Federal Reserve Chair Jerome Powell showed his strength as a market whisperer on Wednesday. Even though interest rates stayed the same, stocks rose by the most on a Fed decision day since last July.

Most important, perhaps, was that Powell managed to avoid the ire of President Donald Trump. Sure, Trump posted that the Fed should be cutting after the decision. But it was a relatively mild rebuke that doesn't suggest the central bank and the administration are on a collision course.

The market's embrace of Powell's message is a bit of a puzzle. The projections still show just two quarter-point rate cuts this year, the same as in December. In fact, a closer examination shows the bias among rate setters has shifted toward fewer cuts -- even though the median outlook is the same, fewer people see more than two cuts. What's more, Powell was particularly eager to emphasize the uncertainty in the outlook.

It gets worse. The Fed also raised its inflation forecasts and lowered projections for growth. That's starting to sound a bit like stagflation, or inflation without economic growth, which isn't good for stocks.

But the market seemed to take this in its stride because Powell instilled confidence in other ways. First, the Fed eased plans to sell bonds back into the market, which is a subtle form of lowering borrowing costs. He also said that if tariffs were to cause an uptick in inflation, the Fed would be able to look through it as long as it's "transitory."

That might be an unfortunate word choice. It was used to describe what was happening after the Covid-19 pandemic, which of course didn't seem like short-lived inflation at all. But it's true that the Fed could actually make things worse if it responds to temporary price gains that will blow over by themselves.

Investors are right to be encouraged by Powell's words. There is a lot to worry about these days -- tariffs, wars, and rapid changes to government policies. At least Powell brings calm and flexibility in times of heightened market pain.

-- Brian Swint

***

Central Bank Pencils In 2 Rate Cuts. Anything Could Happen.

Federal Reserve officials left interest rates unchanged, and investors shouldn't get too comfortable with their projections for two rate cuts this year. That is because the economic outlook remains highly uncertain, a point Fed Chair Jerome Powell made repeatedly at Wednesday's press conference.

   -- Significant changes in federal policies on trade, immigration, and 
      government spending mean rate expectations could change later this year. 
      "It's really hard to know how this is going to work out," Powell said. "I 
      don't know anyone who has a lot of confidence in their forecast." 
 
   -- The labor market remains in the same healthy spot it has been for the 
      past six to eight months, Powell said. But the more than 30,000 federal 
      jobs cut since President Donald Trump took office aren't yet reflected in 
      government data. 
 
   -- The median forecast in the bank's latest Summary of Economic Projections 
      is that the unemployment rate will rise to 4.4% by the end of 2025. A 
      forecast published after the Fed's December meeting projected 
      unemployment would finish the year at 4.3%. 
 
   -- The Fed's policy committee announced that starting in April, it will slow 
      the pace of reducing its balance sheet, allowing only $5 billion in 
      Treasuries to mature every month, down from up to $25 billion a month. 
      Fed Gov. Christopher Waller wanted to keep the current pace. 

What's Next: The new economic projections by Fed officials also forecast slower economic growth than December's projections. Officials now see gross domestic product rising 1.7% in 2025, and 1.8% in both 2026 and 2027. The 2025 forecast is down from 2.1% seen in December.

-- Megan Leonhardt and Janet H. Cho

***

Trump Boosts LNG Projects But Trade War Hits Operators

The Trump administration's steady approvals of liquefied natural gas projects are a boon for the industry, with a fifth approval for an LNG project in less than 60 days. But President Donald Trump's trade war and tariffs are causing problems for those same operators.

   -- The administration approved Venture Global to export gas from a Louisiana 
      plant known as Calcasieu Pass 2. Two leaders of Trump's National Energy 
      Dominance Council recently visited one of the company's other facilities 
      to celebrate its expansion, and Trump has reversed a pause on LNG export 
      terminal approvals. 
 
   -- Venture Global's stock is down 50% since its January IPO, and a drop in 
      LNG prices weighed on fourth quarter earnings. International LNG prices 
      have slumped while U.S. natural gas prices have risen. The tightening 
      spread isn't good for companies that buy U.S. gas and sell it 
      internationally. 
 
   -- Analysts have been warning that tariffs are another vulnerability. 
      Companies in China, the largest LNG importer, have stopped importing U.S. 
      LNG after the Chinese government placed 15% tariffs on it, according to 
      Bloomberg. China hasn't bought U.S. gas for 40 days, the longest period 
      in almost two years. 
 
   -- Instead, China has been rerouting shipments elsewhere. And China 
      Resources Gas International just signed a 15-year LNG import contract 
      with Australian company Woodside Energy this week, the first long-term 
      LNG contract that Woodside has ever signed in China. 

What's Next: Trump has made LNG exports one of the most important bargaining chips in trade talks in recent weeks. And it could still pay off for the operators if trade deals lead to more U.S. exports. But for now, trade tensions are working in the opposite direction.

-- Avi Salzman

***

AI Powerhouse Nvidia Is Going Big on Quantum Computing

Nvidia is planning a quantum computing research center to solve some of the field's most challenging problems by coupling quantum hardware with supercomputers. It enters the sector after building itself into an AI powerhouse, but when it comes to quantum, Nvidia's efforts pale in comparison with giants like IBM.

