Warsh, Donald Trump’s protégé (for whom he has high hopes at the helm of the Fed - especially in the expectation that he will cut interest rates) inherits an economy that is not exactly in trouble, but not exactly relaxed either. Inflation remains more than a percentage point above the Fed's 2% target. Unemployment and growth still need careful reading. Investors have spent the past few months swinging between hopes for rate cuts and fears of rate hikes. For now, they see a meaningful chance of a quarter-point rate hike in December, while rate cuts are not expected until after mid-2027.

Still, the backdrop has improved compared with last week. Donald Trump said a preliminary agreement to end the U.S.-Iran conflict had been signed, helping push oil prices lower and giving markets one less inflation scare to digest. Vice President JD Vance also said he expects the Strait of Hormuz to remain open over the long term without tolls, a statement that helped calm nerves around global energy flows. Oil prices fell sharply Tuesday, with Brent near $80 a barrel and West Texas Intermediate below $79.

The broader market looks eager to believe the worst has passed. The S&P 500 is close to its early-June highs after a pullback driven by worries over high tech valuations and the U.S.-Iran conflict. The Dow has already made new records. In Europe, several markets hit fresh highs on Monday, including Milan, Amsterdam, Madrid, and Warsaw. London, Frankfurt, Paris, and Zurich are lagging, but not by much.

Technology is once again doing much of the heavy lifting. SpaceX continued its extraordinary post-IPO surge Tuesday, rising again in premarket trading after two huge sessions. The company is now close to overtaking Amazon in market value, which would make it the world's fifth-largest company. For Elon Musk, whose space rivalry with Jeff Bezos has long had a personal edge, that detail is unlikely to go unnoticed.

SpaceX also announced plans to acquire software firm Anysphere for $60 billion, a move aimed at expanding its position in enterprise artificial intelligence. The AI theme is also lifting chip stocks. Micron, Western Digital, and Seagate all moved higher, helped by enthusiasm around memory demand. Qualcomm rose after reports that it was in talks to buy AI chip startup Tenstorrent for $8 billion to $10 billion. 

Meanwhile, Dave & Buster's fell sharply after missing first-quarter earnings and revenue expectations. Robinhood rose after saying it would cut 10% of its full-time workforce and close remaining open roles. 

Outside the United States, central banks are adding another layer to the week. The Bank of Japan raised rates to 1%, the highest level in 31 years, as it tries to contain price pressures from the energy shock tied to the Iran war. For most countries, 1% would not sound especially high. For Japan, it is practically mountain air. After decades of deflation, even modest inflation has forced a major shift in policy.

The Reserve Bank of Australia, meanwhile, left rates unchanged at 4.35% but sounded firm on inflation. That is the classic "hawkish hold": no move, but no comfort either. Australia's economy could use support, yet inflation remains too stubborn for the central bank to relax. It is not an enviable position, though central bankers rarely choose careers for the applause.

All of this feeds back into the Fed's decision on Wednesday. Warsh does not need to shock the market. In fact, he probably wants to avoid doing so. But he does need to establish a voice. Investors will listen for how he describes inflation, whether he sees oil's decline as durable, and how much weight he gives to financial conditions that are already looking loose again.

Today's economic highlights:

Today's agenda includes: in China, the House Price Index, Retail Sales, Fixed Asset Investment, and Industrial Production will be released; in Japan, the BoJ Interest Rate Decision; in Australia, the RBA Interest Rate Decision followed by its press conference; in Germany and the Euro Area, the ZEW Economic Sentiment Index; in the United States, preliminary Building Permits, Housing Starts, Import and Export Prices, and the API Crude Oil Stock Change. See the full calendar here.

  • Dollar index: 99.675
  • Gold: $4,345
  • Crude Oil (BRENT): $80.40 (WTI) $77.58
  • United States 10 years: 4.44%
  • BITCOIN: $66,475

In corporate news:

  • Nvidia raises 25 billion dollars through a bond issue ahead of a potential massive share buyback.
  • Google makes its Fitbit Air health tracker HSA/FSA eligible in the US.
  • Italy's competition regulator launches a probe into Apple's iOS and iPadOS over interoperability features.
  • Microsoft prepares to close several Xbox Division studios as part of a strategic restructuring.
  • SoftBank rolls out an OpenAI-powered patching-as-a-service offering in Japan.
  • JPMorgan is mulling a Chase expansion into Europe's largest markets, according to the FT.
  • A U.S. supercomputer taps Intel spinout Cornelis Networks for networking chips.
  • Sable Offshore refinances its Exxon-backed loan with a facility of up to $1 billion.
  • Palantir Technologies to stop working with French intelligence, according to French Prime Minister Lecornu.
  • Dell Technologies wins 1.44 billion USD contract from US Air Force for software licenses.
  • SpaceX gains a further 20% on its second day of trading, with the share price rising to USD 192.50 for a market capitalisation of USD 2.52 trillion, very close to that of Amazon (USD 2.646 trillion).
  • Microsoft is closing several studios within its Xbox division. The group is also facing a class-action lawsuit from shareholders regarding investments in AI and the growth of Azure.
  • Exxon Mobil is seeking an environmental permit for offshore exploration in Guyana.
  • Applied Materials is launching two new systems for 3D chip assembly.
  • BlackRock is continuing its staff cuts.
  • GE Vernova has signed a cooperation agreement with Venezuela on electricity supply.
  • Qualcomm is in talks to acquire Tenstorrent, according to The Information.
  • Gilead Sciences has received FDA approval for the additional indication of Yeztugo in HIV prevention.
  • ConocoPhillips is set to sign an agreement with Syria to restart gas production, according to the Financial Times.
  • The chairman of Fujitsu has resigned over “inappropriate conduct”, according to the company.

Analyst Recommendations:

  • Roku: JP Morgan downgrades to neutral from overweight and raises the target price from USD 150 to USD 160.
  • Carmax: Truist Securities maintains its hold recommendation and raises the target price from USD 37 to USD 47.
  • Marvell Technology Group: GF Securities Co. Ltd. maintains its buy recommendation and raises the target price from USD 230 to USD 350.
  • Tractor Supply Company: Truist Securities maintains its hold recommendation and reduces the target price from USD 44 to USD 32.