Jerome Powell sticks to the script

The Federal Reserve Chair still sees solid growth and cooling inflation

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Good morning market watchers!

Phil here, reporting from New York. Welcome to the inaugural edition of Opening Bell Daily.

We’re going over what’s rattled Disney stock, a bearish Tesla view, the still-robust labor market, and more.

And our main story: A chief economist breaks down what to know from Jerome Powell’s Wednesday speech.

At a glance*:

  • DJIA: 39,586.14, up 0.27%

  • S&P 500: 5,283.75, up 0.33%

  • Nasdaq Composite: 18,454.25, up 0.45%

  • 10-year Treasury yield: 4.363%, up 1 basis point

  • Gold: $2,312.21 per ounce, down 0.11%

  • Bitcoin: $66,348.20, up 0.71%

  • Brent crude: $89.29 a barrel, down 0.07%

*Pre-market data and moves as of 7:45 a.m. EST

A Fed speech that met expectations

Speaking Wednesday, Fed Chair Jerome Powell said the recent slate of stronger-than-expected economic readings have not changed the central bank’s outlook.

Despite marginal upticks in prices to start the year, Powell said overall the landscape resembles “one of solid growth, a strong but rebalancing labor market, and inflation moving down to 2% on a sometimes bumpy path.”

In effect, he kept to his usual book: He wants to see more evidence of disinflation — that is, cooling inflation — before adjusting policy.

“Powell stuck to the main message that he and the committee have been sticking to since the last FOMC meeting,” EY’s chief economist, Gregory Daco, told me last night. “They don’t expect to lower the policy rate until they have sufficient confidence.”

Powell, he added, was implying markets should not try to extrapolate from blips.

In Daco’s view, the up-and-down data of the first quarter was mostly noise.

In a bid to squash multi-decade high inflation, the Powell regime embarked on a historic rate-hiking cycle over the last two years.

Since July, the Fed has kept the benchmark short-term rate in the 5.25%-5.5% range.

Depending on who you ask, the central bank is almost always on the brink of a policy mistake.

Keep rates unchanged for too long, and the odds of a recession creep higher.

Loosen policy too quickly and inflation could rebound.

In any case, the more Powell & Co. beat their “data-driven” drum, the more markets push back their expectations for a rate cut.

In December, traders expected to see as many as six rate cuts in 2024.

Those expectations have since pared to about three (the same amount Daco has expected for months).

Markets currently see about a 60% chance of at least one cut by June, according to CME’s FedWatch Tool — down from about three-quarter odds a month ago.

Five more central bankers are due to speak Thursday, ahead of Friday’s jobs report.

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  • Bob Iger took down Nelson Peltz in a shareholder vote. Disney stock declined more than 3% in Wednesday trading, but CEO Iger notched a key victory nonetheless. (WSJ)

  • Tesla stock could fall 90% — at least according to a prominent hedge fund manager who’s been shorting the EV maker since 2020. The comments follow Tesla’s below-expected car deliveries in the first quarter. (CNBC)

  • Billionaire Ray Dalio defended his long-time bet on China. The Bridgewater founder said he has no plans of leaving the world’s second-largest economy. (Bloomberg)

Rapid-fire headlines:

  • Private employers added 184,000 jobs in March, 34,000 more than expected (ADP)

  • Paramount stock soared 14% after report of a merger with Skydance (WSJ)

  • Ulta Beauty shares tumbled 15% after exec warned of weak demand (The Street)

  • Bank of America says stocks could soon face a 12% correction (Business Insider)

  • JPMorgan cut its price target for Tesla (

Last thing:

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