Fed credibility at risk with Trump's Fed Chair pick

Kevin Warsh's appointment as Federal Reserve Chair is set to reshape monetary policy and potentially impact the stock market. The U.S. Senate confirmed Warsh, who previously served as a Fed governor, on May 13. Inflation is currently on the rise, with Treasury yields surging, setting the stage for a potential "family fight" over interest rate cuts.

Market impact: Warsh's nomination and subsequent confirmation have sparked concern among investors. His plans to reshape the Fed and potential interest rate cuts could lead to a "double whammy" for the stock market, potentially ending the outsize returns seen in recent years. The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite may be particularly affected. Billionaire investor Ray Dalio has warned that the Fed could lose its credibility if Warsh lowers rates.

What to watch next: On May 15, Warsh will take over from Jerome Powell as Fed chair. The first Fed meeting under Warsh's leadership is scheduled for June 14, where he may provide more clarity on his monetary policy plans. Additionally, the next inflation report, due in late May, will offer insights into the economic landscape that Warsh inherits.