Over the last 40 years, Wall Street has maintained a brutal tradition: giving every incoming Federal Reserve Chair a violent "Welcome to the Market" hazing ritual.
Let’s look at the tape:
1. Paul Volcker (Aug 1979)
Backdrop: The U.S. was facing historically terrifying inflation.
The Hazing: Volcker came in swinging with an iron-fisted, hawkish approach, hiking rates aggressively. From his start in August to November, the S&P 500 dropped ~10%. It was short-term pain, but he eventually slayed the inflation dragon.
2. Alan Greenspan (Aug 1987)
Backdrop: An extended bull market with stretched valuations and the rise of algorithmic trading.
The Hazing: The most brutal baptism of fire in history. Just two months after he took the keys to the money printer, "Black Monday" hit. On Oct 19, 1987, the Dow crashed 22.6% in a single day, and the S&P 500 plummeted over 33% from its August peak.
3. Ben Bernanke (Feb 2006)
Backdrop: The late stages of the housing bubble, with markets terrified that rate hikes would pop it.
The Hazing: Bernanke continued the previous regime's rate-hike cycle to fight inflation signs. Between his start in Feb and June, the S&P 500 corrected 7-8% (before the market's final melt-up ahead of the subprime crisis).
4. Janet Yellen (Feb 2014)
Backdrop: QE was preparing to exit, and the market was still hungover from the "Taper Tantrum."
The Hazing: Yellen got off relatively easy. Around her transition in Jan/Feb, the S&P 500 saw a quick 5-6% shakeout. Thanks to her heavy dovish tilt, the market adapted fast and resumed the bull run.
5. Jerome Powell (Feb 2018)
Backdrop: 2017 was historically calm (VIX at all-time lows), and massive short-volatility derivative trades had piled up.
The Hazing: Powell was sworn in on Feb 5, 2018. That exact same week, we got the epic "Volmageddon." The VIX exploded, and the S&P 500 plunged over 10% in a matter of days.
6. Kevin Warsh (May 2026)
Backdrop: Sticky inflation, elevated interest rates.
The Hazing: ?
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