🌪️ QT Ends. Trump Picks New Fed Chair.

2026: Bull Market Revival or Policy-Driven Meltdown?

This isn’t just another Fed headline — this is a macro earthquake.

Prediction markets are exploding:

• Hassett — 64% (from <40%!)

• Waller — 12%

• Warsh — 11%

The market isn’t just guessing anymore.

It’s pricing in a regime change — and regime changes don’t come quietly.

Let’s break down the ultra-bullish path, the nightmare bearish path, and the realistic middle road.

Strap in. 🚀

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🟢 THE ULTRA-BULLISH MEGA-RALLY SCENARIO (The “Liquidity Renaissance”)

If Trump appoints a growth-first Chair — which Hassett fits perfectly — the entire macro landscape could reset.

🔥 1. Faster Rate Cuts Than Wall Street’s Current Models

Markets still think cuts will come “only when inflation hits 2%.”

A Trump-aligned Chair might instead:

• Accept 2.3–2.5% as “good enough”

• Prioritize employment + growth

• Signal that the Fed won’t over-tighten again

That’s institutional dovishness, not short-term messaging.

💧 2. QT Is DONE — and Liquidity Returns With a Vengeance

QT was already slowing.

A new Chair could:

• Stop runoff early

• Shift balance sheet strategy

• Reopen liquidity channels

• Support credit easier and faster

Liquidity is the REAL bull market engine.

📈 3. Risk Assets Explode Higher

Because when liquidity rises and rate expectations fall, everything moves:

• Mega-cap tech reclaims leadership

• Small caps skyrocket (most rate-sensitive)

• Financials and cyclicals revive

• Bitcoin, ETH, gold all rally together — classic liquidity effect

This becomes a multi-asset bull market, not just an equity story.

💥 4. The Psychology Shift

Powell’s Fed = cautious, slow, defensive

New Chair = “growth-first,” “jobs-first,” “don’t crash the plane”

That shift alone can create:

• Lower risk premiums

• Higher equity multiples

• Faster market re-pricing

🟢 Outcome:

A 2026 “Supercycle Rally” becomes absolutely possible.

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🔴 THE NIGHTMARE BEARISH SCENARIO (The “Credibility Shock”)

But let’s not pretend the road is smooth.

A new Fed Chair — especially one seen as politically aligned — brings big risks.

⚠️ 1. Market Tests Fed Independence Immediately

Bonds will ask:

“Is the Fed still data-driven? Or politically driven?”

If the answer isn’t clear:

• 10Y yields spike

• The dollar surges

• EM debt sells off

• Funding markets tighten

• Stocks correct sharply

The Fed’s credibility is worth TRILLIONS.

Lose it, and even dovish policies won’t save risk assets short-term.

🩸 2. Inflation Expectations Jump

Even a hint that the Fed might tolerate higher inflation could cause:

• Sticky inflation

• Higher break-evens

• Delayed real cuts

• Hawkish reaction from global central banks

That’s how you get volatility, not rallies.

🚨 3. Policy Uncertainty = Volatility Spike

Markets LOVE consistency.

A new Chair introduces unknowns:

• Communication style

• Path of QT

• Reaction to unexpected inflation

• Tolerance for political commentary

• Relationship with Treasury

In uncertain macro environments → VIX loves to go vertical.

🔴 Outcome:

Short-term chaos, messy bond markets, and only delayed relief.

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🟡 REALISTIC OUTCOME: Bullish 2026, Chaotic 2025

Here’s the truth no one wants to say out loud:

Both the bulls and the bears are right — just not at the same time.

🔹 2025: Transition turbulence

• Markets test the new Chair

• Bond yields swing wildly

• Policy tone shifts

• Fed communication becomes hyperscrutinized

• Risk assets experience both euphoria and panic

🔹 2026: Liquidity-driven rally resumes

Once the dust settles:

• Rate cuts finally begin

• QT ends fully

• Policy becomes easier and more predictable

• Global investors rotate back into US risk assets

This is the “pain before gain” path.

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🎯 MY HIGH-CONVICTION TAKE 

I’m bullish on 2026, but bearish on the transition gameplay.

• If Hassett gets the job:

→ Dovish pivot, quicker cuts, liquidity flood = major bull run

• If Waller gets the job:

→ Smooth, credible, steady = slow but healthy market ascent

• If Warsh gets the job:

→ Hawkish bias, messy path = volatile 2025, late 2026 rally

Markets will experience shockwaves first.

But macro structure still points to an easier 2026.

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🏆 COME, MAXIMUM ENGAGEMENT:

A new Fed Chair doesn’t just adjust rate forecasts —

it resets the entire macro architecture.

Bulls will cheer the liquidity.

Bears will feast on the volatility.

But the real winners?

👉 The traders who understand that volatility → opportunity

and policy shifts → trend reversals.

2026 won’t just be another year.

It could be the start of a completely new cycle.