Janet Yellen has been confirmed by the U.S. Senate to become the next chair of the Federal Reserve.
It goes without saying that she has a challenging job ahead of her.
But among other things, she might get tested by the market, which is driven by the short-term madness of traders and everyday investors.
UBS has a chart that shows that each of the last four Fed chairs experienced the same initial market reaction at the beginning of their tenures.
Gold outperformed stocks.
Traditionally, gold has been seen as a safe haven for worried investors while stocks have been the asset class of choice for risk takers. Basically, this means there’s a heightened feeling of uncertainty when someone new takes the helm at the Fed.
Last year, gold fell 28% as the S&P 500 surged 30%. Some believe that the markets are already set for some reversal.
Will Yellen be faced with the same market test as her for predecessors?