Warsh's debut at the helm of the Fed: oil crash and the historic "curse" of the new chairman
Today, Kevin Warsh chairs a meeting of the U.S. Federal Reserve for the first time as its chairman. Markets approach this event against the backdrop of a dramatic oil crash and extremely cautious rate expectations. I see at least three powerful pressure factors shaping a uniquely tense backdrop for the new Fed chair's debut.
The main point of intrigue is how Warsh will craft his rhetoric at the start of his term. CME data shows the market is pricing in virtually no rate cut: the probability of maintaining the 3.50–3.75% range exceeds 97%. Chances of easing remain near zero until April 2027 and only rise to about 8% by December 2027. This is a stark signal: the market does not expect concessions from Warsh.
Alarming Statistics: A Historical Pattern of Declines
Analyst Bull Theory highlights a troubling pattern: over the past century, under each of the 12 new Fed chairs, the S&P 500 index fell within the first 90 days of their tenure. The average decline was about 12%. Alan Greenspan recorded the worst result with a 33% crash, while Ben Bernanke fared best with just 2%. During Jerome Powell's first 90 days, the index fell 7%, and under Janet Yellen, it dropped 4%. No new Fed chair has managed to avoid a decline, and now the 90-day countdown begins for Warsh.
The key question is "Warsh's independence." The market will closely watch whether the new chair maintains monetary policy autonomy or feels pressure from Donald Trump. The tone and rhetoric of his first speech will largely determine market sentiment for the second half of the year.
Oil Crash and Risk for Commodity Assets
The backdrop is further complicated by a sharp drop in oil. Brent crude has plunged about 15% to below $78 per barrel — marking the fifth consecutive losing session, the longest decline streak in 2026, and a low since early March. The reason is the return of Iranian oil: tankers carrying over 2 million barrels are already leaving the Strait of Hormuz following a U.S.-Iran deal.
Bloomberg Intelligence strategist Mike McGlone warns that oil, gold, and copper could find themselves in a losing position relative to U.S. stocks. In his view, stock market volatility has remained suppressed for too long amid rising risks in commodity assets, and the boom in initial public offerings (IPOs), including SpaceX, could signal a market peak — similar to how Bitcoin ETFs served as such a signal in 2024.
McGlone rates the influence of the U.S. stock market as 10 out of 10 in determining the future direction of oil, gold, and copper. Cheaper oil reduces inflationary pressure, which could give the Fed more leeway in the future. But for now, all three factors — weak oil, cautious rate expectations, and the alarming statistics of a Fed chair change — combine to create a tense backdrop in which Warsh's decision will serve as the main guide for markets.
My analysis: The historical pattern of S&P 500 declines under new Fed chairs is not just statistics but a reflection of a deep market mechanism: a leadership change always introduces uncertainty, and the market prices in a risk premium. Combined with the oil shock and the lack of expectations for rate cuts, Warsh takes office under extremely unfavorable conditions. If he does not demonstrate firm independence and clarity in his signals, we could see another 12% decline in the next 90 days. The cryptocurrency market, traditionally sensitive to liquidity, will also come under pressure.