Markets are looking for a reason to breathe again, and Morgan Stanley feels it may have found one.

According to the bank’s chief equity strategist, Mike Wilson, Kevin Warsh’s nomination to replace **Federal Reserve Chair Jerome Powell**is effectively shaping up to be a long-awaited confidence reset.

Powell’s chair term expires in mid-May this year, and Warsh is now the administration’s clear choice to take up the Fed’s hot seat.

Nevertheless, since the announcement, things have been choppy to say the least.

The week’s scoreboard: S&P 500 vs. gold and silver

**S&P 500: **-2.16 points (-0.03%) — 6,978.60 to 6,976.44.

Gold (futures): -$248.44 (-4.87%) — $5,101.40 to $4,852.96.

Silver (futures): -$22.62 (-21.42%) — $105.592 to $82.970 (included multiple whipsaws in the week).

As we look ahead, though, Wilson argues that Warsh’s appointment could be a “credibility anchor.”

For context, Warsh is touted as the most hawkish option on President Donald Trump’s roster, a major relief to say the least, considering the recent dollar anxiety and policy uncertainty.

Consequently, the precious metals trade has whipsawed, and Wilson argues that the new look Fed takes a lot of heat out of that trade, as markets move towards stability.

Morgan Stanley says the Fed chair pick could shift market psychology after gold and silver’s sharp rallyPhoto by Bloomberg on Getty Images · Photo by Bloomberg on Getty Images

Wilson is laying out a multi-pronged argument that goes well beyond a single Fed chair pick.

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The primary issue with the current administration’s policies, he argues, is that there’s a deliberate attempt to keep the economy running hot by keeping interest rates a lot lower than inflation would usually justify.

That’s an obvious debt management strategy, a topic that’s been a huge talking point of late among the Wall Street punditry.

Wilson argues, though, that **faster nominal and real GDP growth **is perhaps the cleanest way to pare down America’s crippling debt load.

However, that leads to inflation, which, for the most part, is being toleratedabove the 2% target, with the government wanting the private sector to do much more of the heavy lifting.

Wilson breaks the strategy down to what he calls a “three-plane rebalancing.”

External reset: Make use of a weaker dollar and tariffs in correcting trade imbalances while improving U.S. competitiveness.

Domestic fix: Moving away from overconsumption by supercharging investments through capex incentives and trade policy in the One Big Beautiful Bill Act.

Wage growth focus: Tackle the K-shaped economy by boosting payouts at the lower end, avoiding direct cash handouts.