Good morning, investors. The S&P 500 is coming off three consecutive losing weeks in a row, and yet the index is still within 4% of its all-time high.

Geopolitics, oil shocks, inflation fears and AI uncertainty still haven’t been able to fully derail the bull market.

What happens with the central bank this week, though, could bring a jolt of its own.

Banking on cuts

A judge shot down the Department of Justice's case against Jerome Powell and in doing so may have unlocked the Fed's next rate cut.

The case was the only thing blocking Kevin Warsh's confirmation as Fed chair, and now markets seem to be mispricing what a Warsh-led Fed actually does to rates in 2026.

Republican Senator Thom Tillis — who can single-handedly block Warsh's confirmation on the Senate Banking Committee — said he would lift his blockade the moment the Powell probe ended.

Judge James Boasberg ended it Friday, calling the investigation a pretext to force Powell to cut rates.

Tillis called the probe "weak and frivolous" within hours.

And a senator who still planned to use that probe as cover would not publicly call it out.

Republicans hold a 13-11 majority on the Senate Banking Committee. Tillis could go against his own party and create a 12-12 deadlock, which would prevent Warsh from moving forward.

While the DOJ said it would appeal the latest decision, it’s unlikely to gain new traction.

Tillis is a retiring lawmaker and Powell’s term ends May 15. If no replacement is confirmed in time, Powell stays and President Trump wouldn’t be happy.

Warsh, for his part, has signaled he would be much more open to rate cuts.

His recent comments suggest he would shrug off concerns around rising energy prices, a contrast from Powell’s caution.

The Wells Fargo Investment Institute has forecasted that Warsh would cut rates twice in the second half of this year, should he take on the top job.

Yet CME data suggests traders remain skeptical even of one cut this year.

Markets are positioned for later and fewer cuts than what Warsh has said he’s open to.

Notably, the conflict in Iran has fueled fears of an inflation rebound, which has sparked a sell-off across small-cap stocks, regional banks and more cyclical sectors — exactly the assets that would benefit most from an accelerated timeline for rate cuts.

The Fed isn’t expected to adjust rates at its meeting this week, though the FOMC announcement will dominate headlines anyway.

Friday’s ruling is the news that actually moves the outlook.

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📉 The S&P 500 dropped to its lowest level of the year. The index closed Friday at 6,632, down 5% from its recent high, while oil prices surged past $100 a barrel again. (CNBC)

🏦 Private credit is cracking under a surge of redemption requests investors can't fully honor. Morgan Stanley honored only 45.8% of withdrawal requests from its $7.6 billion North Haven Fund, the latest in a wave of redemption gates that have now hit Blackstone, BlackRock and others. (Benzinga)

🛢 Lowering oil prices is a tall task for President Trump. It will take time for the largest-ever release from global stockpiles to work its way into the oil market and prices. (WSJ)

🗓 March 16, 2008: JPMorgan acquired Bear Stearns for just $2 per share, over a 90% discount to its prior closing price, with the Fed backstopping $30 billion of the deal as the financial crisis unfolded.

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