“I really miss complaining about the cold.”
-John Wagner
Here’s what you need to know this week:
· Stocks fall after an AI agent from OpenAI breached containment and hacked another AI company
· A new trade war starts just as the Iran war pauses
· Earnings, inflation and a Fed meeting round out a jam-packed week
Jailbreak
Stocks sold off last Wednesday as news agencies reported an unprecedented cybersecurity breach. AI startup Hugging Face discovered an intrusion into its data processing systems and quickly traced the intruder to artificial intelligence leader OpenAI. OpenAI ran an audit of its systems and determined the source of the hack was a new AI agent undergoing testing at their lab[1].
Investors were immediately rattled by the news. Cybersecurity has become a major concern for companies and recent years, and spectre of rogue AI agents penetrating a firm’s defenses sounds like the start of a dystopian sci-fi movie. Fortunately in this instance no harm occurred, and OpenAI CEO Sam Altman highlighted the incident as an example for why tighter cybersecurity protocols are necessary immediately. Altman was one of a few AI CEOs who pioneered a framework with the federal government for evaluating and aligning AI models for safety before release.
Iran War & Trade War
Oil prices have swung wildly on rapidly changing conditions in the war with Iran. Brent Crude (the benchmark for Middle Eastern oil) broke above $100/barrel last week for the first time since May as the US carried out airstrikes on Iran for 13 straight days[2]. However, the US and Iran announced another pause in fighting over the weekend to create space for negotiations, sending Brent Crude prices back below $90:
Stocks rose slightly on Monday morning due to the peace talks but markets appear much more apprehensive of a peace deal after getting burned on previous “pauses”. Markets were also jilted last Friday by President Trump’s newest push for a trade war. Trump announced a tariff increase on 60 trading partners from 10% to 12.5% and indicated a willingness to fight federal rulings to push them further. These tariff increases land in a very different economic landscape than last year’s “Liberation Day” tariffs and economists worry that adding this uncertainty on top of the Iran War may drive inflation even higher[3].
All At Once
On top of AI cybersecurity concerns, the Iran war negotiations and tariff increases, markets still must contend with the regular economic calendar. This week we begin earnings season for the 2nd quarter of 2026 and this season kicks off at full speed with more than 200 S&P 500 component companies reporting earnings throughout the week[4]. Apple, Microsoft, Meta and Amazon are the headliners.
Next is the Federal Reserve’s interest rate decision later this afternoon. Investors are still expecting the Fed to hold rates steady for now, but after today it gets interesting. The bond market is currently predicting a 25 basis point (0.25%)interest rate hike next month and another 25 bp hike in March[5]. Last week’s negative CPI report helped stave off rate hike concerns for this month, but rising oil and tariffs raise concerns of inflation resurging and forcing the Fed to hike rates.
And speaking of inflation, tomorrow we receive the Personal Consumption Expenditures (PCE) report for the month of June. PCE is the Federal Reserve’s preferred measure of inflation, and analysts expect the report to show monthly inflation at -0.1% and annualized inflation at 3.6%[6]. Even though an outright decline would be good for investor morale, the combination of higher oil prices and new tariffs may still force the Fed to hike next month. In a week this full of catalysts it will be interesting to see which narrative takes center stage.
What Else
· The Ukrainian military struck multiple power plants in the Crimean Peninsula to put more pressure on the Russian government to negotiate
· The man suspected of driving into a crowd of people in Berlin was killed by German police on Sunday
· Wildfires in France and Spain have forced hundreds of thousands of people to evacuate or take shelter, and has even forced the Tour de France to be rerouted and shortened
· British runner Josh Kerr set a new world record for the fastest mile with a time of 3:42.66
· LeBron James announced he is joining the Philadelphia 76ers for his 24th NBA season
What We’re Reading
Wildfires across the northwestern US and parts of Canada are casting colossal plumes of smoke that are drifting over large swaths of the continent, causing hazy skies and air quality alerts for more than half the population of the continental US. Click below to read more about these fires and to see interactive maps showing the path of the smoke:
What’s Happening Downtown
The Myriad Gardens is hosting Blooms for Four Seasons this Saturday, August 1st. This interactive class teaches visitors how to combine texture, color and structure to make a beautiful garden appropriate for every season. Tickets are $18 ($15 for Myriad Gardens members) and the class runs from 10:00 AM to Noon; click below to learn more and to secure your tickets:
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Written by: Kane Ogle, CFP®
Steve Beck, Kane Ogle, CFP®, Amber Eduvigen, CFP®, Cale Olbert, CFP®, Brett Valentine, CFP®, Brandon Ingerson, Bill Daniel, Sam Postich, Jenni Hess, Hannah Hartman
[1] AP [2] Bloomberg [3] CNBC [4] Kiplinger [5] CME Fedwatch [6] Yahoo! Finance