Changing of the Guard: Wall Street Braces for Buffett's Departure and Trump's Fed Pick in Final Week of 2025

As the final trading week of 2025 begins, the atmosphere on Wall Street is less about the customary "Santa Claus Rally" and more about a seismic shifting of tides. We are witnessing the end of an era in American capitalism and the potential beginning of a contentious new chapter in monetary policy.

Investors returning to their desks this Monday face a truncated week defined by two colossal narratives: the official retirement of the Oracle of Omaha, Warren Buffett, and intensifying speculation that President Trump is days away from naming the successor to Federal Reserve Chair Jerome Powell. With markets shuttered on Thursday for New Year's Day, liquidity will be thin, but the headlines will be heavy.

The End of an Era: Buffett Hands the Reins to Abel

On Wednesday, December 31, the corporate world will mark a historic milestone. After six decades of unparalleled stewardship, Warren Buffett will officially step down as CEO of Berkshire Hathaway (BRK.A, BRK.B).

While the succession plan has been public for some time, the reality of a Buffett-less Berkshire is finally setting in. Greg Abel, the astute Vice Chairman of Non-Insurance Operations, will assume operational control on January 1, 2026.

Abel is no stranger to the conglomerate's inner workings, yet he faces the unenviable task of following the most celebrated investor in history. The market will be watching closely for any shifts in capital allocation strategy, though Abel has signaled a commitment to the firm's culture of patience and discipline. This transition isn't just a corporate reshuffle; it is a psychological turning point for value investors globally who have hung on Buffett's every word for half a century.

The "Two Kevins" and the Fed's Next Chapter

While Omaha prepares for a quiet transition, Washington is noisy with speculation. Following recent comments from President Trump, the timeline for naming Jerome Powell's successor has accelerated. The President has made it clear he intends to reveal his choice "in the coming weeks," and insiders suggest an announcement could drop before the ball drops in Times Square.

The President's "litmus test" for the next Chair is explicitly tied to a willingness to cut interest rates even during periods of economic strength. The shortlist has reportedly narrowed to the "Two Kevins":

• Kevin Hassett, the former White House Council of Economic Advisers chair.

• Kevin Warsh, a former Federal Reserve Governor.

Both are viewed as having the policy chops for the role, but the market is anxious about what a Trump-aligned Fed Chair means for central bank independence. With the current term set to expire in May 2026, an early announcement this week would set the stage for a contentious confirmation battle and immediate market volatility.

Tuesday's Main Event: FOMC Minutes

Before we get a new Chair, we must deal with the current one. On Tuesday, December 30 at 2:00 PM ET, the Federal Reserve will release the minutes from its December FOMC meeting.

Recall that the Fed recently cut rates by 25 basis points but signaled a "wait and see" approach for 2026. Traders will be scouring these minutes for:

• Dissent Details: The vote was not unanimous. We need to know how deep the division is regarding the pace of future cuts.
• Labor Market Anxiety: Powell hinted that job growth figures might be overstated. If the minutes reveal deeper concern about labor weakness, bond yields could plummet as markets price in more aggressive easing for Q1 2026.

Global Macro: China's New Year's Eve Data Dump

While Western markets prepare for champagne, Asian markets will be digesting critical data. On Wednesday morning (Asian session), China releases its official Manufacturing and Non-Manufacturing PMI.

With China's economy struggling to regain momentum, a reading below 50 could dampen sentiment for commodities and luxury goods heading into the first trading days of 2026. This data is the wildcard that could sour risk sentiment just as liquidity dries up for the holiday.

The Week Ahead: Financial Calendar

Liquidity will be premium this week. Expect choppy price action, particularly on Tuesday afternoon and Wednesday morning.

Analyst's Take:

This is not a week to be a hero. The combination of extremely low liquidity, the psychological impact of the Buffett transition, and the binary risk of a Trump Fed announcement makes for a treacherous trading environment.

The "smart money" has likely already positioned for 2026. For the rest, the prudent move is to watch the Tuesday FOMC minutes for clues on the immediate path of rates, and keep one eye on the news wires for a potential "Trump Tweet" regarding the Fed Chair.

On a final note for traders out there, AInvest wish you all a Happy New Year, and trade safe.