed chairs generally maintain continuity, allowing prevailing conditions to carry forward.
In 1930, the index had already fallen 33% from its peak amid the worst bear market in history. By contrast, in 1987, the S&P 500 was hitting record highs—much like today—but Greenspan increased the target rate on September 4th, his first month as chair. Do we really think Trump nominated someone who will increase rates in June? Neither scenario seems comparable to today’s backdrop.
Outcomes following the 1929-49 period saw only one loss at the one-year mark, in 1987.
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