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Wednesday Is The Federal Reserve's Day
PLUS: Domestic Optimism vs Foreign Fear
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TheBRRR’s Thoughts

GM.
Stock indexes and crypto majors continue to consolidate near the lows after a brutal selloff to start the year.
While the macro backdrop in the US remains supportive due to cooling inflation and a strong labor market, US-centric equities have corrected as foreign investors have soured on the US, largely due to the unpredictability of Trump’s trade and tariff policy.
European stocks have seen their most dramatic period of outperformance in years.
Crypto has traded in-line with US stocks, as Trump’s support for the industry and bitcoin reserve strategy has driven strong correlation.
Now with the bulk of Trump’s campaign promises fulfilled, bitcoin, and by extension crypto, should start to trade more in-line with its typical correlation to liquidity conditions, which are just starting to loosen around the world.
Tomorrow we’ll see Jay Powell announce that the Fed is leaving interest rates unchanged until the next meeting in May, but he typically gives context clues to guide markets with his future outlook and analysis of recent economic data.
We also get interest rate dot plots from Fed officials, where they project interest rates for the months to come.
U.S. Optimism vs. Global Pessimism: Invesstors Flee as Trump’s Policies Take Shape
Synopsis: While American optimism about the country’s direction is at 20-year highs, global investors are bailing on U.S. assets at an unprecedented rate.
Trump’s aggressive trade policies have triggered a sharp sell-off in U.S. equities, a flight to European markets, and concerns over stagflation. The divergence between domestic confidence and foreign skepticism is the key macro trend shaping markets right now.
The Details:
Americans Are More Optimistic Than Ever: Polls show 42% of Americans now believe the country is on the “right track” (Feb 2025), the highest reading since 2004. (Harvard CAPS/Harris Poll, NBC News).
U.S. Investors Bullish: A Gallup survey shows 61% of Americans expect stock prices to rise, the most optimistic sentiment since Gallup began tracking in 2001.
Foreign Investors Are Running for the Exits:
Global investors slashed U.S. equity exposure by 40 percentage points—the largest reduction ever recorded—turning from a 17% overweight position in February to a 23% underweight in March (Bank of America Survey).
Foreign holdings of U.S. Treasuries fell from $8.63 trillion to $8.51 trillion between Nov-Dec 2024, marking a significant pullback (U.S. Treasury Dept.).
Stagflation fears rising: 71% of fund managers now expect stagflation (high inflation + low growth) over the next year, leading to a massive shift of capital out of U.S. assets (BofA Global Fund Manager Survey).
$4 trillion wiped from U.S. markets: The S&P 500 has lost over 8% since its February peak due to trade war fears (Reuters).
Dollar Weakness: Bullish positions on the U.S. dollar were cut in half as capital flows into the euro and emerging markets instead (WSJ).
Why It Matters:
This is the fastest shift from U.S. to European stocks in 25 years. Foreign investors have lost confidence in Trump’s policies and are diversifying away from U.S. risk.
Wall Street vs. Main Street: While American consumers and domestic investors feel optimistic, the smart money is pulling back, wary of inflation and trade disruptions.
Potential Market Impacts: If global capital continues to exit U.S. assets, expect higher bond yields, a weaker dollar, and continued underperformance in U.S. equities relative to international markets.
March 2025 FOMC Meeting Preview: Fed Expected to Hold Rates Amid Mixed Signals
Synopsis: The Federal Reserve is widely anticipated to keep interest rates steady at 4.25–4.50% in its March meeting as policymakers evaluate mixed economic signals. While inflation continues to moderate toward the Fed’s 2% target, the labor market remains strong yet shows early signs of cooling.
The Details:
Current Fed Funds Rate: 4.25–4.50% (no change expected)
CPI Inflation: 2.8% y/y (Feb 2025), down from 3.0% in Jan
Core CPI Inflation: 3.1% y/y (Feb 2025)
PCE Inflation: 2.5% y/y (Jan 2025), core at 2.6%
Unemployment Rate: 4.1% (Feb 2025), stable near historic lows
Job Growth: +151,000 jobs (Feb 2025), slowing pace
GDP Growth: 2.3% annualized (Q4 2024), moderate slowdown expected in Q1 2025
Consumer Sentiment: Near 29-month lows amid tariff concerns
WHY IT MATTERS: The Fed’s cautious stance reflects uncertainty about the economy’s trajectory amid moderating inflation but persistent global and domestic risks.
Traders and investors are positioning for at least two rate cuts later this year (CME FedWatch indicates ~75% likelihood), but timing remains uncertain.
Markets could experience significant volatility depending on the tone of Fed Chair Powell’s comments and any shifts in the updated dot plot.
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I don’t think our tech/crypto portfolio has quite bottomed yet, but it’ll come swiftly and we’ll recover into the summer. We’re still up 109% since launching in March 2023.

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Older Notes
Wednesday, April 3, 2024: We haven’t deployed the cash yet, but are eyeing exposure to a few assets including META and PLTR.
Monday, March 11, 2024: We sold Apple this morning. The newsletter held the stock from inception a year ago for a meager 12% gain.
The company has lost its magic evident by complacent iPhone releases, lack of a coherent vision for AI integration and punitive & anti-competitive App Store policies.
We believe the stock will move in-line with the broader Nasdaq going forward.
We’ll sit on the cash for now, but plan to redeploy it quickly.
Watchlist
$META: Sleeper in AI race and ad biz is proving resilient
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The BRRR is meant for informational purposes only. It is not investment advice. Please consult with your investment, tax, or legal advisor before making any investment decisions.
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