Interest rates staying where they are is a forgone conclusion, but the Fed's decision day still matters

• This post originally appeared in the Insider Today newsletter.

Halfway to the weekend! Stagecoach, or Coachella with cowboy hats, might have taken over your social media this weekend. Here's how it's become the new "it" festival.

In today's big story, what another delay to interest rate cuts means for a market banking on them.

What's on deck:

• Markets: A famed economist doesn't feel good about what Trump 2.0 means for the economy.

• Tech: Amazon posts an earnings beat and touts its "considerable momentum" in the AI space.

• Business: We'll always have the cheddar bay biscuits: What really went wrong with Red Lobster.

But first, higher for longer (again).

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The big story

The waiting game continues

Spoiler alert: The Federal Reserve won't be lowering interest rates today.

The official announcement won't come until this afternoon, but interest rates staying where they are is a forgone conclusion.

(Don't take my word for it. The CME FedWatch Tool, which calculates the probability of the Fed's decision based on interest rate traders, has the odds of rates staying untouched at 97.5%.)

So why does it matter, you ask? Talk of cutting interest rates has been going on for the better part of a year. And the market has still managed to reach record highs.

That's true, but you could argue part of what's fueled the market rally is the belief that interest rate cuts were coming.

Late last year, Fed Chair Jerome Powell signaled three rate cuts for 2024, then reiterated that plan in February. Investors took the news and ran with it, with some even pricing in twice as many cuts.

Now, those dreams have been smashed. Some speculate we'd be lucky to get a rate cut at all this year, let alone multiple. The continued absence of cuts is set to catch up with a market that's been banking on them for a while.

Take real estate, an industry impacted by high interest rates.

Homebuyers might need to accept that waiting for lower mortgage rates is a fool's errand. Commercial real estate, meanwhile, will have to continue renegotiating debt to buy time until rates fall.

Just because cuts aren't coming today doesn't mean there won't be some news.

Powell's press conference following the rate decision will likely indicate how the central bank views the economy.

According to CME's FedWatch Tool, the Fed's June and July meetings aren't likely candidates for the first rate cut. September seems a better bet, and even then, it's still roughly a 50-50 shot that relief comes.

A September rate cut would come shortly before another major economic event: the US presidential election. Powell has said politics has no impact on the Fed's decision, but the effect of a cut jumpstarting the economy on the eve of the election can't be understated.

(According to one report, the Fed's independence from the White House could be short-lived.)

Of course, if Powell takes a more hawkish tone today, expect that timeline to get pushed out even later.

Powell's mantra has been the need for more data and time before cutting rates. If he's comfortable waiting, investors should be, too.

3 things in markets

1. Nobel economist Paul Krugman isn't feeling good about what Trump 2.0 means for the economy. Former President Donald Trump's re-election could fuel inflation if he imposes high tariffs, according to Krugman. In an op-ed for The New York Times, Krugman also wrote there are indications "a future Trump regime would manipulate monetary policy in pursuit of short-run political advantage."

2. All the news that's fit to trade. Hunterbrook Capital is a $100 million hedge fund that only trades on news from its media sister company. The unique setup means the fund employs no analysts or portfolio managers and only one full-time trader.

3. Start fretting about stagflation. JPMorgan is warning that the recent stock market rally, which has been bolstered by a wave of upbeat earnings, is glossing over worrying economic data. Chief market strategist Marko Kolanovic flagged the risk of stagflation, referring to a toxic combination of high inflation and sluggish growth.

3 things in tech

1. Meta's new AI search function is weird. Facebook and Instagram now have Llama 3 integrated into their search fields. But for anyone who wants to use the search field for, well, searching, the new tech is confusing and annoying.

2. Binance's former CEO was sentenced to four months in prison. Changpeng Zhao pleaded guilty to violating US anti-money laundering rules. Binance will also pay a $4.3 billion fine in federal court.

3. Amazon impresses Wall Street. The e-commerce giant's first-quarter earnings beat analysts' expectations. Amazon also said that it's seeing "considerable momentum" on the AI front, which it said was helping its AWS division to a $100 billion annual run-rate.

3 things in business

1. Inside the fishy demise of Red Lobster. Endless Shrimp turned out to be a horrible idea, but it didn't kill the seafood chain. It was Wall Street's meddling that ultimately crushed it.

2. What not to do during a home renovation. A couple expected to spend $180,000 renovating their cottage, a project they imagined would take a year. Three years and $500,000 later, the project turned into a nightmare — and a lesson in contract law.

3. Trouble is brewing at The Wall Street Journal. Staff discontent is rising due to a series of job cuts, a dozen WSJ insiders told BI. The newsroom's union is edging toward its first-ever strike, while some employees have taken to calling editor-in-chief Emma Tucker's No. 2 the "angel of death" after she announced many of the layoffs.

In other news

• Massive NYPD presence clears pro-Palestine student protesters at Columbia.

• Fresh customer fraud allegations against Globe Life.

• Trump won't rule out election violence if he loses to Biden in November: 'It depends.'

• Exclusive: GroundGame Health and SameSky Health are merging with $17 million from 7wireVentures and Elevance to get underserved patients access to care.

• AI is ushering edtech into a new era. Three investors share what they're most excited about in the space.

• I'm ready to lose it all betting on Skee-Ball at Dave & Buster's.

What's happening today

• Today's earnings: eBay, Pfizer, and other companies are reporting.

• Federal Open Market Committee decision on interest rates.

• Court hearing for the US government's antitrust lawsuit against Google.

• Court hearing for Steve Bannon, charged with fraud in the "We Build the Wall'' scheme.

The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Jordan Parker Erb, editor, in New York. Hallam Bullock, senior editor, in London. George Glover, reporter, in London.