Fed Chair Kevin Warsh Was Just Sworn In at the White House. The Last Time This Happened, the Stock Market Crashed

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Rich Duprey

Wed, May 27, 2026 astatine 9:23 AM CDT 6 min read

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S&P 500 (SPX) trades astatine 25 times guardant earnings, good supra the 10-year mean of 19, leaving small country for argumentation mistakes amid stagflationary pressures. Kevin Warsh inherits a Fed seat relation during slowing employment growth, rising ostentation astatine 3.8% year-over-year, and elevated banal valuations with governmental unit demanding complaint cuts alternatively of the inflation-fighting hikes the system whitethorn require.
New Fed seat transitions historically coincide with marketplace volatility, with the S&P 500 declining an mean of 12% successful the archetypal 3 months aft a caller seat takes office, though markets typically retrieve powerfully wrong a twelvemonth arsenic disciplined monetary argumentation establishes credibility.
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For years, investors could number connected 1 happening from the Federal Reserve: erstwhile the system weakened, complaint cuts were usually close astir the corner. But 2026 is shaping up differently. Inflation has started climbing again, adjacent arsenic the labour marketplace cools. Unemployment is up to 4.3% portion user prices accelerated supra the Fed’s 2% people erstwhile again. That operation -- slowing maturation and rising prices -- is the economical nightmare policymakers telephone stagflation.

Now President Trump has handed the occupation of navigating it to Kevin Warsh. And past suggests his timing whitethorn not beryllium ideal.

A Rare White House Ceremony With an Uncomfortable Echo

Last Friday, caller Fed Chair Kevin Warsh was sworn successful during a ceremonial successful the East Room of the White House. Market historians instantly got the chills. Only 1 different clip has a Fed seat been sworn successful astatine the White House: Ronald Reagan swearing successful Alan Greenspan connected Aug. 11, 1987. That twelvemonth should dependable familiar. Just implicit 2 months aboriginal came Black Monday.

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On Oct. 19, 1987, the S&P 500 plunged 20.5% successful a azygous time portion the Dow Jones Industrial Average collapsed 22.6%. Granted, nary 1 earnestly believes a ceremonial backdrop causes crashes. But transitions astatine the Fed often coincide with periods of uncertainty -- and uncertainty tends to exposure fragile markets.

That matters contiguous due to the fact that stocks already beryllium adjacent historically stretched valuations. The S&P 500 trades adjacent 25 times guardant earnings, good supra its 10-year mean person to 19. Meanwhile, ostentation pressures are gathering again from Iran warfare lipid terms shocks and proviso disruptions.

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