Wall Street no longer believes Kevin Warsh can do what President Trump wants |
Wall Street no longer believes Kevin Warsh can do what President Trump wants
Good morning. On Fortune’s radar today:
Markets: Full steam ahead!
Wall Street simply doesn’t believe Kevin Warsh can deliver a cut.
AI data center companies are stealing water.
There is no jet fuel shortage, this CEO says.
It took 8 years to create Google Sheets. AI cloned it in days.
Chart: AI is a convenient excuse for CEOs doing layoffs.
Quick note: Subscribe to the forthcoming Fortune Gulf Brief. Every Tuesday, this new newsletter will deliver clear-eyed, authoritative intelligence on the deals, decisions, policies, and power shifts shaping one of the world’s most consequential regions, written for the people who need to act on it. Sign up here.
Investors are really enjoying the wall of worry
S&P 500 futures were up 0.21% this morning. The index was up 0.58% yesterday—another record high at 7,444.25.
In Europe, the Stoxx 600 was up 0.21% in early trading and the U.K.’s FTSE 100 was up 0.14% before lunch.
Asia: South Korea’s KOSPI was up 1.75%. Japan’s Nikkei 225 was down 0.98%. India’s Nifty 50 was up 1.36%. China’s CSI 300 was down 1.68%.
Brent crude sank to $106 per barrel this morning.
Bitcoin slipped to $79.7K.
Traders no longer believe Warsh can do what Trump wants
It’s not if, but when. That’s what Wall Street—and the markets—are saying about Kevin Warsh hiking interest rates.
Until a few weeks ago, and certainly prior to the war with Iran, investors had priced in the U.S. Federal Reserve delivering a schedule of interest rate cuts over the next year. After this week’s inflation reports, all of that is now off the table.
The Consumer Price Index (the main inflation gauge) for April came in at 3.8%, and the Producer Price Index (inflation in wholesale prices) came in at 6%—both above expectations.
The highly reliable Fed Funds Futures market—where speculators bet on future interest rates—shows that traders believe it’s a near-certainty that the Fed will stay on hold until September. After that, dissenting bets tilt toward a rate hike. Prediction market Kalshi has 31% of bettors saying there will be a hike by the end of the year.
On Wednesday, the risk premium on 30-year U.S. bonds rose above 5% for the first time since 2007. Investors think interest will rise in the future, in other........