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Welcome back!

While we wait to hear from the FOMC tomorrow, Casey dug up some historical data about what Fed chairs past have done in their final 12 months. Not that we’re certain this is Powell’s final lap, but we’re pretty sure. 

Plus, one of crypto’s more controversial figures has a shiny new deal. Check it all out below:

Hawk talk

US equities and bitcoin were in the red Tuesday afternoon as conflict in the Middle East stretched into a fifth day. Investors are also waiting to hear from the FOMC tomorrow about their interest rate decision and, more importantly, what the committee’s latest Summary of Economic Projections has to say. 

Bitcoin had lost 2.7% over the day at 2 pm ET, hovering around $104,000. The S&P 500 and Nasdaq Composite opened lower and were trading 0.8% and 0.9% lower, respectively, at that time. 

All signs point to the Fed holding interest rates tomorrow. And probably again in July. Should the Israel-Iran conflict lead to sustained higher oil prices, the FOMC’s timeline for cutting rates could be delayed further. 

Speaking of that timeline, we’ll know a lot more tomorrow. The updated dot plot will tell us where committee members see rates ending 2025, plus where they think the unemployment rate, GDP and PCE are headed. 

In March, most FOMC members reported expecting interest rates to land at 3.75%-4% by the end of 2025. With the current rate being 4.25%-4.5%, this means committee members expected two 25 basis point cuts (or one 50bps decrease) by December. 

We know that the first few post-Liberation Day inflation data points have come in mild, milder than committee members had expected. Even so, should the market’s expectations for inflation increase, the Fed is going to get concerned. When businesses and consumers expect prices to rise, it’s like a self-fulfilling prophecy. 

It’s also worth noting that Chair Powell is probably in his final lap as head of the Fed. His term ends on May 23, 2026 and based on Trump’s past comments, we doubt Powell will be renominated. 

There are eight (including this week’s) FOMC meetings between now and Powell’s presumed departure. 

Secured overnight financing rate futures, which provide an avenue for investors to bet on the future of monetary policy, suggest that markets envision Powell cutting rates before the end of his term. Trading volumes on June 2026 options contracts have increased in recent months, er CME Group data. 

Historically, though, outgoing Fed chairs tended to spend their final year being more hawkish. Janet Yellen raised rates three times in the last 12 months of her term. Alan Greenspan, whose final year as chair was in 2005, issued four hikes. Of course, these were during times of stable growth and low inflation. 

In Powell’s case, the most hawkish move of all would be to raise rates this year. We (and markets) are all but certain that will not happen. What he might do instead, which would still be fairly hawkish, would be to delay rate cuts. “Higher for longer.”  

All that said, should you buy options? I’m not in the business of offering investment advice, so I’ll hold my tongue, mostly. 

My advice is to wait until Powell’s press conference tomorrow. We’ll have a better idea of what the Fed chair is thinking then.

— Casey Wagner

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This is how much US retail sales fell in May, marking the second-straight month of decline. Economists had projected the figure to come in at -0.6%. Excluding auto sales, the print was a bit better, at -0.3% over the month.

A little over two years after being sued by the SEC, Justin Sun is back on top. 

Sun’s crypto company, Tron, is set to go public through a reverse merger with SRM Entertainment, a merchandise manufacturer that said it will change its name to “Tron.” 

The SEC asked the court to pause a 2023 lawsuit against Sun just a month after President Trump moved back into the White House. Securities regulators had charged Sun with market manipulation and an unregistered securities offering. 

In his first stateside trip in years, Sun attended Trump’s memecoin dinner (as the No. 1 holder of the token) outside of DC last month. He also purchased $75 million of WLFI, the token associated with the Trump family-backed World Liberty Financial. 

SRM currently designs and produces toys and souvenirs for theme parks and media franchises. The company said the Tron acquisition is part of its plans to establish a Tron treasury strategy. Shares gained more than 500% on the announcement yesterday. 

You can’t make this stuff up.

— Casey Wagner