VideoBenjamin CowenBenjamin Cowen

FOMC: The End of an Era

Leadership uncertainty around Powell's likely final April 29 meeting frames expectations for a cautious Fed that will resist near‑term rate cuts, with markets repricing cuts toward late‑2027 amid rising energy‑driven inflation and geopolitical shocks. Energy—particularly oil and XLE—emerges as a late‑cycle driver that has historically coincided with Bitcoin bear lows and could force market rejections, rotating flows toward lower‑risk assets. The speaker warns that premature easing risks reigniting inflation and that the Fed may act reactively to yields, leaving downside risk as the business cycle nears its end.

Monetary PolicyInterest RatesInflationEnergy MarketsGeopolitical RiskInvestment Strategy

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Key Takeaways

April 29 is likely Jerome Powell's last FOMC meeting, creating an 'end of an era' and governance continuity questions; markets have repriced the next rate cut out toward late‑2027, and Powell is expected to resist near‑term easing by pointing to rising inflation tied to recent geopolitical developments.

Surging energy prices, tariffs, and geopolitical shocks materially constrain the Fed's ability to ease policy and make premature rate cuts dangerous, because energy is a late‑cycle indicator that is likely to remain elevated until a recession and could reignite an inflationary wave if policy is loosened too early.

With leadership uncertainty, the Fed risks acting reactively—cutting late to 'chase' the 2‑year yield rather than preemptively—which would drive investors toward lower‑risk assets even though Powell has so far engineered a partial soft landing (equities at all‑time highs, gold strong); downside risks remain until the economy truly 'lands.'

CRYPTO

Double Bottoms — Bitcoin formed discrete lows around June and November; the November low aligns with the FTX collapse narrative. The speaker cautions that bear markets often expose fraud, so multiple factors likely explain the declines.

“Now, one of the things I want to draw your attention to specifically with Bitcoin is one could argue there was a reason Bitcoin found a low in June for…”—

ENERGY

Late-Cycle Oil — The speaker expects oil prices and energy equities (XLE) to remain elevated until a recession forces them down, arguing energy is typically a late‑cycle indicator that tops after broader equity markets.

“At that point, whenever oil does come back down, it'll probably be due to a recession. Okay? But until you get a recession, oil prices are likely to remain high…”—

FED-POLICY

Chair Uncertainty — April 29 is likely Powell's last FOMC meeting as Fed chair, a symbolic 'end of an era' that raises the question of whether he will remain on the Fed Board as a governor. Markets will watch his message for clues about continuity and future policy direction.

“April 29th is going to likely be Pal's last meeting, FOMC meeting as chair of the Federal Reserve…”—

Cuts Repriced — Markets have pushed expectations for the next Fed rate cut from 2026 toward late 2027. Powell is expected to resist near‑term easing, citing rising inflation tied to recent geopolitical developments.

“If you look at expectations for the next rate cut, you could argue that the market's not really pricing in a rate cut until, say, late 2027.”—

MACRO-DRIVERS

Energy Correlation — Overlaying XLE on Bitcoin shows Bitcoin bear lows often coincided with XLE highs, implying Bitcoin's performance is tied to energy‑driven monetary conditions. Rising oil and inflation have rotated flows from higher‑risk crypto to lower‑risk assets, making Bitcoin a relative safe‑haven within crypto rather than broadly strong against the dollar.

“So when you actually overlay Bitcoin or sorry overlay XLE onto the Bitcoin chart, what you'll see is that in the bare market, the lows for Bitcoin corresponded roughly to…”—

MARKET-CYCLE

Cycle Timing — Historically the S&P 500 tends to peak before recessions while energy peaks later or during the recession (examples: 2000 and 2007/2008). The speaker believes the current business cycle will likely end within the next couple of years, leaving limited runway and meaningful downside risk when it does.

“Whereas the S&P comes down before you go into the recession. So look at this…”—

MONETARY-POLICY

Premature Cuts — Cutting rates too early could reignite inflation and push equities into a bear regime; mid‑1990s precedent shows premature easing can force the Fed back into tightening.

“The reason for that is because then it would likely truly ignite another inflationary wave that would then lead us into, you know, a bare market for the S&P 500…”—

Reactive Fed — With uncertainty around a new chair, the Fed could act reactively—ultimately cutting to 'chase' the 2‑year yield rather than preemptively—which would likely push investors toward lower‑risk assets and reflect policy responding to worsening conditions.

“I think that as you have a new Fed chair and you have the uncertainty associated with that, it still will likely lead to, you know, higher risk assets bleeding…”—

RISK-ASSETS

Dual Resistance — Bitcoin is testing bear‑market resistance against both gold and the U.S. dollar simultaneously; past rejections (late March/early April and November 2022) coincided with XLE surges, suggesting energy‑driven inflation could again trigger a rejection.

“When you look at this as say Bitcoin against gold, what you'll notice is that Bitcoin is testing its bare market resistance band against gold at the same time that…”—

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Important Disclaimers

Not Investment Advice: For education only — not financial, tax or legal advice.

AI-Generated: Made by AI from source transcripts and may contain errors.

No Guarantees: Past performance does not predict future results; investing carries risk.

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