Fed chair change, US stocks and Bitcoin bound to fall? Can Warsh break the curse upon taking office?

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Barclays research shows that since 1930, every time a new Fed Chair has taken office, the S&P 500 has experienced an average maximum drawdown of 5%, 12%, and 16% within one, three, and six months, respectively—exceeding the typical annual correction. Powell will step down on May 15, and Trump’s nominee, Kevin Warsh, is expected to take office in June. Will he break this curse? (Context: Powell once said he would never resign early "unless I die," serving as the final bastion of Fed independence.) (Background: Powell on Bitcoin: BTC's competitor is gold, not the dollar; people still view it as a speculative asset.) Powell sat in the FOMC chair for the final time on the 29th, keeping interest rates unchanged at 3.5%-3.75%, in line with market expectations. However, this decision saw four dissenting votes, the most since 1992, with three regional Fed Presidents (Hammack, Kashkari, and Logan) advocating for the removal of the easing bias. Powell’s term officially ends on May 15, and Trump’s nominee, Kevin Warsh, is expected to chair his first FOMC meeting on June 16-17. Research by Alexander Altmann, Head of Global Equity Strategy at Barclays, shows that since 1930, the U.S. stock market has almost always been "severely tested" whenever a new Chair takes office. Barclays' data covers all Fed Chair transitions since 1930. The average maximum drawdown of the S&P 500 after a new Chair takes office: - Within 1 month: average decline of 5% - Within 3 months: average decline of 12% - Within 6 months: average decline of 16% These declines exceed the normal peak-to-trough variance of the S&P 500 in any randomly selected year. In other words, the volatility brought by a change in Fed Chair is not a "normal correction" but additional systemic pressure. Recent transitions confirm this pattern: - February 2018 | Powell succeeds Yellen: The market encountered "Volmageddon" in his first week, with the S&P 500 plunging 10% in just a few days. It slumped again in Q4, falling from a September high of 2,940 to 2,350 in December, a decline of about 20%. - May 2022 | Powell reappointed: After his reappointment, the S&P 500 fell from about 4,130 to 3,577 in October, a decline of about 13%. If measured from the January high, the annual correction exceeded 25%. - February 2006 | Bernanke succeeds Greenspan: Three months after taking office, the market hit a May-June correction, with the S&P 500 falling from 1,326 to 1,223, a decline of about 8%. A larger storm arrived two years later. Every new Chair is "tested" by the market; the only difference is the depth and timing of the test. Warsh is not a typical Fed Chair nominee. He served as a Fed Governor from 2006-2011 and was Bernanke’s right-hand man during the 2008 financial crisis. During his confirmation hearing in April, he declared he would be "completely independent of the President," displaying the posture of an old-school central banker. But political pressure will not let him off the hook. Trump previously stated in an interview that he would "be disappointed" if Warsh does not cut rates at his first FOMC meeting in June; heaven knows the White House wants easing. The problem is that Warsh’s own record leans hawkish. He has publicly criticized the low-interest-rate policy of 2021-2022 as a "fatal policy error," believing the Fed reacted too slowly to inflation. Currently, inflation remains above target, with March CPI up 3.3% year-on-year, and the Cleveland Fed estimating 3.56% for April. Brent crude is above $111, and the interest rate space is only about 50 basis points above the neutral rate, but inflation is overshooting by 100 basis points—which is critical. If the signals from the June FOMC are not as dovish as the market expects, the S&P 500 will likely deliver an "opening drop" in line with the curse. Based on the

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Published:2026-05-01 09:15:27

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