Midweek Macro Note: FOMC Wrap-up, Tariffs, Cooling Real Estate Cycle, Technicals, Energy, Vision Note, Gold/Silver

In this Midweek Macro Note we cover the FOMC wrap-up, tariffs - which have vaporized from the headlines, the cooling RE cycle, energy, tariffs, a Vision Note, gold, silver, and more. #MacroEdge

Good Wednesday evening MacroEdge readers and community,

This week we’ve continued to seeing evolving news and headlines in this headline-driven market - that then had FOMC added into the mix again today as the Fed remained relatively hawkish about concerns over stagnation, tariffs, and persistent price pressures. The Israel-Iran conflict remains top of mind for everyone as well, given it’s obvious energy price implications (and much more), and we have zero clear signal from the Administration on what their next steps are in the region - even though they’ve mobilized a massive amount of equipment and have continued to take a ‘talk tough’ stance but then walk it back when Trump states that ‘Iran wants to visit the White House’ - three times - like we saw today.

FOMC, Mostly Hawkish, Fiscal Policymakers Won’t Like It

The FOMC remained relatively hawkish today - shifting rate expectations lower on a 1-year basis - and increasing both their unemployment and inflation forecasts in the short term (and unemployment in the longer run).

• The policy rate was held steady at 4.25-4.5%

• Median projection still shows two rate cuts by year-end (7 of 19 voting members expect no cuts now)

  • Tighter rate path until 2027

• Powell noted that rates were only ‘moderately restrictive’ now more accurately describing

• Powell demonstrated his total misunderstanding of housing dynamics by talking about a ‘housing shortage’ as inventory surges across the Sunbelt and elsewhere – nature is self-correcting

As long as the inflation risk remains present - this Fed (which disastrously missed the obvious inflation forming in early 2021) will be cautious - in my opinion. That’s not to say if there’s not another broader macro event like higher unemployment or a major war - they would hesitate to bring rates lower again - as well… The overall tone and takeaway is that in the face of the ‘BBB’ world and continued fiscal insanity - the Fed is taking a more cautious tone on easing than markets expected. Consensus is shifting in the dots - and investors are offsides again if energy/food costs accelerate and the Fed pushes any sign of a cut later into the year (like late fall).

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Tariffs - Where’d They Go…?

Ironically, the war, and Elon/Trump spat provided perfect cover for individuals to shift their attention away from the trade deal debacle that’s been underway… we’ll continue to watch for ‘trade deals’ or TACOs over the next few weeks.

Real Estate

• Housing starts - lowest since the pandemic

• Building permits - declined slightly - single-family permits decreasing was the notable feature here