   -- The Nvidia Accelerated Quantum Research Center, or NVAQC, won't be the 
      first to propose merging quantum systems with the most advanced 
      traditional computers. Researchers in Germany are integrating an 
      Advantage system from D-Wave Quantum with Europe's first exascale 
      supercomputer. 
 
   -- Quantum technology can help supercomputers overcome limitations on the 
      types of calculations they do. Researchers at the NVAQC will tackle 
      issues like qubit noise, or disturbances that cause quantum computers to 
      bungle computations and have hindered their adoption on a commercial 
      scale. 
 
   -- Nvidia is working with Quantinuum, the software company created in the 
      2021 merger of Cambridge Quantum and Honeywell Quantum Solutions, Quantum 
      Machines, and QuEra Computing, two private companies each developing 
      their own quantum solutions. The project will use Nvidia's AI 
      supercomputers. 
 
   -- The NVAQC will be in Boston, where it will recruit researchers from 
      quantum groups at Harvard and MIT. Nvidia has developed a cloud-based 
      platform on which users can build and test quantum algorithms, but has 
      expressed no intention of building its own quantum processors. 

What's Next: Nvidia is targeting a launch for the project later this year and is expected to share more about its plans for quantum computing during its Quantum Day presentation today, a part of this week's developer's conference.

-- Mackenzie Tatananni

***

SEC Drops Its Case Against Ripple and XRP, CEO Says

The Securities and Exchange Commission has dropped its long-running case against Ripple Labs, CEO Brad Garlinghouse said in a video clip posted on X. The price of XRP, the token used to facilitate and settle transactions on Ripple's digital-payments platform, soared following the news but was down first thing Thursday.

   -- "Ripple is the first company with the resources, determination, and grit 
      to fight back against the agency's overreach," Garlinghouse said. "Today 
      this journey finally concludes. Today is a victory and a long-overdue 
      surrender by the SEC." An SEC spokesperson declined to comment. 
 
   -- In 2020, the agency charged Ripple with selling an unregistered security. 
      In August, a federal judge ordered Ripple to pay $125 million for 
      violating investor-protection laws, way below the $2 billion the SEC had 
      sought. 
 
   -- XRP was one of the best performing cryptocurrencies in the lead-up to 
      President Donald Trump's election win, largely driven by hopes that it 
      would mean an end to the SEC's crypto crackdown under former chair Gary 
      Gensler. 

What's Next: Earlier this month, Trump named XRP as one of the cryptocurrencies that could be added to the U.S. government's crypto stockpile, and Garlinghouse said Wednesday that he expects an exchange-traded fund tracking the token's price to be approved this year. Those are the kind of catalysts XRP will need to carry on rallying, now that Ripple's long-running legal battle with the SEC has seemingly been resolved.

-- George Glover and Elsa Ohlen

***

Disney and Comcast Prepare for a Park Brawl in Orlando

Harry Potter and Super Mario are about to go head-to-head with Luke Skywalker and Mickey Mouse in a real-life fight for dominance in Orlando, Fla. Walt Disney, king of the world's theme-park capital for more than half a century, faces a challenge from Comcast-owned NBCUniversal this May.

   -- Comcast's Epic Universe theme park opens there May 22, an expansion of 
      its already large presence. Why is that a problem for Disney? Investors 
      have long regarded Disney's Orlando park as the biggest moneymaker for 
      its experiences business, which made up about 60% of total profit in 
      fiscal 2024. 
 
   -- Disney's parks have faltered lately. Experiences segment operating income 
      was flat last year, overshadowing other successes, like streaming turning 
      a profit for the first time. While some of the slowdown was out of 
      Disney's control, such as inflation-weary Americans cutting vacation 
      spending, other problems are self-inflicted. 
 
   -- Disney hasn't built enough new rides to lure people back. Its $71 billion 
      purchase of 21st Century Fox in 2019 sucked up cash, and Disney has 
      prioritized other parts of its business since then, including spending 
      $23.4 billion on content over the past fiscal year to woo streaming 
      subscribers. 
 
   -- Disney executives have been sanguine about the threat the new park poses. 
      Executives have said in the past that Epic makes Orlando more appealing 
      as a vacation destination, boosting foot traffic at Disney World as well 
      as at Universal's resort. Disney declined to make executives available to 
      Barron's. 

What's Next: MoffettNathanson, a boutique investment research firm, has estimated that Epic will lure about one million visitors away from Disney World in the first year that it's open. Universal has poured about $7 billion into the development, according to analyst estimates. For more, read here.

-- George Glover

***

We are hearing from a lot of people who are frustrated with getting through to the Social Security Administration to have questions answered. "People are TOTALLY freaking out right now," a Social Security and Medicare expert told MarketWatch recently.

So MarketWatch asked around for advice on how to handle it.

For more on this, read here.

-- Beth Pinsker

***

-- Newsletter edited by Liz Moyer, Patrick O'Donnell, Rupert Steiner

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

March 20, 2025 07:02 ET (11:02 GMT)

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