Here’s what you’ll find in today’s edition:

• Why things would have to deteriorate substantially to wake up the Powell put.

• Labor market conditions are looking healthy — for now. 

• A look at the long, winding DeFi broker rule saga that has reached its end.

Powell isn’t coming to save your bags

In the world of macro, the FOMC roadshow has been sidelined as global markets and pundits are squarely focused on Trump’s trade policies and their impacts on the global economy. 

That creates a state of fragility with a bunch of crosscurrents. Economic activity is grinding to a halt as businesses have trouble making hiring and capital investment decisions without knowing what the outlook will be on tariffs. 

After some initial tariff frontrunning in January and February, the Philly Fed Manufacturing Index cratered to a multi-year low: 

Traditionally — as economic activity slows down — you would see a decrease in prices to rebalance economic equilibrium. However, with the looming concern of tariffs, we’re seeing a continued increase in the prices paid for goods (as measured in the Philly Fed report):

So that’s growth (economic activity) down, and prices up. That’s a nasty combination for central bankers to deal with. 

What makes the picture even messier is contrasting this with the other side of the Fed’s dual mandate — the labor market. Initial jobless claims (the highest frequency labor market datapoint we have) continue to signal no meaningful layoffs occurring in the economy right now:

To be fair, the labor market is pretty bad for those seeking a new job; but as long as you sit in your current job, there’s no meaningful layoff cycle to be seen right now. If the labor market continues to remain OK-ish as it appears in the current data, there’s no meaningful catalyst on that side of the mandate for the Fed to react dovishly to. 

This framework of lower growth, higher prices (even if just short-lived, a one-time price level increase from tariffs and not reflexive embedded inflation), and a decent labor market are forcing the Fed to continue to sit on its hands.

Fed Chair Jerome Powell took to the podium yesterday and further hit home on this messaging — to the dismay of bulls looking to get the wind in the sails of their struggling bags. An excerpt from his speech:

Where this nets us out is that the Fed put strike price is much lower than current pricing. Things would have to deteriorate meaningfully to wake up the Powell put.

And so, we come full circle where once again investors are at the whim of where Trump’s trade policies allow the dust to settle. Good luck out there; the Fed (for once) does not have your back.

— Felix Jauvin

No Tariffs on Builders

The Fed won’t refactor your contracts. Rates won’t fix UX. Policy won’t push code to prod.

Builders. Founders. Devs. Not waiting for the cycle — writing the next one.

• $100K+ in hackathon bounties

• Developer tickets available

• Speaker lineup live

📅 June 22–26 | Brooklyn, NY

The “market opportunity” of the fund tokenization segment by 2030, according to a report by crypto custody firm Taurus. 

It notes that while mutual funds manage roughly $58 trillion in assets, inefficiencies exist with a T+2/3 settlement period locking up funds.

Check tomorrow’s edition for more commentary on tokenization’s growth potential.

Fewer people than expected filed for unemployment benefits last week, data released this morning shows. 

Initial jobless claims fell by 9,000, coming in at 215,000 for the week ended April 12 — a sign that neither federal layoffs nor tariffs are weighing on the labor market. At least for now. 

Continuing claims, however, are on the rise, signaling that while companies may not be engaging in significant layoffs, they also aren’t ramping up hiring. There are now 1.89 million people receiving unemployment benefits, a level not seen since November 2021. 

The report comes a day after Chair Powell assured markets that the labor market is in “a really good place.” He added, however, that maintaining this health is dependent on price stability. 

Tariffs, of course, pose a threat. But Powell (and most of the Fed governors) have consistently said they’ll just have to wait and see how things shake out. In other words, they’re not cutting rates on the expectation of persistently higher inflation. 

The market took him seriously; odds of a May 25bps cut dropped from 15% to 10% yesterday, per data from CME Group. 

President Trump this morning again criticized Powell, writing on Truth Social that the Fed head’s “termination cannot come soon enough.” Trump has said in the past he’d like to fire Powell, an action experts say is legally questionable.

It’s unclear if he was signaling that he’d like to do so, or if he’s simply anticipating the end of Powell’s term in May 2026.

— Casey Wagner

The DeFi broker rule saga is behind us. It only took 3+ years.

Crypto industry groups all but closed the book on the matter on Wednesday when they requested the lawsuit they filed against the IRS be dismissed.

“The parties agree that, in light of the enactment of Joint Resolution 25, the Final Rule has no force and effect, meaning this action is now moot,” they wrote.

The Resolution, brought under the Congressional Review Act, sought to nix an IRS rule  (published in December) that required “certain decentralized finance industry participants to file and furnish information returns as brokers.”

It passed the House and Senate with bipartisan support and last week President Trump signed the Resolution into law, officially reversing the rule. 

A quick timeline of the latest events, showing the speed this was done after the administration change:

• Dec. 27: Blockchain Association, the DeFi Education Fund and the Texas Blockchain Council sue the IRS.

• Jan. 22: Two days after President Trump was sworn in, Rep. Mike Carey and Sen. Ted Cruz introduce resolutions to reverse the IRS rule.

• Feb. 10: The court orders a status report from the plaintiffs, who say they are watching to see if the legislation passes.

• Feb. 19: Industry firms write a letter to Senate and House leaders urging them to repeal the IRS rule. 

• Feb. 28: Legislation to reverse the rule advances out of the House Ways and Means Committee.

• March 4: 70 senators, including 18 Democrats, vote in favor of the CRA.

• March 11: House members pass the bill too. Final vote tally: 292-131. 

• April 10: Trump signs H.J. Res. 25 into law.

And now this court filing.

We should note that this tale started way before December. When The Infrastructure Investment and Jobs Act became law in 2021, it amended the definition of a “broker” to include “any person who, for consideration, is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.”

Blockchain Association CEO Kristin Smith warned in an opinion piece prior to the bill’s passage that it would “threaten to sabotage American leadership in digital currency and send jobs overseas.”

Smith is actually leaving the crypto advocacy group to become president of the Solana Policy Institute in May. So I guess not only does the suit dismissal put a bow on this issue. Smith is, in a sense, putting a bow on her Blockchain Association tenure.

— Ben Strack

• Republican attorneys general from 18 states have asked a judge to pause their lawsuit against the SEC, citing new leadership at the agency. The suit, which alleges “regulatory overreach” of the crypto industry, was initially filed last year. The DeFi Education Fund is also a plaintiff. 

• US housing starts fell 11.4% from February to March. Building permits, on the other hand, increased 1.6% month over month, according to Census data released Thursday. 

• Felix’s latest Forward Guidance podcast interview with Mel Mattison is out now. Watch here or listen wherever you get your podcasts.