Fed Powell Signals: ‘Now Yous Can’t Leave'

With Inflation High and Growth Slowing, the Market Faces Its Bronx Tale Moment

In an unforgettable scene from A Bronx Tale, Sonny offers a group of rowdy bikers a drink: "You can have a beer." But when they push their luck, refusing to respect his rules, the atmosphere shifts dramatically. Sonny calmly locks the door and utters the chilling line:

"Now yous can't leave."

What follows is a swift and brutal enforcement of his authority, leaving no doubt about who controls the bar.

This moment serves as a perfect metaphor for Federal Reserve Jerome Powell and company handling of interest rates. For years, the Fed provided the financial equivalent of free-flowing beer—ultra-low interest rates that fueled economic growth and market exuberance. But as inflation spiraled and financial excesses mounted, Powell, like Sonny, has drawn the line. The Fed’s current stance—keeping rates elevated between 4.25% and 4.5% despite clear economic slowdown signals—is its own version of “Now yous can't leave.” The door to constantly rising stock prices and economic growth has been locked, and financial markets are feeling the consequences.

The Illusion of Economic Strength

While headline numbers suggest resilience, deeper signals tell a different story. Inflation is masking economic fragility. Higher prices create the illusion of nominal growth, but key indicators reveal underlying weakness:

• Multiple jobholders hit record highs, showing more people need two or more jobs just to stay afloat.

  

• Three-month average of restaurant and bar sales growth has collapsed, sinking further into negative territory in February—marking the largest decline in two years and following a decline in January.

  

• Food service spending plunged in February, the biggest drop in two years, indicating that consumers are pulling back hard on discretionary spending.

  

• The Federal Reserve’s GDP growth estimate is now negative, even before reciprocal tariffs take effect in Q2.

  

• The Fed's newly updated 2025 forecast has raised its expected unemployment rate, now seeing it possibly rising to 5% or higher. At the same time, they have lowered their GDP forecast to near 0% growth for the year, further reinforcing economic slowdown concerns.

  

Like the bikers in A Bronx Tale, the market thought it could push boundaries or in this case stock valuations, expecting the Fed to cut rates and bail them out. Instead, Powell has locked the door saying interest rates are not going to be significantly lower any time soon, and the economic reality is beginning to set in.

Markets Are Catching On

Investors are waking up to the Fed’s unwavering stance, and the consequences are rippling through financial markets:

• The Nasdaq is down -15% from its highs, with major tech stocks taking an even bigger hit:

  • Apple (-20%)

  • Microsoft (-20%)

  • Amazon (-20%)

  • Meta (-20%)

  • Nvidia (-20%)

  • Google (-20%)

  • Tesla (-50%)

    

These 10 companies account for 51% of the Nasdaq, meaning their collective decline is dragging the entire index lower.

Meanwhile, investors are fleeing to safer assets:

• Gold has surged 15% in 2025, breaking above $3,050 an ounce, as investors recognize the true economic downturn that inflation has been masking.

  

• Bonds have climbed 4% in principal value year-to-date, with total returns nearing 6% over the past three months as investors seek safety.

  

Just as Sonny made it clear that the bikers would suffer the consequences of disrespecting his domain, Powell is showing that those betting against the Fed’s inflation fight will pay the price.

Market Analysis by Greg Crennan