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

• Felix unpacks yesterday’s Fed news. 

• GDP at the end of 2024 rose less than expected.

• An ex-SEC senior counsel weighs in on the agency’s priorities.

The Fed committed to pausing rate cuts. Why?

The FOMC meeting was yesterday, and not a whole lot happened. 

The Fed committed to pausing rate cuts for this meeting, as has been priced into the SOFR curve for many months now. 

As is always the case for FOMC meetings, the statement comes out first before Fed watchers comb through it to sort out what new changes have been made. 

Interestingly, a shift in language was made around how they’re viewing inflation:

Initially, this sent risk assets lower on the interpretation of a more hawkish Fed. Shortly after however, during the press conference, Chair Powell mentioned that this was simply them cleaning up language and shouldn’t be taken as a change in policy stance. This then sent risk assets in the opposite direction — higher. What a whipsaw! 

This whipsaw showcases just how important it is to discern which side of the dual mandate the Fed is prioritizing at any given time. So with that in mind and no meeting until March, let’s take a look at where the economic data stands:

Labor market

Today we received the weekly initial jobless claims data, some of the most up-to-date and high frequency labor market data that we can get our hands on. Notably, we saw a major down-move in claims:

Further, we saw continuing claims continue to flatten out:

Overall, these data points hint at a labor market that continues to remain in balance and has no cause for concern from the Fed. 

Growth

Achieving solid economic growth without inflation being its driver is the golden goose of central banking. When it happens, it's magic.

Today, we received preliminary GDP growth data that shines a light on an economy that remains solid. 

Although the print came in at 2.3%, below the consensus of 2.6%, the underlying drivers remain solid.

Consumption remained the primary driver of the growth, at 4.2%. The consumer is the engine of the US economy; so as long as this remains strong, there’s little to worry about in terms of the growth outlook.

Notably, however, fixed investment saw its first contraction since 2023 — of -0.6%. It’ll be interesting to see how the Fed digests this dispersion in growth between the investment sector and the consumption sector. Overall, however, there’s nothing of major concern yet.

Piecing it all together and contrasting it with the Fed’s dual mandate, we have a labor market that is in solid balance and no major concern of deterioration. Further, we have a consumer that remains strong and spending that doesn’t hint at major worries of a growth slowdown at the moment. 

This all sets the stage to validate the Fed opting to pause cutting rates here as it takes time assessing how its 100-basis point cuts during this cycle so far impact the economy.

— Felix Jauvin

The regulatory landscape is shifting. As the US explores a strategic digital asset reserve, the implications for markets, monetary policy, and investment strategies are enormous.

At DAS NYC, join the leaders shaping this transformation — from BlackRock’s perspective on institutional adoption to Ripple and Solana’s insights on blockchain’s expanding role in finance.

Explore how these changes are shaping portfolios, shaping markets, and influencing the global financial system. If you’re navigating this evolving landscape, you can’t afford to miss these conversations.

📅 March 18-20 | NYC

The amount of cash that super PAC Fairshake said it has on hand to back crypto-friendly candidates in the 2026 midterm elections.

This includes $11 million in new contributions, the committee said Thursday. 

Fairshake and other PACs threw big financial support behind various Congressional hopefuls last year; there are about 300 pro-crypto legislators in the 119th Congress.

Advance Q4 GDP estimates show growth slowed more than expected at the end of 2024, but annual growth still came in at a healthy level. 

The Bureau of Economic Analysis says the US economy grew by 2.8% in 2024, down slightly from 2023, which saw a 2.9% increase. 2% is the accepted threshold for developed countries. 

Inflation-adjusted GDP for the final months of 2024 came in at 2.3%, lower than projections of 2.4%. Q3 GDP was adjusted to 3.1% growth. 

Personal spending in Q4 was up again, coming in at 4.2% annualized. Consumers spent the most on healthcare and recreational goods and vehicles, the report showed. 

While the figure may show consumer resilience, some argue the boost in spending is just a reflection of higher prices. 

The figures come on the heels of the latest FOMC decision to hold interest rates. Chair Powell yesterday took a more dovish stance, reiterating that central bankers are in no hurry to lower rates.

Looming tariff policies also contribute to economic uncertainties, Powell added. Duration, size, targeted nations and consumer impact are all up in the air, making forecasting a challenge. 

Imports were down slightly in the fourth quarter, BEA data showed. Inventories also fell, subtracting from GDP. Both will be key figures to watch as Trump’s tariff plans take shape.

— Casey Wagner

Former SEC senior counsel Adrienne Gurley yesterday gave her take on how the SEC could approach the influx of crypto ETF proposals. She had a few other things to say. 

For one, the Venable LLP partner told me she’s expecting token classification guidance and custody rule revisions to be key near-term priorities for the securities regulator.

President Donald Trump’s executive order laid out 30-, 60- and 180-day deadlines for the SEC and others. The dates to watch appear to be:

• Feb. 22, by which agencies identify regulations/guidance/orders affecting the digital assets sector. 

• March 24, by which each agency submits recommendations related to those. 

• And finally, July 22, by which the working group sends a report to the president.

“Clear guidance will increase confidence in the market, encourage innovation (something that is a focus of [Paul] Atkins), and allow for larger financial institutions to consider entering the crypto custody business,” Gurley said.

Getting rid of SAB 121 was a start. Galaxy Digital execs wrote in a Wednesday report they expect traditional banks to provide crypto custody and trading — “starting a process that could see them gradually transform into self-custodial neobanks.”

The next step: the world’s top custody banks safeguarding digital assets. This could help spur the SEC to allow spot bitcoin and ether ETFs to perform in-kind creations and redemptions, they add.

“Banks could also begin offering lending and financing services for digital assets, such as margin trading backed by bitcoin collateral or the creation of innovative structured products that provide bespoke exposure to the underlying digital assets,” the Galaxy pros noted.

As for the SEC’s enforcement strategy, any matters involving fraud (related to crypto or not) will remain a priority, Gurley explained.

But, she noted, the commission is likely to step away from investigating crypto cases purely based on registration violations. Particularly after an appeals court again called out the SEC for “arbitrary and capricious” behavior.

— Ben Strack

• Meta has agreed to pay $25 million to settle a lawsuit with Donald Trump over his suspension from Facebook and Instagram. The news broke as the company announced its Q4 2024 earnings last night, which topped expectations on earnings per share and revenue. 

• US equities were mixed Thursday as investors digested new earnings reports. Tesla and Meta were up while Microsoft dropped. Apple will report earnings after the bell. 

• Want more commentary on the AI race and DeepSeek’s impact on the market? Check out the latest Forward Guidance podcast.