Trump's Fed Pick May Not Play Ball 🏦

Welcome back to the the Day Trading newsletter 📈 

Markets reopen today after the long Presidents Day weekend, and all eyes are on whether the AI jitters that spooked investors last week will carry through. Futures are down this morning, and gold is taking a breather after its monster run.

Let’s get into it 👇️ 

🔻 Big Tech has shed over $1.3 trillion in market cap since January as investors question whether massive AI spending will generate sufficient returns. Microsoft alone has lost $613 billion (-17% YTD), with Amazon down 14% and Apple shedding $256 billion (Reuters)

🤖 The "SaaSpocalypse" is here. AI agents are cannibalizing traditional SaaS businesses, with reports of mid-sized firms cutting engineering and admin headcounts by up to 30%. Morgan Stanley flagged a "trinity of software fears" as legacy vendors face an existential reckoning (Fortune)

🥇 After its monster run toward $5K, gold is pulling back today. The rising wedge pattern suggests more downside short-term, but the structural bid from central bank buying and geopolitical hedging hasn't gone anywhere (Investopedia)

❄️ CPI cools to 2.4%. January inflation came in at 2.4% year-over-year, the lowest since May 2025, effectively ending the "tariff-shock" volatility phase. Markets liked it (briefly) before the SaaS selloff stole the spotlight (Axios)

The guy Trump picked to run the Fed might be the last person Wall Street wants in the chair.

Kevin Warsh, nominated January 30 to replace Jerome Powell when his term ends May 15, built his reputation as an inflation hawk during the worst financial crisis since the Great Depression (and he's showing no signs of softening).

While Trump has been publicly pushing for lower rates and markets have practically priced in more cuts, Warsh's track record tells a different story.

During his time on the Board of Governors (2006–2011), he consistently prioritized fighting inflation over supporting employment, even as unemployment surged during the Great Recession.

With inflation still running above the Fed's 2% target and shelter costs staying stubbornly high, Warsh isn't likely to rush toward cuts.

The bigger wildcard is that Warsh wants to shrink the Fed's $6.6 trillion balance sheet. Selling off Treasury bonds and mortgage-backed securities would push borrowing costs up, the exact opposite of what Trump and Wall Street are banking on.

Higher mortgage rates, tighter lending, less corporate spending.

He still needs Senate confirmation, and he'd only be one vote among 12 on the FOMC.

But if Warsh gets the gavel, rate cut expectations may need a serious reality check.

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⚠️ Disclaimer: Not financial advice. Do your research before making any trades.