Source: Bloomberg, Sam Ro, alexandraandnyc

The market likes to test them... Source: NDR, RBC

Interestingly, since his name came up yesterday, markets have been pricing in more his hawkish reputation than his more recent dovish tilt: - Risk assets lower: equities down, bitcoin / cryptos down, gold down and silver in bear market! - Steeper yield curve: could be related to the fact that he is in favour of a smaller Fed balance sheet - Stronger dollar So how should we interpret market erratic moves over the last two days? Stop labeling Kevin Warsh as just a "Hawk." 🦅❌ The social media "chattering class" loves a simple label, but the reality of the next Fed Chair is far more nuanced. If you’re building a strategy based on the idea that Warsh is purely a rate-hiker, you’re missing the bigger picture. Here is the "Warsh Playbook" that the headlines are missing: 1. The "Productivity Boom" Pivot 🚀 Warsh isn't looking to keep rates high for the sake of it. He believes the U.S. is in a massive productivity surge. If that’s true, the Fed can actually lower rates without sparking inflation. It’s a growth-friendly view that most "hawks" wouldn't touch. 2. The Policy Mix: Lower Rates + Tighter Balance Sheet ⚖️ This is the sophisticated play. Warsh wants to shrink the Fed’s massive balance sheet while simultaneously keeping interest rates manageable. It’s a "tighter but lower" approach that aims for long-term stability rather than short-term sugar rushes. 3. Pragmatism Over Ideology 🛠️ History check: During the COVID-19 onset, Warsh was weeks ahead of Jay Powell in calling for an aggressive response. When the alarm bells ring, he’s shown he’s a practical crisis manager, not a rigid academic. The Bottom Line: Calling him a hawk is a convenient narrative for his confirmation hearings—it shows independence from the White House. But in practice? Expect a Fed Chair who is data-driven, productivity-focused, and ready to move fast when the situation demands it.