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The changing role of the U.S. Federal Reserve. Last week's new Fed Chief was surprisingly hawkish, since Trump appointed him to lower interest rates. Warsh is restructuring how the Fed will communicate with investors. This adds uncertainty and less transparency. And more volatility which is not necessarily negative. When 2008 hit, the balance sheet of the central bank became a policy tool. Critics of Alan Greenspan point to the late 1980s when he slashed interest rates to zero that maybe led to the real estate bubble. Since 2008, there's been a massive ramp-up of the Fed's balance sheet as a percentage of US GDP is what Warsh will manage, to lessen than past Fed chiefs. Warsh's intent is to lower the bond coupon of 3.36% and the T-bill yield of 3.84%; his hawkish stance will help the long end of the curve, but hurt the short end. It will add volatility.

Be cautious. We've seen this before and it ended badly. Many good things are happening: the US economy is doing well, Canadian jobs numbers were solid, the housing market is firming up a little, the AI boom. Though he's skeptical, the Middle East war is de-escalating. We're near the end of the bull market: are record-high multiples and the market should mean-revert in a correction. U.S. 10-year treasury notes are not being issued because 85% of the issuance is now at the short end. Even defensive stocks aren't cheap. Only energy and tech have gained in the last 12 months; all else has done poorly. In Canada, telcos are cheap because of competition and regulatory threats. Canadian banks have shot up to all-time high PEs. He's not in a hurry to deploy new capital.