9 of 18 Fed members want hikes, oil at $75, and the deal is signed — the tug-of-war inside...

THURSDAY MARKET UPDATE

Welcome back to Profits & Insights.

Yesterday was two historic events crammed into one trading day. Warsh told the market hikes are on the table. Then Trump signed the deal at Versailles. The S&P sold off on the first headline and futures recovered on the second. I'm not sure I've seen a day quite like it.

🟥 | S&P 500 fell 1.21% — Warsh's hawkish debut spooked growth; Dow dropped 507 points.

🟩 | Trump signed the Iran deal at Versailles — “It's signed”, he said; oil crashed to $75 WTI.

🟩 | Intel surged 9.8% pre-market — Trump announced an Apple-Intel chip partnership for U.S. manufacturing.

Gold & Macro

GOLD FELL 2%. THEN THE DEAL SAVED IT

Gold dropped nearly 2% on Wednesday to $4,275 after Warsh's press conference. Then it bounced. This morning it's trading near $4,305 after Trump signed the Iran deal at Versailles last night. Two forces pulling in opposite directions — and gold is stuck in the middle.

The bearish force: 9 of 18 FOMC members now project at least one hike this year. The median dot shifted to 3.8% — up from 3.4% in March. CME (Chicago Mercantile Exchange) FedWatch shows a 60.7% chance of a hike in October. Warsh's message was clear: “The commitment to deliver on price stability is strong, unanimous, and unambiguous”. Gold doesn't like that word.

The bullish force: oil at $75 WTI. If sustained, June CPI could drop to 3.5%. That would make the October hike unnecessary. The deal that crashed oil may have just saved gold from a deeper fall. Silver holding near $71, watching the same tug-of-war.

The Trade

WARSH SOLD THE MARKET. THEN TRUMP BOUGHT IT BACK

The S&P 500 fell 1.21% to 7,420. The Dow lost 507 points. The Nasdaq dropped 1.34%. Warsh shortened the Fed statement to 130 words, removed all forward guidance, and let the dot plot do the talking: 9 of 18 members want hikes. Then, hours later, Trump signed the Iran deal at Versailles. Futures rebounded overnight.

Gundlach said it plainly: “He is absolutely telling you that he plans on delivering on price stability”. This is not the dovish Fed Chair Trump wanted. Warsh announced five task forces to overhaul everything — communications, balance sheet, inflation measurement. He didn't submit a dot. He said it's “not helpful”. He's rewriting how the Fed operates, not just what it says.

But here's what matters for your portfolio: oil at $75 may make the hike unnecessary. If June CPI drops to 3.5%, those 9 hawkish dots become 4 by September. The deal is the circuit breaker. Warsh set the ceiling. Trump's deal may have just set the floor.

What to watch:

Today: jobless claims, plus Kroger, Lennar, and FedEx earnings — all three tell you about the consumer. Friday: markets closed for Juneteenth. Next week: Nvidia shareholder meeting June 24.

Heat Check

Nathan’s Take

“Warsh set the ceiling. Trump signed the floor. Your portfolio now lives in the gap between a hawk who means it and a deal that might make him wrong”

Names to Know

INTEL, SPACEX, MICROSOFT

Intel $INTC ( ▲ 10.13% ) — surged after Trump announced an Apple-Intel chip manufacturing partnership for the U.S.; validates CEO Tan's foundry strategy.

SpaceX $SPCX ( ▼ 4.52% ) — extended to $208 on the $60B Cursor AI acquisition; market cap now above $2.5 trillion.

Microsoft $MSFT ( ▼ 0.96% ) — fell with the broader tech selloff Wednesday; SpaceX briefly passed it as the fourth-largest U.S. company by market cap.

Chip Sector $SOXX ( ▲ 4.89% ) — rebounding sharply Thursday; Micron +4.8%, AMD +3.9%, Broadcom +3%; the Apple-Intel news lifting the entire complex.

Exxon Mobil $XOM ( ▼ 3.18% ) — oil at $75 WTI after the deal signing; the war premium is officially gone.

For real-time data, I recommend monitoring Finviz.

The Macro Edge

🕊️ | Trump signed the Iran deal at the Palace of Versailles — “It's signed”; 14-provision MOU includes Hormuz reopening in 30 days and $24B in frozen assets.

🏛️ Warsh overhauled Fed communications — statement cut to 130 words; five task forces announced; did not submit a personal dot; “not helpful in the conduct of policy”.

🤖 SpaceX acquired Cursor AI for $60B — the AI coding startup makes SpaceX “not just a rocket company anymore”; market cap above $2.5T.

📊 PCE inflation projection raised to 3.6% for 2026, up from 2.7% in March — the Fed sees inflation lasting longer than Wall Street hoped.

🛢️ CME oil futures curve shows $72/barrel by February 2027 — the market is pricing a sustained post-war oil decline, not a bounce.

Markets closed tomorrow. The deal is signed. The hawk is loose. See you next week.

Nathan Reed | Profits & Insights