Transition of Fed Chair Amid Economic Challenges
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 days ago
0mins
Source: NASDAQ.COM
- Fed Chair Transition: Jerome Powell's term ended on May 15, with Trump nominee Kevin Warsh taking over amid a divided Federal Open Market Committee and a historically high stock market, signaling potential unrest ahead for major indexes.
- Interest Rate Outlook: The CME Group's predictive tool indicates a rising likelihood of rate hikes over the next year, with a 40% chance of a 25 basis point increase by April next year, which could significantly impact the already pricey stock market.
- Inflation Pressures: The inflation rate surged from 2.4% to 3.8% over the past year due to energy supply disruptions caused by the Iran war, complicating the Fed's monetary policy decisions and intensifying the pressure on Warsh's hawkish stance.
- Market Reaction Expectations: Warsh's hawkish background combined with the current economic landscape may lead to higher interest rates by late 2026 or early 2027, potentially undermining investor confidence and market liquidity.
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Analyst Views on CME
Wall Street analysts forecast CME stock price to fall
10 Analyst Rating
4 Buy
4 Hold
2 Sell
Hold
Current: 289.290
Low
209.00
Averages
285.90
High
320.00
Current: 289.290
Low
209.00
Averages
285.90
High
320.00
About CME
CME Group Inc. provides a derivatives marketplace. The Company enables clients to trade futures, options, cash and over the counter (OTC) markets, optimize portfolios, and analyze data. It exchanges offer a range of global benchmark products across all major asset classes based on interest rates, equity indexes, foreign exchange (FX), energy, agricultural products and metals. It offers futures and options on futures trading through the CME Globex platform, fixed income trading via BrokerTec and FX trading on the EBS platform. In addition, it operates central counterparty clearing provider, CME Clearing. Its products provide a means for hedging, speculation and asset allocation related to the risks associated with, among other things, interest rate sensitive instruments, and changes in the prices of agricultural, energy and metal commodities. It provides clearing and settlement services for a range of exchange-traded futures and options on futures contracts and OTC derivatives.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Trumpflation's Impact on Wall Street
- Rising Inflation: The U.S. inflation rate hit 3.8% in April 2026, primarily driven by Trump's tariff policies and military actions against Iran, leading to increased living costs for consumers and posing risks to economic growth.
- Energy Supply Shock: Trump's attacks on Iran led to the closure of the Strait of Hormuz, affecting about 20% of global oil demand, causing U.S. gas prices to surge to $4.54 per gallon since the onset of the conflict, creating a dual burden on consumers and businesses.
- Federal Reserve Policy Shift: With Powell's departure, Trump's nominee Kevin Warsh is set to lead the Fed, raising concerns about a potentially hawkish monetary policy that could exacerbate market uncertainty amid persistent inflation.
- Historical Valuation Risks: The S&P 500's Shiller P/E ratio has surpassed 42, marking the second-highest valuation in history, and historical trends indicate that such high valuations often precede declines of 20% or more, prompting investors to tread carefully in anticipation of upcoming rate hikes.
See More
Trump's Policies Trigger Inflation Crisis
- Surging Inflation: The U.S. inflation rate reached 3.8% in April 2025, primarily driven by Trump's tariff policies and military actions against Iran, leading to increased living costs for consumers and potential pressure on the stock market.
- Energy Market Turmoil: Following Trump's military actions against Iran on February 28, 2026, approximately 20% of global oil demand was affected, causing U.S. gas prices to rise by $1.56 in just a few months, significantly impacting the economy.
- Federal Reserve Policy Shift: With Trump's nominee Kevin Warsh set to take over as Fed chair, market expectations for interest rate hikes have increased, with a greater than 77% chance of a rate hike by April 2027, raising borrowing costs and potentially stifling stock market growth.
- Historical Valuation Risks: The S&P 500's Shiller P/E ratio has surpassed 42, making it the second most expensive stock market in history, and historical data indicates that instances of P/E ratios exceeding 30 are often followed by declines of 20% or more, prompting investors to be wary of potential market corrections.
See More
Regulatory Battle Intensifies Over Prediction Markets
- Market Growth Momentum: Despite legal uncertainties, Kalshi's valuation has surged from $11 billion in December to $22 billion, indicating sustained investor confidence in prediction markets and reflecting the sector's potential profitability.
- Regulatory Dispute: Legal battles between the Commodity Futures Trading Commission and 17 states over the jurisdiction of prediction markets are underway, with states arguing these markets resemble gambling, which could impact future market structures and operational models.
