Lately, it feels like we’re seeing historic moves almost every day. This is certainly no dull market.

• Gold and silver wiped out trillions of market cap within minutes. Technically, silver even briefly entered a bear market from its highs in just 2 days as it fell 22%. The magnitude of these moves is insanely rare.

• The entire crypto complex continues to get crushed by forced liquidations. It’s close to an extinction-level event, like the FTX crash, but without an actual trigger.

• Earnings are a landmine. The gap between incredible earnings and punished earnings is razor thin. There is no room for even small misses. Meta was up 10% yesterday, while Microsoft was down 11% in one of its biggest one day sell offs in history. Even though Microsoft’s numbers were not that bad, even slight misses on growth and uncertainty about its relationship with OpenAI was enough to drag it down.

These are truly unprecedented market moves.

Extreme events like this almost always come from a very vulnerable market structure: huge leverage, cascading margin calls, evaporating collateral, and forced selling.

We’ve seen the pattern before. Prices rise for months or years. Everyone gets excited and overconfidence starts to creep in. People take on more leverage because it’s been only going up. But then something small breaks. It almost does not matter what it is. Even a tiny price drop can trigger margin calls. Margin calls force selling. Forced selling pushes prices down further. That destroys collateral, which triggers even more margin calls. That’s how the market gets rid of excess leverage before the cycle eventually repeats.

It’s hard to decipher exactly what’s going on underneath. And we’ll likely only find out in hindsight. But something is definitely off. There are a few signs that I talked about in last week’s Market Update “An Unusual Market”.

So, what does this mean for the market going forward?

I’m actually surprised by how calm the general markets are while there are insane moves underneath the hood in certain parts of the market. Although I’m still positive on the market as a whole, the current environment does make me more cautious. This is not a normal market and volatility will certainly be our companion for a while.

We’re going through a market period where any headline can change everything overnight. Hence, keeping your exposure to risk assets under control is critical. It’s not a reason to sell everything, but having some cash on the sidelines will not only smooth out the volatility but also give you the flexibility to take advantage of new opportunities.

But most importantly, keeping an open mind, staying flexible, and remaining calm is key right now. This is an incredibly fast paced market. Anything is possible in this market. A pullback, a correction, or a parabolic move up. Being able to adapt is a huge advantage.

Trump just nominated Kevin Warsh as the new Fed chair to replace Jerome Powell when his term ends in May 2026.

There are a few key things about Kevin Warsh’s background that I think are noteworthy:

• He has degrees from Stanford, Harvard, and MIT.

• He started his career at Morgan Stanley and then served in the White House Economic Council under George W. Bush.

• He became the youngest-ever Fed Governor at age 35 in 2006.

• He was a Fed Governor throughout the Global Financial Crisis.

• He has served as a partner at Stanley Druckenmiller’s family office (like Scott Bessent) for over a decade since leaving his role as a Fed governor.

• He’s married to Jane Lauder, the billionaire heiress to the cosmetics company Estée Lauder. Her father, and his father in law, is Ronald Lauder, a long time friend of Donald Trump.

He’s seen as more hawkish on inflation and more critical of the Fed’s past money printing and balance sheet expansion, which would signal a shift in monetary policy. It will be very interesting to see what happens, what a Warsh led Fed could look like, and what he actually does once he is in office.

On a more positive note, many of the names related to AI infrastructure had great earnings, including SanDisk ($SNDK), Seagate ($STX), GE Vernova ($GEV), and ASML ($ASML), among others. It’s always interesting to track which companies beat earnings. They show that, despite the odd behavior in parts of the broader market, the core build-out of AI infrastructure is still moving forward at full speed.

Demand for storage, power, and chips remains off the charts, and there is no sign of slowing down. This is definitely not close to the end, but it does not mean it will be a straight line up forever. There will be corrections along the way. Many of these names are very extended, and a larger pullback or a period of consolidation would be completely normal and could create better entry opportunities.

There is no reason to be aggressive right now. Hence, I’ll be monitoring the market closely and adjust exposure as necessary. It is more important to keep risk under control and be prepared for volatility, because one thing is for sure: volatility is here to stay.