Real Change

Markets shift focus to U.S involvement in Iran amid Fed policy pause.

Summary: The Fed held rates steady last week, but other things will likely be on the markets' minds this week. All eyes will be on geopolitics following the US involvement in Iran. Hopefully, no one does anything stupid.

---

Editor’s Note: We have reserved the sections after Macro for our premium subscribers. If you’re not a premium subscriber already, please consider subscribing.

---

Macro

The Fed held rates steady last week
"In support of our goals, today the Federal Open Market Committee decided to leave our policy interest rate unchanged. We believe that the current stance of monetary policy leaves us well positioned to respond in a timely way to potential economic developments." – Federal Reserve Chair Jerome Powell

The consumer is still in the game
"The consumer is still in the game. The consumer's confidence is as exhibited by spending continues to be strong. And then what we're seeing the things that we're investing are working. So we have continued to see some continued loan growth. We continue to see a little bit of deposit growth. The consumer side for us has been really strong." – Truist Financial (TFC 0.00%↑) CEO William Rogers

"But to the facts and just how consumers are behaving, responding, still in a position of strength. If you look at retail spend as an example, our spend for our customers, our everyday spend. So if you look at Costco, if you look at Amazon, that's up year-over-year, Walmart up year-over-year restaurants, entertainment, flat. So discretionary spend, which is where you see some of the softness, is still holding up. So spend is holding up." – Regions Financial (RF 0.00%↑) Head of Consumer Banking Kate Danella

"I would say from a consumer sentiment standpoint, they're probably a little less positive about the future, but I don't think it's necessarily showed up so much in the buying habits at this point." – Carmax (KMX 0.00%↑) CEO William Nash

The labor market is strong
"I think if you were to look at employment and payroll. So our unemployment receipts are still below 2019 levels. Our payroll, social security is still indicating a strong labor market. In fact, payrolls are up on a real basis or adjusted basis from 2019." – Regions Financial (RF 0.00%↑) Head of Consumer Banking Kate Danella

The US economy has been remarkably resilient
"So the U.S. economy has defied all kinds of forecasts for it to weaken really over the last three years. And it’s been remarkable to see, just again and again, when people think it’s going to weaken. Now, eventually it will, but we don’t see signs of that now." – Federal Reserve Chair Jerome Powell

Maybe we'll start to get rate cuts soon
"The data the last few months has been showing that trend inflation is looking pretty good, even on a 12 month basis. So I’ve labeled these good news rate cuts, when if inflation comes down to target, we can actually bring rates down. I’ve been saying this since about November of 23. So I think we’re in that position that we could do this and as early as July." – Federal Reserve Governor Christopher Waller

But the world will be focused on other things this week
"We have completed our very successful attack on the three Nuclear sites in Iran, including Fordow, Natanz, and Esfahan. All planes are now outside of Iran air space. A full payload of BOMBS was dropped on the primary site, Fordow. All planes are safely on their way home. Congratulations to our great American Warriors. There is not another military in the World that could have done this..." – U.S. President Donald Trump

It's certainly a time of real change
"It’s certainly a time of real change, you know, from a geopolitical standpoint, from a trade standpoint, from an immigration standpoint. You see this not just here but everywhere. So there’s quite a lot going on." – Federal Reserve Chair Jerome Powell

Let's hope no one does anything stupid
“Maybe I should go to the Fed... Am I allowed to appoint myself at the Fed? I’d do a much better job than these people.... So we have a stupid person. Frankly, you probably won’t cut today. Europe had 10 cuts, and we had none. And I guess he’s a political guy, I don’t know. He’s a political guy who’s not a smart person, but he’s costing the country a fortune.” – US President Donald Trump

International