“There are two times in a man’s life when he shouldn’t speculate: when he can afford to and when he can’t.”
-Mark Twain
Here’s what you need to know this week:
· Stocks eked out a small gain last week
· The Israeli-Iranian conflict reaches an uneasy truce
Unusually Calm
Stocks were surprisingly placid last week in the face of escalating tensions in the Middle East. The S&P 500, Dow Jones and NASDAQ all traded within a 1% range for the entire week and closed at a slight gain on Friday. Outside of the Israel-Iran conflict, the Federal Reserve met on Wednesday and once again opted to leave interest rates unchanged.
Most analysts expected the Fed to hold steady but are less certain of the next two moves. The Fed meets again in July and September; as of writing, bond markets are assigning a 23% chance of a 25 basis point (0.25%) rate cut in July and a 72% chance of a cut by September[1]. As the last two weeks have shown, conditions can change quickly, and the Fed’s decision will be determined largely by inflation which may be impacted by both the tariffs and the burgeoning war in the Middle East.
Stop and Go
Once again I must caveat that things are moving fast between Israel and Iran and this may be out of date by the time you read this. The US took its first direct action in the conflict over the weekend, sending eight B-2 bombers to Iran in a mission dubbed “Operation Midnight Hammer”. President Trump declared the mission a success, and the UN corroborated that the bombers successfully struck all three of Iran’s nuclear enrichment facilities.
Iran immediately promised retaliation and followed through with a limited strike on a US military base in Qatar. Geopolitical analysts have dubbed this attack a “deescalating strike” because the attack was limited and caused no US casualties, allowing the Iranian government to save face domestically without meaningfully causing harm to the US military. In the days following these attacks, US negotiators brokered an uneasy ceasefire between Israel and Iran, although both countries continue to saber rattle at each other.
Markets reacted quite positively to the ceasefire; the price of oil fell by nearly 10% and stocks surged to within striking distance of all-time highs:
As you can see, oil prices and stock prices tend to trade inversely. You may remember from last week’s newsletter that markets tend to prefer lower oil prices due to oil’s impact on corporate expenses and inflation.
Should this ceasefire hold, investors will likely turn their attention back to tariffs. President Trump’s 90-day pause on tariffs is set to expire just two weeks from now on July 9th, and thus far very few deals have been reached. It seems we are headed for a very eventful July, but so far the market seems confident that resolutions will be reached.
What Else
· THE OKC THUNDER WON THE NBA CHAMPIONSHIP!
· Oklahoma City and the OKC Thunder have signed an agreement for the team to remain in the city through at least 2053 with an option to extend the lease to 2068
· Russian President Vladimir Putin met with Iran’s foreign minister in an attempt to deescalate tensions between Iran and Israel
· The Senate is preparing to hold their first vote on President Trump’s tax bill
· A sweltering heat wave is causing record temperatures across two thirds of the US
What We’re Reading
After more than two decades of development, the Vera Rubin Observatory has gone live. Set on a mountaintop in a remote region of Chile, this new observatory benefits from some of the least light pollution on Earth and can see deep into outer space. Click below to see the first photos from the observatory’s 3.2 billion pixel camera, as well as photos of the telescope itself:
What’s Happening Downtown
The West Village District is hosting Fourth Fridays this Friday, June 27th. This event is free to attend and features multiple live music stages across the West Village District as well as other performances such as live sculpting and painting. There will also be food trucks and specials from local restaurants and retailers. Click below to learn more:
· https://westvillageokc.com/fourth-fridays/?mc_cid=338714db1d&mc_eid=71bf387036
To read more from our blog, click here
Written by: Kane Ogle, CFP®
Steve Beck, Kane Ogle, CFP®, Amber Eduvigen, CFP®, Cale Olbert, CFP®, Brett Valentine, CFP®, Brandon Ingerson, Jenni Hess
Sources: [1] CME Group