Morning Forecast: Thursday 18 June
The Fed just signaled a rate hike this year instead of a cut, and stocks fell hard on the news.
This content is for informational and educational purposes only and does not constitute financial advice. Always do your own research. Not financial advice (NFA).
👀 Today’s Stories at a Glance
🏦 Fed Signals Hike, Not Cut: The Fed’s dot plot now points to a 2026 rate hike, sending stocks sharply lower.
🛢️ Trump Warns Iran on Strike: Trump defends his Iran deal but threatens to resume bombing if Tehran breaks commitments.
🚗 BMW Warning Hits European Autos: BMW slashed its margin target on a deepening China slump, dragging Mercedes and Volkswagen down.
🛋️ La-Z-Boy Soars on Fatter Margins: La-Z-Boy jumped 17% on a profit beat and buyback, though revenue stayed flat.
🎬 Lionsgate Holds Gains Despite Netflix: Lionsgate kept most of its takeover pop even after Netflix flatly denied interest.
🛒 Retail Sales Beat Again: May retail sales rose 0.9%, beating forecasts and feeding the Fed’s hawkish shift.
💨 Trump Pays to Kill Wind: The administration will pay Invenergy $765 million to scrap four offshore wind leases.
📉 CME’s Duffy to Step Down: CME’s long-time chief Terry Duffy will hand over to Lynne Fitzpatrick in 2027.
🧠 One Big Thing
The Fed's hawkish flip and the Iran deal are the same story read two ways. The dot plot turned hawkish because war-driven oil pushed inflation to a 4.2% annual rate, but the interim deal reopening Hormuz has already pulled crude from above $120 toward $73. That leaves the Fed forecasting hikes off an inflation driver that is actively unwinding, so the implied 2026 hike may never arrive. The trade is to treat the rate-driven sell-off in quality growth names, gold, and small caps as a fade rather than a trend. Watch the next inflation print and whether crude truly flows through Hormuz, because both could reverse the panic.
⚖️ Fear & Greed
📉 The Number That Matters
3.8%
The Fed's new dot plot puts year-end 2026 rates at 3.8%, and that 3.8% sits above the 3.4% pencilled in March, flipping a forecast cut into an implied hike.
⚔️ Winners vs Losers
Winners
CAST 0.00%↑ +167.18% FreeCast Inc. extended its explosive multi-day run on a string of streaming distribution wins led by a broadened DIRECTV relationship, though a move this size reflects a thin-float momentum squeeze far more than fundamentals.
SWBI 0.00%↑ +16.68% Smith & Wesson Brands Inc. jumped after fiscal Q4 results blew past expectations, with revenue up roughly 27% to $178.4 million and adjusted EPS of $0.36 against a $0.23 consensus.
RUM 0.00%↑ +15.36% Rumble Inc. surged after closing its Northern Data acquisition and reorganizing into RUM Group, rebranding the combined cloud and GPU operation as Quake AI to reposition itself as an AI-infrastructure player.
INTC 0.00%↑ +8.67% Intel Corporation climbed as its 18A-P manufacturing process entered risk production and on reports that Apple agreed to use its foundry services, with Marvell (+5.30%) and Western Digital (+5.07%) riding the same semiconductor strength.
SHAZ 0.00%↑ +8.17% SharonAI Holdings Inc. extended gains from its newly signed six-year NVIDIA compute collaboration to deploy up to 40,000 Grace Blackwell GB300 GPUs across 72MW of new AI data-center capacity in Australia.
Losers
RERE 0.00%↑ -10.83% ATRenew Inc. moved sharply lower in pre-market with no specific catalyst identified, the drop reading as a thin-liquidity move in the Chinese ADR rather than a news-driven decline.
LEGN 0.00%↑ -7.97% Legend Biotech Corporation pulled back as traders booked profits following an outsized early-June run that had lifted the CAR-T developer from the mid-$20s into the mid-$30s.
