Tim Cook’s 15-Year Run as Apple CEO Comes to an End, Oil Spikes After U.S. and Iran Exchange Strikes

Zaid Admani (0:00)

Public.com presents The Rundown, your daily market update in 10 minutes. My name is Zaid Admani, and today is Monday, August 31st. In today's episode, we'll recap Fed Chair, Kevin Warsh's big speech at Jackson Hole, and tell you why the odds of a September rate hike just jumped. We'll also talk about Tim Cook's final day as Apple CEO, and the massive challenge waiting for new CEO John Ternus. Then stick around to the end of the show to find out why LIV Golf might be headed for bankruptcy. We got a great show for you today.

Let's go.

Stocks are coming off a winning week. Despite the dip on Friday, the S&P 500 was up 0.5% last week, while the NASDAQ added 0.85%. The big news on Friday was of course, the speech from Fed Chair, Kevin Warsh, at the symposium in Jackson Hole. Now we've been talking about that speech all week last week because going into it, markets weren't really sure how serious Kevin Warsh was about inflation and if he was willing to raise rates, especially with President Trump publicly pushing for lower interest rates. Well, we got our answer in the speech. Kevin Warsh came out swinging against inflation. He reaffirmed that the Fed's target for inflation is 2% and he called out how inflation has been above the Fed's 2% target for 65 months now. And here's the line that really caught Wall Street's attention. Kevin Warsh said that he'd be hard pressed to describe financial conditions as restrictive today, which basically means he doesn't think that interest rates are high enough to bring down inflation. Those were some pretty sharp words there and markets definitely heard the message. Before the speech started, traders were pricing in a roughly 35% chance of a September rate hike. After the speech, those odds jumped to around 60%. So yeah, Kevin Warsh talked a tough game in the speech on Friday. Now we'll have to see if the Fed actually follows through with the rate hike at the September meeting, which is on September 16th. So it's coming up in a couple of weeks. On a side note, as I was watching the speech, I still feel like Kevin Warsh is lacking the aura of past Fed chairs. Jerome Powell was a tough act to follow and maybe Warsh will get there at some point, but I don't think he's quite there just yet. More importantly for Kevin Warsh though, he needs to establish credibility with the markets. So if he does follow through with the rate hike in the September meeting after this hawkish speech, I think the markets will start taking them even more seriously moving forward. Now looking ahead to this week, we are getting earnings from Dell, Broadcom and Snowflake. And then on Friday, the August jobs report will come out. So we'll get more information on the health of the labor market. So we'll stay on top of all of that along with everything else happening in the stock market and bond market. So definitely get subscribed to the podcast if you haven't already and tune in every day to stay in the loop.

Let's run through some headlines. Starting with oil and Iran. After about a month of relatively calm, the US and Iran are exchanging strikes again, which is causing oil prices to jump again. Brent crude is back above $90 a barrel. Over the weekend, US forces struck two Iranian rocket launchers on an island that sits inside the Strait of Hormuz. Iran responded to those attacks by launching missiles and drones at US military bases in Jordan and the UAE. Jordan says it intercepted eight missiles and reported no casualties. So after weeks where the war had shifted more towards sanctions and economic pressure, we're starting to see direct military strikes again. Maybe it's a sign that the economic pressures that the US was applying to Iran are proving to be not as effective as they had hoped. Big picture though, we're six months into this war and there just seems to be yo-yo diplomacy here. Some weeks there are talks of a deal, other weeks there's missiles flying, but so far, there seems to be no long-term solution. The Strait of Hormuz is one of the most important waterways when it comes to shipping oil, and Iran wants to turn it into a toll road and charge for every ship that passes through the strait, and so far, the US has not agreed to that. So we might be in this period of unknown for a while, but look, the oil markets have generally settled around the $90 a barrel range, and according to multiple reports, there are about seven million barrels a day currently moving through the Strait of Hormuz via the Omanian coast, but you know, if oil prices stay at this level or start rising again, it could continue to put upward pressure on inflation, which could force the Fed to hike interest rates. So it's all one big economic story, and we'll see what ends up happening.