The Last Meeting
The Last Meeting
May 7, 2026
Powell is gone. Not yet — technically he chairs through May 15 — but Wednesday was his funeral. The FOMC voted to hold at 3.50–3.75%, as scripted, as expected, as utterly beside the point. What mattered was everything orbiting that decision like debris around a dying star: four dissents, the most fractious meeting since 1992, Kevin Warsh clearing the Senate Banking Committee on the same afternoon, and Powell announcing he'd stay on as a mere governor while a criminal investigation into him winds its way through the machinery of an administration that never wanted him there in the first place.
Three policymakers dissented not against the rate hold itself, but against the statement's easing bias — the soft forward-guidance language suggesting the next move is more likely down than up. Read that slowly. The majority of the committee that disagreed Wednesday wasn't demanding cuts. They were demanding the Fed stop telegraphing them. Powell tried to spin this as a timing dispute rather than a philosophical one, saying the committee is "moving toward a more neutral place" on its bias. It was not a convincing performance. It sounded like a man explaining a car accident to the insurance company before the other driver gets to speak.
The rate decision itself is almost secondary at this point — a bureaucratic formality dressed in formal language. Inflation "remains somewhat elevated," job gains "have remained low," and the committee is watching "the implications of developments in the Middle East." Careful, hedged, calibrated to offend no one. The prose of an institution managing its own transition more carefully than it's managing the economy.
Because here's the real story: Kevin Warsh is about to inherit a committee with four active dissenters, a geopolitical oil shock that's doing the Fed's dirty inflation work for it without the Fed having to do anything, and a market that has somehow convinced itself a rate cut is coming before year-end despite futures pricing it at sub-10% probability. Warsh will likely preside over his first meeting on June 16–17, when the FOMC releases updated economic projections alongside a rate decision. Those dots will tell us everything. Or nothing. Probably both.
Meanwhile, outside the Eccles Building, the world is doing what it does.
Crude fell more than 7% on Wednesday. Not because inflation is cooling or demand is collapsing, but because someone in Tehran is reading a 14-point proposal drafted in Islamabad, and markets decided to front-run a peace that hasn't happened. WTI dropped to around $94.80/bbl and Brent to $102.37, following reports that the US and Iran are closer to an agreement than at any point recently — though the Strait of Hormuz remains sealed, with only a handful of cargo crossings recorded this week. Saudi Aramco cut its June Arab Light OSP to Asia by $4 a barrel simultaneously, from $19.50 to $15.50 over the Oman/Dubai average. That's not a rounding error. That's Riyadh reading the same diplomatic tea leaves and hedging its book before the premium evaporates.
Oil traders have been humiliated twice this year by Iran headline risk — once on the way up, now possibly on the way down. Anyone who positioned short oil in early April, when the temporary ceasefire collapsed and Brent ripped back above $114, got a harsh education in the physics of geopolitical risk. Peace hopes move prices as fast as war scares. Sometimes faster, because they catch the short side sleeping.
AMD delivered an 18% pre-market surge on earnings, pulling the Nasdaq up 1% and helping push the S&P 500 to a new all-time high at 7,259. The chip story remains the load-bearing wall of this entire bull market. Remove it and nothing else holds up the ceiling. Every other sector — materials, industrials, even the airlines catching tailwinds from cheaper jet fuel — benefits from the AI-adjacent gravity well that AMD, Nvidia, and their ecosystem have created. Magnificent 7 stocks now account for 55% of expected S&P 500 earnings growth this quarter alone. That concentration is not healthy. It's just working. There's a difference, and markets are refusing to care about it.
The one genuine surprise: Shopify. SHOP fell 15.6% despite posting Q1 EPS of $0.36 against a $0.32 consensus estimate. Beat the number, destroyed the stock. The market wanted acceleration and got competence. Competence is apparently worth a $12 billion market cap haircut on a Tuesday afternoon. If you want a one-sentence summary of investor psychology in May 2026, there it is.
The yen surged sharply Wednesday amid speculation of fresh Japanese intervention, following months of MOF threats as the currency was battered. Tokyo has been performing the ritual long enough that markets treat intervention rumors as a recurring nuisance rather than a genuine policy signal. At some point, the credibility cost of threatening without acting compounds. Japan knows this. They keep doing it anyway.
What Warsh inherits is not the usual mess. It's a specifically modern mess: an economy that's fine on the surface, an inflation problem partly imported from a war nobody can end, a committee openly divided on the direction of bias, and a market that's pricing in rate cuts while simultaneously watching crude oil bounce between $95 and $115 on the whims of Iranian nuclear diplomacy. Powell will stay on as governor, keeping a low profile, until he's satisfied the criminal investigation into him is resolved. The man who spent four years being the adult in the room will now sit in the back of the room watching someone else drive.
The next FOMC meeting is June 16. Between now and then: a payrolls report expected to print around 60,000, a Senate confirmation vote on Warsh, and whatever the Strait of Hormuz decides to do. Plenty of time for this story to turn completely inside out.
It usually does.
Not investment advice.*
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