BlockBeats News, May 19th, Federal Reserve Chairman Kevin Wash is about to take over from Powell this Friday, Wall Street may once again tremble. Behind this lies a 96-year-old "Fed Curse": after a new chairman takes office, the stock market on average experiences a 12% pullback in 3 months and a 16% pullback in 6 months. Wash, as a staunch inflation hawk, signifies a significant shift towards tightening policies, and investors are repricing the market's systemic risks.

According to Barclays Bank's statistical data, this pattern has never failed since 1930: within 1 month of a new Fed chairman taking office, the S&P 500 index averages a 5% decline; a 12% pullback in 3 months; a 16% pullback in 6 months.

When a new chairman takes office, it means that interest rate policies, inflation tolerance, and the pace of monetary easing or tightening will all be rewritten. The market has to reserve a risk premium for this uncertainty. Wash's hawkish stance is crystal clear—he plans to shake up the Fed's 15-year-old dot plot and forward guidance framework, rewriting the pricing logic of global assets.

Powell's 8-year term before this was also a rollercoaster ride. In his first week in 2018, the Dow plummeted 1175 points, causing a $1 trillion evaporation in the U.S. stock market in 3 days. Facing soaring inflation in 2022, he initiated the most aggressive rate-hike cycle in a decade—raising rates by 75 basis points for 4 consecutive times, bringing the rate from zero to a 20-year high of 5.25%-5.5%.

In terms of performance, Powell achieved relatively good employment data, with an average monthly unemployment rate of 4.6% during his tenure, outperforming Greenspan (5.5%), Bernanke (7.3%), and Yellen (5.1%). But inflation has been a weak point, with an average inflation rate of 3.09%, far exceeding the Fed's 2% target. It is worth noting that he steadfastly defended the Fed's independence under political pressure—considered the most important legacy of his tenure.

However, history also has turning points. When Paul Volcker took office in 1979, the U.S. inflation rate reached 13.5%. He successfully defeated inflation with aggressive rate hikes (rates soared to 20%), at the cost of an economic recession. However, during his 8-year term, the S&P 500 surged from 104 points to 333 points, a cumulative increase of 220%.

A similar pattern repeated during the terms of Volcker, Greenspan, and Bernanke: short-term volatility is the norm, long-term growth is the rule. During the terms of these three chairmen, the U.S. stock market multiplied 16 times. The market panics at the beginning of each new chairman's term, but gradually accepts the new policy framework after 6 months.