Summary

• Kevin Warsh is poised to become Fed chairman, but structural and macro constraints will likely limit radical policy shifts, in my view.
• Despite Warsh's advocacy for a smaller, less politicized Fed, immediate geopolitical risks (especially from the Iran conflict) favor a cautious, wait-and-see approach.
• Potential stagflation and long-term AI-driven labor disruptions may force the Fed to maintain or even expand its quasi-political role, possibly considering tools like UBI.
• I expect Warsh's tenure to resonate with Bernanke's pragmatic balancing political strategy post-GFC rather than Volcker's aggressive regime change.
• I am betting on the S&P 500 discounting this scenario and continuing its upward trajectory.

Kevin Warsh is now very likely to take over as the Fed's chairman in a few weeks. Many analysts argue he may want to "walk the talk", enacting some of the radical changes he advocated for

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