- Corporate Investment Strategies: CEOs of Flutter Entertainment and DraftKings have both expressed intentions to continue investing in prediction market platforms despite regulatory risks, demonstrating their confidence in long-term market growth, which may drive further industry development.
- Diverse Market Opportunities: CME Group's CEO noted that, aside from sports event contracts, other event contracts related to economics, politics, and financial predictions are experiencing less scrutiny, with estimates suggesting that by 2030, sports contracts will only account for 30% of trading volumes.
See More
New Fed Chair Kevin Warsh Takes Office Amid Market Turmoil
- New Chair Takes Office: Kevin Warsh officially assumes the role of Fed Chair, marking a new chapter for the Federal Reserve while signaling potential turmoil for major Wall Street indexes, particularly given the current highs of the Dow Jones and S&P 500.
- Economic Challenges Ahead: Warsh steps into one of the most challenging economic scenarios in history, with a divided FOMC, an exceptionally high stock market, and persistent inflation pressures exacerbated by the energy supply disruptions from the Iran war.
- Rising Rate Hike Probability: The CME Group's FedWatch Tool indicates an increasing likelihood of interest rate hikes over the next year, with a 40% chance of a 25 basis point increase by April 2027, which could significantly impact the stock market.
- Monetary Hawk Stance: Warsh's previous voting record on the FOMC shows a hawkish stance, having repeatedly cautioned against lowering interest rates, suggesting that the combination of high inflation and an overvalued stock market may lead to a higher interest rate environment in the near future.
See More
Transition of Fed Chair Amid Economic Challenges
- Fed Chair Transition: Jerome Powell's term ended on May 15, with Trump nominee Kevin Warsh taking over amid a divided Federal Open Market Committee and a historically high stock market, signaling potential unrest ahead for major indexes.
- Interest Rate Outlook: The CME Group's predictive tool indicates a rising likelihood of rate hikes over the next year, with a 40% chance of a 25 basis point increase by April next year, which could significantly impact the already pricey stock market.
- Inflation Pressures: The inflation rate surged from 2.4% to 3.8% over the past year due to energy supply disruptions caused by the Iran war, complicating the Fed's monetary policy decisions and intensifying the pressure on Warsh's hawkish stance.
- Market Reaction Expectations: Warsh's hawkish background combined with the current economic landscape may lead to higher interest rates by late 2026 or early 2027, potentially undermining investor confidence and market liquidity.
See More
Euronext Considers 24/7 Trading Demand Amid Market Changes
- Market Demand Assessment: Euronext CEO Stéphane Boujnah stated that the exchange would respond if there is market demand for 24/7 trading, although he remains cautious about the appetite for round-the-clock equity trading, indicating that the market may not be fully ready yet.
- Digital Asset Exploration: Euronext is working on several ideas for digital assets, but Boujnah warned that fully continuous trading faces practical constraints, particularly in trade processing, highlighting the complex relationship between technological innovation and market demand.
- Impact of Young Investors: Boujnah noted that the growth of the retail market is driven by younger investors, especially in crypto trading, although demand for equities remains relatively limited, reflecting a shift in market structure and investor preferences.
- Potential for Trading Expansion: Boujnah believes that digital assets are likely to be the first area for extended trading, with fixed income products potentially being better candidates than ordinary equities, demonstrating Euronext's strategic thinking in adapting to market changes and meeting the needs of emerging investors.
See More
Trumpflation's Impact on Wall Street
- Rising Inflation: The U.S. inflation rate hit 3.8% in April 2026, primarily driven by Trump's tariff policies and military actions against Iran, leading to increased living costs for consumers and posing risks to economic growth.
- Energy Supply Shock: Trump's attacks on Iran led to the closure of the Strait of Hormuz, affecting about 20% of global oil demand, causing U.S. gas prices to surge to $4.54 per gallon since the onset of the conflict, creating a dual burden on consumers and businesses.
- Federal Reserve Policy Shift: With Powell's departure, Trump's nominee Kevin Warsh is set to lead the Fed, raising concerns about a potentially hawkish monetary policy that could exacerbate market uncertainty amid persistent inflation.
- Historical Valuation Risks: The S&P 500's Shiller P/E ratio has surpassed 42, marking the second-highest valuation in history, and historical trends indicate that such high valuations often precede declines of 20% or more, prompting investors to tread carefully in anticipation of upcoming rate hikes.
See More
Trump's Policies Trigger Inflation Crisis
- Surging Inflation: The U.S. inflation rate reached 3.8% in April 2025, primarily driven by Trump's tariff policies and military actions against Iran, leading to increased living costs for consumers and potential pressure on the stock market.
