A Great Deal Of Uncertainty - So Much Uncertainty
We all knew the Fed was going to hold at 4.25% - 4.50%. I skipped the recap out of respect—for your time and your intelligence.
So what, if anything did we learn. In my opinion, not much. Here were my takeaways:
There’s no rush to cut rates from their “modestly restrictive” level.
Risks have risen to both sides of the Fed’s dual mandate and the reality is no one knows whether high unemployment or high inflation will be the more pressing problem.
Patient Powell: “We’re in a good place to wait and see” “The cost to waiting is low” “Appropriate to be patient”
“My gut tells me uncertainty about the path of the economy is elevated…the right thing for us to do is await further clarity.
My other major takeaway was that at least 80% of reporters seemed to be begging for rate cuts. I’d have to review the transcript, which I don’t care enough to do, but in real-time, the sentiment of most of the questions seemed to be pressing Powell for an explanation as to why “preemptive” rate cuts shouldn’t occur at present.
Below Is More Value Than Yesterday’s FOMC - You’re Welcome
“In making decisions under conditions of uncertainty, the consequences must dominate the probabilities" - Peter Bernstein. There, that quote was more valuable than the press conference. Most of this blog is simply writing about uncertainty. Author Robert Greene once wrote, "The need for certainty is the greatest disease the mind faces."
And The Source Of Uncertainty - Tariffs (for now)
In response to a reporter's question about exempting certain baby products from Chinese tariffs, Trump indicated that he’s not open to removing the 145% tariffs on China as a means to getting the Chinese to the negotiating table.
We’ll see how the reported talks between Bessent and the Chinese go in Switzerland and in the meantime CNBC have their cameras watching to see if ships are coming into the Port of Long Beach.
But At Least AI Didn’t Destroy the World Today
Unless you were Google that is…Alphabet shares were down 8% as Apple exec said that search is toast as AI answers will replace those blue hyperlinks we’ve all become accustomed to seeing.
Overall the S&P finished slightly higher at 5,631. The 2Y and 10Y yield were little changed with the 2Y at 3.79% and the 10Y at 4.28%.
We’ll see if the BoE can be more exciting than the Fed.
Utter Boredom
Until then you can reflect on this quote from Dune: “to know the future absolutely! All of it! What fortunes could be made — and lost on such absolute knowledge, eh?” but “what a hellish gift that’d be. What utter boredom! Every living instant he’d be replaying what he knew absolutely … Ignorance has its advantages.”
XTOD’s:
XTOD: Gem after gem. 1/ Mediocrity is invisible until passion shows up and exposes it.
2/ Time is the best filter. It is the only filter I trust. 3/ Victory is spelled survival.
4/ The hard way is the right way. 5/ What you want is money, but what you really want is meaning.
XTOD: China Slashes Rates and Reserve Ratios: Liquidity Lifeline or Desperation Signal?
China just fired a monetary bazooka. On May 7, 2025, the People’s Bank of China (PBOC) announced a 50 basis point cut to the Reserve Requirement Ratio (RRR) and a 10 basis point cut to key lending rates, unleashing an estimated ¥1 trillion (~$138 billion) of liquidity into the system. This is Beijing’s most aggressive monetary easing since the early COVID era. But don’t mistake this for routine stimulus. This is a signal and it’s flashing red…..Bottom Line:
Don’t let the mild rate cut fool you this is a liquidity distress signal from the world’s second-largest economy. Markets will celebrate short-term stimulus. But underneath, Beijing is bracing for impact
XTOD: The world doesn’t run to growth when things go wrong. It runs to shadows. Today, two of those shadows — Switzerland and Hong Kong — are screaming. The Swiss franc, too strong again. A currency not rising on strength, but on fear. Prices in Switzerland? Flatlining. Demand, evaporating. The SNB is watching inflation disappear — and with it, its reason to hold. Zero is coming. Maybe negative. Again. Half a world away, the Hong Kong dollar slammed into its upper bound. The HKMA stepped in. First time since 2022. Not because the city’s thriving — but because the capital is clawing its way to safety. Out of Asia. Out of credit. Out of risk. These aren’t technicalities. They’re tremors. Tiny economies. Heavyweight currencies. Both surging not on confidence — but on risk aversion. This is what stress looks like in a world of financial scaffolding. When the safe havens get crowded, the system is telling you something. The pipes are creaking. The air is thinning. Risk is rising. Rates are falling.
Soft landing? No. This is what remembering how to do worse looks like.
https://x.com/domcooke/status/1919728149396336990
https://x.com/onechancefreedm/status/1919937328295882838
https://x.com/JeffSnider_EDU/status/1919986155790942271
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