masterSergeant
Listen below or on the go on Apple Podcasts and Spotify
Trump promises peace between Israel and Iran ‘soon.’ (0:41) Oil spike making the Fed’s job tougher. (1:23) Best banks for a multipolar world. (4:06)
The following is an abridged transcript:
Wall Street will find itself in the grasp of geopolitics in a holiday-shortened week that also features the Fed. The markets will be closed on Thursday for the Juneteenth federal holiday.
The escalating conflict between Israel and Iran will hold sway over an edgy market. Over the weekend, Israel said it was striking military targets in Tehran and advised Iranians to evacuate weapons factories. Iran also launched more missiles against Israel.
President Donald Trump posted on Truth Social there will be peace between Israel and Iran soon as he shepherds a deal, referencing a deal between India and Pakistan that he says was made using trade with the U.S.
"Likewise, we will have PEACE, soon, between Israel and Iran! Many calls and meetings now taking place," he said.
In addition, Trump told ABC News that "it's possible we could get involved" in the conflict and said that he would be "open" to Russian President Vladimir Putin being a mediator in the conflict.
"He is ready. He called me about it. We had a long talk about it."
For equities, there is scope for cautious optimism for bulls after stocks in Israel ended higher on Sunday. The TA-35 rose 0.5%.
But the spotlight will be on Oil (CL1:COM) (CO1:COM) after its biggest rise in three years on Friday.
Apollo Chief Economist Torsten Slock says: ‘According to the Fed’s model of the US economy, a sustained $10 increase in oil prices is expected to increase inflation by 0.4% and lower GDP by 0.4%.”
WTI is currently up more than $10 from its lows at the end of May.
“In short, higher oil prices exacerbate the ongoing stagflation shock stemming from tariffs and immigration restrictions,” he said. “Stagflation is a problem for the FOMC … Higher inflation says the Fed should be hiking. Lower GDP growth says the Fed should cutting. So will the FOMC next week put more weight on the upward pressure on inflation or more weight on the coming slowdown in growth?”
The Fed will deliver its fourth interest rate decision of the year on Wednesday, and markets are pricing in a virtual certainty of no move. The spotlight will be on its updated economic projections, the first since the "Liberation Day" tariffs, and Chairman Jay Powell's press conference.
Raymond James Chief Investment Officer Larry Adam says “the Fed’s job is about to get more complex.”
“Much of the current economic data and corporate earnings were reported before the latest tariffs took effect, meaning the full impact has yet to be felt,” he said. “Since tariffs tend to slow growth while pushing prices higher, Fed policymakers could soon face tough trade-offs between supporting the economy and keeping inflation in check.”
“On top of that, they’ll need to consider the potential effects of the proposed ‘One, Big Beautiful Bill Act,’ which could include new stimulus measures like tax cuts,” he added.
Victor Dergunov, leader of The Financial Prophet Investing Group on SA, says: “There seems to be a massive debate whether the Fed is asleep at the wheel right now or not. On the one hand, some inflation readings remain above 2%, and we've seen a recent pop in oil and other commodity prices. On the other hand, rates are relatively high, the economy is slowing and we could see more softness in the labor market and other key data as we advance. Also, the recent risk asset rally was likely supported by the expectations of a more accessible interest rate policy.”
In other macro events, the May U.S. retail sales report is due on Tuesday. Housing starts and building permits are on the docket on Wednesday.
On the earnings calendar:
- Lennar (LEN) reports Monday.
- On Tuesday, Jabil Circuit (JBL) issues numbers.
- Accenture (CAN), Kroger (KR) and CarMax (KMX) weigh in on Friday.
For income investors, Meta Platforms (META), UnitedHealth Group (UNH), Merck (MRK) and aristocrat Altria Group (MO) all go ex-dividend on Monday. Meta pays out on June 26. UnitedHealth pays out on June 24, while Merck has a July 8 payout date. And Altria pays out July 10 .
Salesforce (CRM), Lam Research (LRCX) and Best Buy (BBY) goes ex-dividend on Wednesday. Salesforce and Best Buy pay out on July 10 and Lam Research has a July 9 payout date.
And Broadcom (AVGO) goes ex-divided on Friday, paying out on June 30.
And in the Wall Street Research Corner, Morgan Stanley’s Global Banks & Asset Managers, along with management consulting firm Oliver Wyman, selected their top banking stock ideas in what they call the emergence of a “multipolar world.”
The evolving implications of the administration’s trade and tariff policies has challenged the assumption that the U.S. would pursue a growth agenda reinforcing the existing world order, analysts said.
But, despite the potential shifts toward a multipolar world, analysts said that “gravity always wins,” and that it remains “difficult to break the dominant position of the U.S. markets and U.S. wholesale banks over the medium term.”
Among the picks are BlackRock (BLK), Amundi (OTC:AMDUF), Intercontinental Exchange (ICE), Standard Chartered (OTCPK:SCBFF), Mizuho Financial (MFG), Societe Generale (OTCPK:SCGLF), BNP Paribas (OTCQX:BNPQF), Citi (C), JPMorgan Chase (JPM) and Goldman Sachs (GS).
