I wanted to send a quick note on what I expect out of today’s FOMC. (TLDR: not much.)

I have three kids in three different schools with three different spring break schedules. This happens to be a tight window where two overlap and my wife can cover our third.

It also happens to overlap with the FOMC meeting. I should be at the desk. If I was at a fund, I'd be at the desk.

But the whole point of doing this instead of running someone else's money is being able to take these moments with my kids when I get them. That's a core value of the Reboot: maximizing return on life over return on capital. So I'm writing this from just below the majestic five peaks of Breckenridge.

A cease fire among a divided Fed

The entire market expects the Fed to sit on its hands tomorrow. There will be talk of shifts in the longer-term dot plots and elevated oil prices. But given the Iran war backdrop and the recent data, it's too soon and the situation too fluid to act.

Powell is on his way out, which makes Wednesday's language even less binding on what the Fed does in the second half of the year. His replacement, Kevin Warsh, doesn't even have a confirmation hearing scheduled.

The Fed knows the market expects nothing. Because they know that, they've been given permission to deliver exactly that.

It's an unwritten agreement. The Fed doesn't want to surprise anyone, and the market won't throw a tantrum.

Stocks, Treasuries, and the dollar have all bounced off the extremes we saw last Friday. Those markets might twitch as positions adjust. But with Iran unresolved, every asset class is still watching crude oil for a risk-on/risk-off signal.

The war is still running. As long as that's the case, every other macro input gets tallied and filed into the queue as something to worry about later. The Fed will talk about inflation expectations and labor markets, and you'll hear the word "transitory" a lot.

Normally, elevated volatility and a potential headwind for markets push the Fed toward cutting to support prices. But they can't. The shock is inflationary, not deflationary.

Oil is the headwind, and they can't cut into rising energy prices. The one thing they'd want to do is the one thing they're not allowed to do.

Before the war, the committee was already in a standoff. The January vote was 10-2 to hold. The December dots had only four members who wanted exactly one cut, seven who wanted fewer, and eight who wanted more.

That's not consensus. That's a standoff with everyone's hand on their holster.

When the ice thaws, the split gets wider

The war turned that standoff into a ceasefire. Right now everyone agrees on "wait and see."

But once the headline risk clears, both sides reload with stronger ammunition. The hawks will point to inflation expectations that already jumped (CNBC) and energy costs that could take months to work through the system. The doves will point to a labor market that was already soft and a growth scare that demands action.

Wells Fargo called that combination "the FOMC's worst nightmare" (Morningstar). The war isn't resolving the Fed's internal divide. It's freezing it. And when it thaws, the split gets wider, not narrower.

Before the war, the committee was already in a standoff. The January vote was 10-2 to hold. The December dots had only four members who wanted exactly one cut, seven who wanted less, and eight who wanted more (Reuters). That’s not consensus. That’s a Mexican standoff.

As much as we'd like to look past the geopolitics and get back to trading on fundamentals, we're not there yet. This Fed meeting is about an implicit agreement that waiting and seeing is the best course of action. Anything beyond that would be a surprise.

Trust the process.

Tim