NEWS
Fed Chairman Fends Off Tough Questions

The Federal Reserve delivered its 25 bp cut as expected, but reporters’ questions about Powell’s job security under the Trump administration sparked significant discussion. Meanwhile, risk assets continued to rally on optimism about what the Trump administration’s policies could mean for the economy and markets. 👀

Today's issue covers the Fed’s latest interest rate move, speculative bets gaining more steam, and the biggest earnings pops and drops. 📰

Here’s the S&P 500 heatmap. 8 of 11 sectors closed green, with technology (+1.74%) leading and financials (-1.61%) lagging.

And here are the closing prices: 

Most bullish/bearish symbols on Stocktwits at the close: 📈 $CELU, $XRAY, $BNZI, $NMHI, $GCT 📉 $LEV, $HSY, $IIPR, $BLUE, $GERN*

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POLICY
Jerome Powell’s Not Leaving His Post 🧑‍💼 

As expected, the Federal Reserve cut interest rates by another 25 basis points at today’s meeting. Unfortunately, market participants didn’t get much more information from the central bank regarding its next move.

Overall, the Fed noted that the risks to its dual mandate (max employment and stable prices) remained balanced and that the path toward a neutral interest rate remained intact. Specifically, the document said, “The Committee judges that the risks to achieving its employment and inflation goals are roughly in balance…”

Meanwhile, Jerome Powell’s statement referenced a slight downtick in the labor market, saying, “Conditions have generally eased, and the unemployment rate has moved up but remains low.” While he acknowledged the weaker employment and stickier inflation of late, he indicated that the Fed’s next move will remain data-dependent…not offering much color beyond that.

As for reporters, they all wanted to know how Donald Trump’s election would impact the Fed…and more specifically Jerome Powell’s job as Fed Chair. The President-elect has been critical of Powell’s management of monetary policy in the past and suggested he would seek to make a change before Powell’s term ends in May 2026.

On the first point, Powell said that the Fed will include the potential outcomes of fiscal policy in its model as more details come out and adjust policy as needed. However, fiscal policy often takes significant time to be drafted, passed, and implemented, elongating the time it takes to see its economic impacts. So it is a consideration, but something the Fed can manage over time vs. needing to react quickly.

For the second question, we’ll refer you to the tweet below, which perfectly sums up Powell’s epic response. 🤣 

Internationally, the Bank of England cut rates by another 25 bps but warned that future reductions would likely be gradual. The central bank expects the British government’s first budget will lead to higher inflation and economic growth; thus, a more restrictive stance is likely necessary to keep prices in check.

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