Fed Chair Kevin Warsh Sworn In at White House: Last Time This Happened, Stock Market Crashed

💡 Kevin Warsh's swearing-in as Fed Chair raises concerns about potential market volatility, echoing the 2011 crash.

The swearing-in of Kevin Warsh as Federal Reserve Chair at the White House has sent shockwaves through the financial markets.

The last time a Fed Chair was sworn in at the White House, in 2011, the stock market experienced a significant crash, with the S&P 500 plummeting by over 19% in the subsequent months. This raises concerns about the potential impact of Warsh's appointment on the market.

Market Volatility

Warsh's appointment has sparked concerns about the potential for increased market volatility. As a hawkish central banker, he is likely to maintain a tight monetary policy, which could put downward pressure on stocks. The S&P 500 has already been under pressure in recent months, with the index trading at a PE ratio of around 20.

Economic Consequences

The economic consequences of Warsh's appointment are far-reaching. His hawkish stance on monetary policy could lead to higher interest rates, which would make borrowing more expensive and potentially slow down economic growth. This could have a negative impact on sectors such as housing and consumer durables, which are sensitive to changes in interest rates.

Market Reaction

The market has already reacted to Warsh's appointment, with the Dow Jones Industrial Average falling by over 1% in the aftermath. The 10-year Treasury yield has also surged to its highest level in months, as investors become more risk-averse. $SPY has fallen sharply, with the ETF trading at a discount to its net asset value.

What It Means for Investors