What Will Stocks Do Under A New Fed Chair?

Via LPLResearch.com,

President Trump is reportedly set to announce his selection for the next Chair of the Board of Governors of the Federal Reserve (Fed) in the very near future, with Jerome Powell emerging as the likely nominee.

Though he’s yet to make a final decision, reports suggest that a final decision will come before November 3.

In our latest Bond Market Perspectives, we took a dive into the potential shift in composition of Fed members in 2018, in addition to the chair, and why it could be quite hawkish—but what does new Fed leadership really mean?

Per Ryan Detrick, Senior Market Strategist, “Just as a new President brings uncertainty, a new Fed chair can do the same. In fact, going clear back to Charles Hamlin (the first Fed chair) in 1914 and his 14 successors, the Dow is down on average six months after a new chair.”

Keep in mind that the sample size is quite small and the results below are skewed due to WWI, the Great Depression, and the crash of 1987.

We’re not suggesting that a new Fed chair is likely to trigger a sharp selloff, but it would add to market uncertainty, and markets don’t like uncertainty.

So we wouldn’t be surprised if Trump’s announcement spurs a bout of volatility, but when we look at the bigger picture, we continue to see very few signs of the excesses seen at previous major market peaks. This suggests very low odds of a recession beginning over the next 12–18 months and a likely continuation of the equity bull market in 2018.


Give Me Some Truth rejected Mon, 10/30/2017 - 20:42 Permalink

Re: What will the Stock Market do with a new Fed chair?What is this? A trick question?It could actually go down? Who thinks that?Here's another question:What will gold and silver do with a new Fed chair?Hmm. Let me think a minute. Gold and silver. Gold and silver. What will they do?Okay. They will go ... DOWN. They will NOT GO UP.Am I right?  

In reply to by rejected

adolphz Mon, 10/30/2017 - 19:07 Permalink

Everyone in world is watching America. Be ready. Keep analysis of the traders from Shepwave active and we will make profits no matter what happens.

Rasna Mon, 10/30/2017 - 19:42 Permalink

The markets are impervious to ANY type of news... Government debt that goes to infinity and wil NEVER be repaid. - shrug it offEndless war - shrug it offThreat of nuclear war with North Korea - shrug it offUncerttainty surround inacting any of Trumps policies or initiatives - shrug it offUncertainty over relations with Russia or the rest of the world - shrug it offUncertainty surrounding the overvalued, ovdrinflated world economies - shrug it offDysfunction in congress - shrug it offDistress of the middle class - shrug it offFundamentals discarded by the riadside and sky high valuations unsupported by anything that we're familar with.  shrug it offDaily, low volume melt-ups with new highs each day (who's buying??) - shrug it off(Feel free to insert your own favorites) .. the list goes on and on... Why on earth would a new Fed chairman make any difference?  Shrug it off and melt higher... PARTY ON!!!

Give Me Some Truth Rasna Mon, 10/30/2017 - 21:04 Permalink

Time magazine selling for $1 (maybe $2) - Bullish Baby!Rolling Stone magazine selling for $1 - Bullish Baby (Rock and Roll!)ESPN announces another round of mass layoffs - Bullish Baby!New York Times cuts staff again - Bullish Baby!Cumulus Media shares dip below 30 cents - Bullish Baby!USA Today publishes 12-page edition - Bullish Baby!Hollywood has worst year ever - Bullish Baby!Attendance at NFL games and NFL TV ratings plummet - Bullish Baby!Good times. Good times to be in the media. Good times to be a business person buying advertising.  

In reply to by Rasna

Cabreado Mon, 10/30/2017 - 20:06 Permalink

The trajectory of chaos is becoming more certain, "folks."And I say that because, simply, a critical mass of The People don't know what's what.

Give Me Some Truth Mon, 10/30/2017 - 20:53 Permalink

If the stock market goes down ...... the value of pension funds and insurance funds goes down. State and municipal governments have to pony up even a larger share of pensions and retiree benefits. The Federal government and state governments (like California's) receive less capital gains tax  receipts.CEO compensation goes ... downStock buy-back strategies ... backfireFewer people buy units in the Trump Tower or have memberships at the Trump country clubsThe MSM, in reporting on the economy, can no longer say "the economy is strong" because the market is going up, up and up again. ... Gold and silver might start to go up, perchance way up (which sends a signal of its own).Folks, the stock market is NOT GOING DOWN.  

Whitey Bulger Mon, 10/30/2017 - 21:33 Permalink

This question is like asking will the casinos new owner make the  slot machines lose more than they win. The real question is what will the cryptos do???? Will they be ban??? If not they go up.