Not in a Hurry

"...this is not a committee that feels like it's in a hurry to cut rates quickly." - Powell

Summary: Jerome Powell tempered expectations for fast rate cuts last week. The market seems to be updating to the idea that interest rates won't fall as fast as people have been hoping for. But there's enough strength in the economy that it’s not clear that more rate cuts are a good thing.

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Macro

The Fed is not in a hurry to cut rates.
“But the sense of the committee, this is not a committee that feels like it's in a hurry to cut rates quickly. It's a committee that wants to be guided, ultimately we will be guided, by the incoming data and if the economy slows more than we expect, then we can cut faster, if it slows less than we expect, we can cut slower, and that's really what's going to decide it.” - Federal Reserve Chair Jerome Powell

Expectations may have gotten ahead of themselves.
“I think the forward curve is wrong. We're not going to see, and I think Chairman Powell said that yesterday, we're going to be patient as we... I think the amount of easing that's in the forward curve is crazy. I do believe there's room for easing more, but not as much as a forward curve would indicate... It's hard for me to see another 200 basis points of decline in short rates.” - BlackRock (BLK 0.00%↑) CEO Larry Fink

Rate cuts may not come as fast as people think.
“The story over the past couple of years has been the rate rises, as rates begin to decrease, it certainly changes things. I think it's not going to be as quick as people think.” - Affirm (AFRM 0.00%↑) CFO Michael A. Linford

It's not clear that rate cuts are needed.
“This [rate cut] was a very, very expensive insurance policy....The notion that we would cut rates. Financial markets are wide open. Equities are at an all-time high. Financing is available. Real estate prices are going up in every market. And yet, we're stimulating. And we're stimulating fiscally. It is not clear that we need more rate cuts at this point in time. To the extent we encourage growth—and growth was very strong, as you saw from GDP for the quarter—to the extent we accelerate the economy and have to go in the other direction, that would not be a good day.” - Apollo Global Management (APO 0.00%↑) CEO Marc Rowan

A lot of segments of the economy are doing well.
“I've been very consistent. We are not, we're not going to have a hard landing...we spend so much time focusing on the segments that are doing poorly...other parts of the economy are doing really well. Look at corporate earnings overall. They've been very strong. And I think they're going to continue to be very strong...I don't know why we talk about a hard or soft landing. We're continuing. We're going to grow at 2-3%.” - BlackRock (BLK 0.00%↑) CEO Larry Fink

Inflation has cooled.
“At the same time, inflation decelerated modestly to approximately 1.5%. And we continue to expect inflation to gradually slow before leveling out later this fiscal year.” - United Natural Foods (UNFI 0.00%↑) President & CFO Matteo Tarditi

Hiring is still positive.
“While growth and hiring has moderated, hiring within our client base during the first quarter was positive and better-than-expected across our HCM and HR outsourcing businesses.” - Paychex (PAYX 0.00%↑) President & COO John B. Gibson 

Companies are optimistic.
“I think the fact that the Fed has reduced rates is going to help to manage the unemployment issue and stimulate consumption. So we remain as optimistic as we have been about our expectations for the back half of the year.” - Constellation Brands (STZ 0.00%↑) CEO Bill Newlands

International