June's Swoons

The stock market was hit by another June swoon today. Investors were unnerved by the outcome of last Wednesday's FOMC meeting. The committee participants were more hawkish than expected, according to their Dot Plot. Fed Chair Kevin Warsh abstained from providing his dot, but he came across as very hawkish during his presser, repeatedly stressing the importance of the Fed achieving price stability. Also weighing on AI-related stocks is news that token prices are falling as competition heats up, and that a Chinese company introduced a new dirt-cheap open-source AI model.

(1) Crude oil. Meanwhile, the June swoon for oil prices continued today. Brent crude fell below $77 a barrel this evening (chart). The decline reflects an improving supply outlook following the US-Iran MOU, with tanker traffic resuming through the Strait of Hormuz and the lifting of the US blockade of Iran's ports. The sharp reversal suggests the geopolitical risk premium in the crude oil market is rapidly unwinding and that the underlying trend is bearish, with crude prices falling from early 2022 until the latest war in the Middle East began.