I’ve seen a lot of market mood swings in my career. But this one deserves a neck brace…

A few weeks ago, Fed Chair Powell sat in front of a room full of Harvard undergrads and declared rates are in a “good place.”

The media lapped it up. But the most important chart in finance flipped from pricing in rate hikes to rate cuts in a matter of days. Since then, it’s changed meaningfully four more times.

That’s not conviction. That’s confusion.

What’s The Big Skinny? One chart alone blows up Powell’s “good place” narrative, according to Mark Malek, CIO at Siebert Financial. We sat down to unpack it and the implications for our investment portfolios. [Watch our full conversation here.]

That’s the headline The Harvard Crimson ran two weeks ago, emphasizing Powell’s statement, “We feel like our policy is in a good place for us to wait and see how that turns out.”

He also acknowledged that rising Middle East tensions would affect gas prices and said the Fed is closely monitoring private credit.

That all sounds calm, measured, and responsible. Except for the fact that “wait and see” could prove to be the three most expensive words in central banking.

As Malek put it bluntly in our conversation: “The policy error is doing nothing.”

He’s right.

“Wait and see” is easy to say when you are looking in the rearview mirror like the Fed.

It’s a lot harder when the labor market is softening underneath the surface, private credit remains a quiet stress point, and investors are forced to reprice the entire rate path every other day.

That is why I think Malek nailed the real story in our conversation. The policy error at this stage may not be hiking too much or cutting too soon. It may be doing nothing.

And it turns out the biggest error investors can make right now is doing nothing, too.

Forget the CME tool everyone cites. Malek calls Bloomberg’s WIRP chart his “first look every single morning.”

Why? Because it maps where the market actually expects Fed funds rates to land based on futures and overnight swap rates.

On March 27, the WIRP showed a greater than 57% probability of a Fed rate hike by year-end.

By midweek? That hike probability collapsed to zero. And rate cuts surged to 30%+ percent.

From hikes to cuts in a matter of days. That’s not normal market noise.

As Malek put it, “It’s all about the direction, not the actual number.” And the direction just reversed at warp speed. That’s the market screaming that Powell’s “good place” messaging doesn’t square with the real-time state of the economy.

So where does all this rate whiplash leave our portfolios?

It’s no secret that I’ve been banging the table on tech’s AI-driven earnings cycle. Turns out, I’m not the only one.

As Malek points out, the latest interest rate drama is obscuring the fact that tech valuation multiples have compressed from 40x to 20x, which is nearly on par with the S&P 500.

Heck, consider $NVDA, the undisputed king of the AI infrastructure buildout. It now trades at a lower forward P/E multiple than Walmart (23.15x versus 42.92x).

Let that sink in. Nvidia is cheaper than Walmart on a forward earnings basis. Yet it boasts five consecutive quarters of double-digit earnings growth, expanding margins, analysts raising targets, the list goes on.

As Malek put it: “Where do we get these opportunities to invest at these multiples where analysts are upping their growth targets at the same time we’re seeing multiple compression?”

We don’t often. So don’t miss it!

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