The U.S. stock market saw a pullback, and while a decline in equity indices is entirely normal, an intraday headline made the move particularly noteworthy. Markets had largely assumed the next Federal Reserve Chair would be White House chief economic adviser Kevin Hassett. However, last Friday (local time), President Trump said that as he considers a successor to Powell, he is leaning toward “two Kevins”—Kevin Warsh and Kevin Hassett.
Although Hassett has been viewed as the front-runner, Trump noted that after a 45-minute White House meeting with Warsh on Wednesday, Warsh has also entered his top tier of preferred candidates. That news contributed to a pullback in U.S. equity indices, suggesting that markets view Warsh as a relatively hawkish option whose comments may be amplified further, warranting close attention.
How Deep Could the Equity Pullback Get?
On U.S. prediction markets Kalshi and Polymarket, the probability of Warsh being nominated by Trump as Fed Chair rose by 17 and 24 percentage points, respectively, yet his overall probability still remained below Hassett’s. The main reason is that Trump wants a Fed Chair who will follow “his” preference for rate cuts, while Warsh’s past remarks indicate a hawkish stance on inflation—precisely the market’s biggest concern, and something reflected in the equity pullback. Still, the final choice will not be settled until January next year, and without concrete evidence, trading and volatility remain relatively subdued, so a large drawdown in equity indices does not seem likely.
From a risk-management perspective, however, protective measures are still advisable: the Nasdaq’s 20-week moving average remains the key bull–bear dividing line, around 24,600. If that support holds firmly, the market’s next clear direction may depend on the eventual confirmation of the next Fed Chair.
Silver: Beware of Adjustment Risk
During a short squeeze, silver’s upside can often exceed expectations, but when it reverses, it can do so without mercy. Although the broader uptrend is not over, history shows that silver is highly prone to fast reversals of 30%+ even within an upswing. Meanwhile, the gold–silver ratio has already moved into a relatively low range, and a rapid mean reversion in that ratio is often driven by silver declining. For traders speculating in silver, it is important to control pacing and position sizing. For those still determined to stay long, the preferred approach is to use long (buyer-side) options, and to avoid oversized positions.
Gold’s volatility has recently eased; holding a long position may not offer silver’s amplitude, but it is steadier. If silver drags gold down, that could be a good opportunity to add to gold positions. At present, beyond holding existing gold exposure, selling call options can be used to hedge existing positions, offering a degree of protection while also adding some incremental return
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