SOTS 2nd Hour: Israel-Iran Conflict Latest, G-7 Meeting Begins, & FOMC Predictions 6/16/25

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Sara Eisen (0:51)

Good Monday morning, welcome to Squawk on the Street. I'm Sara Eisen with Carl Quintanilla and David Faber, live as always from Post 9 of the New York Stock Exchange. We're starting the week strong again here, the S&P 500 now at the highs of the morning, and every sector's higher except for energy, which may be a little counterintuitive, but crude oil giving back a lot of the gains that we saw on Friday despite escalation in terms of US, or excuse me, Iran-Israel conflict. As for the best performing sector today, that would be technology now at 1.5 percent, financials are coming back strong, communication services too. As far as the big tech winners, seeing a lot of gains, AMD, Palantir is at the top of the list today, some of the other chip stocks also working well. Treasuries are selling off higher yields today, get an auction of 20 year later in the day. The 10-year yield, actually we've just reversed, 4.4 percent, so a little bit of a bid just in the last few moments or so. Today, Rockefeller's Ruchir Sharma on how global markets are reacting to Israel-Iran as G7 leaders gather in Canada this morning, where the Middle East is sure to be front and center. Plus, shares of biotech companies to Reptatherapeutics, losing half their value almost this morning. We're going to tell you what's driving this decline. First up though, guys, big event of the week is going to be the Fed meeting. We do have a holiday shortened week. Thursday, the market is closed and we get some important economic data before then. Tomorrow, we'll get retail sales, also import prices which are in focus because of the tariffs. But the biggie is the Fed decision. Then later on Friday, Philly Fed and leading indicators, we got an Empire Fed, New York regional manufacturing number that was pretty ugly this morning, but that's a very volatile series and the outlook wasn't as bad. So let's talk about the Fed because nobody expects any change in policy this week. But everyone wants to know how Fed Chair Powell is going to frame the recent data and what the dots are going to look like. This is one of those exciting Fed meetings where we get the dot plot, which is the estimates for where the individual members of the Fed think interest rates are going. We haven't had one since March and a lot has changed since March, including tariffs and weaker inflation. So here are the charts the Fed is going to be looking at and reflecting on, CPI and PPI. So this is just straight up consumer prices. And what we have seen is they've very much softened. Remember 2022, that was the peak when we were looking at like 9 percent or so prices and that was a very inflationary period. We've come down. We're still elevated above the 2 percent level. But again, there's been a lot of progress. So my biggest question, David, is how is Fed SharePowell going to frame the progress in light of the risks of higher inflation going forward because of tariffs and now maybe oil prices. I mean, look at oil prices. They've come up a little bit on the result of these geopolitical tensions. But this is a three year chart. They're still down pretty sharply over the past three years. I was just looking at a price of Brent from October 2023 That was when Hamas first attacked Israel.

We were looking at 85 buck crude oil north of that. We're in the low 70s right now. So is this really a source of concern for the Fed when it comes to inflationary pressure? That's another big question.

David Faber (3:55)

Yeah. Well, but isn't the really big question, where's the pressure from tariffs and is it going to show up and when? And obviously, I know those who expect it still say it will be one time in nature. But I mean, here we are. It's the middle of June. Yes. We haven't seen signs yet.