Good morning and welcome to today's market chronicle. It's Wednesday, July 8th. The Fed is whispering about hikes while Wall Street counts its best quarter since 2020, and somehow both sides think they are winning.
Let me set the scene. Yesterday's close was the second act of a chip rout, the S&P 500 slipping to 7,504 and the Nasdaq shedding 1.2 percent to 25,819, dragged down by the sudden discovery that semiconductors are, in fact, cyclical. Samsung forecast profits comfortably above consensus and its shares fell almost 7 percent, which tells you everything about a market that only rewards perfection and punishes the merely excellent. Applied Materials ($AMAT) dropped nearly 10, AMD ($AMD) and Micron ($MU) more than 7, and even Nvidia ($NVDA), the deity of this cycle, was allowed to slip a couple of percent, briefly, before the faithful remembered their catechism. Monday we printed a record. Tuesday we panicked. This is what passes for conviction in the wonderful world of finance.
Overnight the plot thickened, and not gently. Our beloved president decided the ceasefire needed seasoning, so the United States struck more than eighty sites in Iran and revoked the waiver letting Tehran sell its oil. Brent jumped toward 75, WTI ripped above 72, and le tout-Wall Street rediscovered that geopolitics is not, after all, a rounding error. Who won here? The oil desks, the defense names, and nobody who was long duration.
And yet everyone is pretending not to notice the part that actually matters, which is that the Fed is now openly flirting with hikes. Nine officials on the dot plot want at least one more before year-end, inflation just got a fresh coat of crude, and the same crowd that rode the S&P up 14.9 percent last quarter is telling itself the minutes this afternoon will sound dovish. Really? Into rising oil?
So today is the FOMC minutes at two o'clock, and the ritual is familiar. Everyone claims they will trade the wording, the algos front-run the two-year, and by the close the narrative will have quietly rewritten itself to fit whatever the tape did. Beyond that, Q2 earnings are creaking open, so brace for a season of companies beating lowered bars and calling it strength.
The levels, cleanly. Gold is soft near 4,114 an ounce, which is quite the tantrum for the asset that supposedly loves a war. Bitcoin sags around 63,550, the 10-year sits at 4.50 percent and reaching for higher, and S&P futures hover around the 7,500 line, nobody willing to commit before Powell's diary is read aloud. Oil, as noted, is the skunk at the party.
The takeaway is bleak and simple: the war premium is back, the Fed is not your friend, and the coffee is the only reliable stimulant left. Stay sharp, and see you tomorrow.