Last week, the new Fed chairman, Kevin Warsh, was sworn in at the White House.

For the first time in 39 years. Normally, this oath is taken at the Fed building because the Fed is an independent institution, not part of the government.

But what happened 40 years ago, in 1987?
The then-US President Ronald Reagan wanted growth, he wanted to loosen regulations, but Fed Chairman Paul Volcker thought differently.

Volcker was a legendary figure who had raised interest rates to 20% in the early 1980s to curb inflation, defeating it with a harsh prescription.

In short, he opposed Reagan's plan to liberalize the banks.

The relationship between Reagan and Volcker deteriorated significantly.

Reagan didn't remove him from office, but he didn't renew him when his term ended. He chose someone closer to his philosophy…
Alan Greenspan.

A Wall Street native who advocated for a free economy.

(Similar to the Trump-Powell rivalry and Warsh's arrival we are witnessing today)

Greenspan was also sworn in at the White House. This was an unusual decision for the time. Because holding a ceremony at the White House symbolically conveyed the message…
‘The Fed is now part of my economic vision.’
Trump is giving the same message today.

Then what happened?

Just two months after Greenspan took office, on October 19, 1987, the stock market experienced its largest single-day drop in history, falling by 22.6%.

This day is called ‘Black Monday,’ you may have heard of it.

After this drop, Greenspan made a brief statement…
‘The Fed will provide all the money to the market to support the system.’

Liquidity was pumped into banks, interest rates were lowered. Within a few weeks, the market recovered. There was no recession, the crisis did not escalate.

After this event, the following belief arose in the market…

The Fed intervenes whenever the market falls, rescuing investors.

This is called the ‘Greenspan Put,’ and it formed the basis of the bull market of the next 20 years.

What I'm trying to say here is…

The Trump-Warsh duo will likely start gradually warming up the economy. Rules will be relaxed, liquidity will increase, and growth will be prioritized.

Some in the market will say, ‘The Fed has lost its independence, there will be a huge price to pay in the future.’ Others will say, ‘The economy will take off, we need to invest in stocks.’

The election period is also approaching, adding to the political tension.

So, the coming period will not be easy. A volatile market full of sudden movements awaits us.

But I believe…
the process that will unfold at the end of these fluctuations could surpass even the legendary bull market after 1987.