- Energy Market Turmoil: Following Trump's military actions against Iran on February 28, 2026, approximately 20% of global oil demand was affected, causing U.S. gas prices to rise by $1.56 in just a few months, significantly impacting the economy.
- Federal Reserve Policy Shift: With Trump's nominee Kevin Warsh set to take over as Fed chair, market expectations for interest rate hikes have increased, with a greater than 77% chance of a rate hike by April 2027, raising borrowing costs and potentially stifling stock market growth.
- Historical Valuation Risks: The S&P 500's Shiller P/E ratio has surpassed 42, making it the second most expensive stock market in history, and historical data indicates that instances of P/E ratios exceeding 30 are often followed by declines of 20% or more, prompting investors to be wary of potential market corrections.
See More
Regulatory Battle Intensifies Over Prediction Markets
- Market Growth Momentum: Despite legal uncertainties, Kalshi's valuation has surged from $11 billion in December to $22 billion, indicating sustained investor confidence in prediction markets and reflecting the sector's potential profitability.
- Regulatory Dispute: Legal battles between the Commodity Futures Trading Commission and 17 states over the jurisdiction of prediction markets are underway, with states arguing these markets resemble gambling, which could impact future market structures and operational models.
- Corporate Investment Strategies: CEOs of Flutter Entertainment and DraftKings have both expressed intentions to continue investing in prediction market platforms despite regulatory risks, demonstrating their confidence in long-term market growth, which may drive further industry development.
- Diverse Market Opportunities: CME Group's CEO noted that, aside from sports event contracts, other event contracts related to economics, politics, and financial predictions are experiencing less scrutiny, with estimates suggesting that by 2030, sports contracts will only account for 30% of trading volumes.
See More
New Fed Chair Kevin Warsh Takes Office Amid Market Turmoil
- New Chair Takes Office: Kevin Warsh officially assumes the role of Fed Chair, marking a new chapter for the Federal Reserve while signaling potential turmoil for major Wall Street indexes, particularly given the current highs of the Dow Jones and S&P 500.
- Economic Challenges Ahead: Warsh steps into one of the most challenging economic scenarios in history, with a divided FOMC, an exceptionally high stock market, and persistent inflation pressures exacerbated by the energy supply disruptions from the Iran war.
- Rising Rate Hike Probability: The CME Group's FedWatch Tool indicates an increasing likelihood of interest rate hikes over the next year, with a 40% chance of a 25 basis point increase by April 2027, which could significantly impact the stock market.
- Monetary Hawk Stance: Warsh's previous voting record on the FOMC shows a hawkish stance, having repeatedly cautioned against lowering interest rates, suggesting that the combination of high inflation and an overvalued stock market may lead to a higher interest rate environment in the near future.
See More
Transition of Fed Chair Amid Economic Challenges
- Fed Chair Transition: Jerome Powell's term ended on May 15, with Trump nominee Kevin Warsh taking over amid a divided Federal Open Market Committee and a historically high stock market, signaling potential unrest ahead for major indexes.
- Interest Rate Outlook: The CME Group's predictive tool indicates a rising likelihood of rate hikes over the next year, with a 40% chance of a 25 basis point increase by April next year, which could significantly impact the already pricey stock market.
- Inflation Pressures: The inflation rate surged from 2.4% to 3.8% over the past year due to energy supply disruptions caused by the Iran war, complicating the Fed's monetary policy decisions and intensifying the pressure on Warsh's hawkish stance.
- Market Reaction Expectations: Warsh's hawkish background combined with the current economic landscape may lead to higher interest rates by late 2026 or early 2027, potentially undermining investor confidence and market liquidity.
See More
Euronext Considers 24/7 Trading Demand Amid Market Changes
- Market Demand Assessment: Euronext CEO Stéphane Boujnah stated that the exchange would respond if there is market demand for 24/7 trading, although he remains cautious about the appetite for round-the-clock equity trading, indicating that the market may not be fully ready yet.
- Digital Asset Exploration: Euronext is working on several ideas for digital assets, but Boujnah warned that fully continuous trading faces practical constraints, particularly in trade processing, highlighting the complex relationship between technological innovation and market demand.
- Impact of Young Investors: Boujnah noted that the growth of the retail market is driven by younger investors, especially in crypto trading, although demand for equities remains relatively limited, reflecting a shift in market structure and investor preferences.
- Potential for Trading Expansion: Boujnah believes that digital assets are likely to be the first area for extended trading, with fixed income products potentially being better candidates than ordinary equities, demonstrating Euronext's strategic thinking in adapting to market changes and meeting the needs of emerging investors.
See More