📊 Market Snapshot
Cryptocurrencies:
Bitcoin (BTC): $63,974 (▼0.73%)
Ethereum (ETH): $1,740 (▼0.50%)
XRP: $1.17 (▼1.39%)
Equity Indices (Futures):
S&P 500: 7,561 (▲0.91%)
NASDAQ 100: 30,476 (▲1.59%)
FTSE 100: 10,397 (▼0.39%)
Commodities & Bonds:
10-Year US Treasury Yield: 4.46% (▼0.67%)
Oil (WTI): $75 (▼0.52%)
Gold: $4,267 (▲0.33%)
Silver: $68.21 (▲0.55%)
Data as of: UK: 11:40am BST / US: 6:40am EDT / Asia (Tokyo): 7:40pm JST
✅ 5 Things to Know
🏦 Warsh’s Fed Tilts to a Hike, Stocks Fall
The Federal Reserve left interest rates alone yesterday, holding its benchmark range at 3.50% to 3.75% for a fourth straight meeting on a unanimous 12 to 0 vote. The shock was in the forecasts. The Fed’s new dot plot, the chart showing where each official expects rates to go, now points to a year-end 2026 rate of 3.8%, up from 3.4% in March, which implies a hike this year rather than the cut it had penciled in. Nine of the eighteen officials who submitted forecasts see at least one increase, and the whole path moved higher, to 3.6% in 2027 and 3.4% in 2028, both above the 3.1% the Fed calls neutral. Stocks fell hard: the Dow dropped 507 points to 51,492, the S&P 500 lost 1.2%, and the Nasdaq fell 1.3%. (CNBC)
This was the moment the market’s bet on cheaper money died, and it came on Kevin Warsh’s first day as Fed chair. Warsh stripped the policy statement back to roughly 130 words, scrapped the practice of signaling future moves, and pointedly declined to submit his own rate forecast, calling the dots “pencils, those kind with the big erasers” and leaving the path deliberately murky. He paired a hard commitment to 2% inflation, “inflation is a choice,” he said, with a notably upbeat read on the economy, calling activity “solid” and productivity and capital investment “strong.” The projections back him up and explain the hawkish turn: they show inflation at 3.6% this year and not back to the 2% target until 2028. (Reuters)
For investors, rates staying higher for longer keep the pressure on growth and technology stocks, gold, and anything sensitive to borrowing costs, from mortgages to small caps. With guidance gone, Warsh wants markets trading the data rather than his words, so the next inflation reading, not this meeting, becomes the trigger. Money markets now price a hike as soon as October, and Asian shares fell overnight though US futures steadied. One caveat worth holding onto: the committee is split down the middle, with half of officials seeing rates here or lower by year-end and half higher, so the hawkish dots are a lean, not a lock. (Reuters)
Sensei’s Insight: For the first time this cycle the Fed’s own forecast points to a hike, not a cut, but I wouldn’t read too much into it. This hawkish turn is an oil story, and with the US and Iran deal pulling crude from above $120 back to around $73, the thing that spooked the Fed is already reversing, so I don’t think they actually deliver these hikes; this is a Fed talking tough to rebuild credibility while it buys time. Warsh withheld his own dot and scrapped forward guidance, which leaves the path murky and means the next inflation print, not this meeting, sets the direction. I’m not chasing the panic: oil near $73 looks like a buy, I’d treat a knee-jerk sell-off in quality names as opportunity, and longer term I still expect a major market correction before the end of 2027 and one final crypto capitulation later this year.
🛢️ Trump Threatens to Bomb Iran as Deal Nears
President Trump defended his interim deal with Iran at the close of the Group of Seven summit yesterday, saying it had averted a global “economic catastrophe,” then warned in the same breath that he would resume bombing if Tehran breaks its commitments. The agreement, set to be signed tomorrow in Switzerland, reopens the Strait of Hormuz, the channel that carried about a fifth of the world’s seaborne oil before the war, and starts a 60-day clock to negotiate the hard parts, uranium enrichment and sanctions relief. Oil rose about 1% on the threat, with Brent near $79.55 and US crude at $76.79, close to three-month lows. (Reuters)
The Iran war was the single biggest driver of this year’s inflation surge, pushing oil above $100 and lifting consumer prices to a 4.2% annual rate, so a durable peace would cool both and eventually give the Fed room to ease. Trump’s threat cuts the other way: keeping the option to restart the war open leaves a risk premium baked into oil. The deal also defers every hard question to a 60-day window, and Iran has floated charging ships a fee to cross Hormuz. The signing falls tomorrow on Juneteenth, a US market holiday, so the first full trading reaction has to wait until markets reopen. US crude slipped again at today’s open. (Reuters)
Sensei’s Insight: The signing is not the test; the tankers are. Watch whether crude truly flows through Hormuz over the next two weeks, because that, not a ceremony in Switzerland, decides whether oil and inflation keep falling. The 60-day clock leaves enrichment and sanctions unresolved.
🚗 BMW’s Profit Warning Spells Trouble for European Autos
BMW issued a rare profit warning after the close earlier this week, cutting its 2026 operating margin target for the core car business to a thin 1% to 3%, down from 4% to 6%, and saying group pretax profit will now fall significantly, which the company defines as more than 15%. Shares dropped about 7% yesterday in Frankfurt to their lowest level since late 2020, leaving the stock down more than 30% this year. The German carmaker blamed a deepening slump in China, where its sales have fallen about 18% so far this year, and the energy and consumer-sentiment hit from the Iran war. (CNBC)
China is the real problem here, and the Iran war is the trigger that forced BMW to admit it. This is the company’s third profit warning in two years, all tied to China, where European brands are losing a price war to local electric-vehicle makers. The warning dragged down Mercedes-Benz, which still earns roughly a third of its profit in China and fell about 3%, and Volkswagen, off about 2%. Analysts at JPMorgan called the cut radical and flagged a possible 10% to 15% cut to German factory capacity at BMW’s strategy update in September, the next catalyst to watch. (Yahoo Finance)
Sensei’s Insight: This is BMW’s third China-driven warning in two years, so the pattern, not the surprise, is the story. The real catalyst is September’s strategy day, where JPMorgan expects a possible 10% to 15% German capacity cut. Mercedes, with a third of its profit from China, looks most exposed next.
🛋️ La-Z-Boy Jumps 17% on Margins, Not Demand
La-Z-Boy, the recliner and furniture maker, blew past earnings estimates after the close earlier this week, and the stock jumped about 17% yesterday. Adjusted earnings came in at $1.26 a share against the roughly $0.82 Wall Street expected, a beat of more than 50%, helped by a $0.16 tax benefit. Sales were flat at about $570 million, a touch above forecasts. The company also announced a new $300 million share buyback, meaning it will repurchase its own stock, which can support the share price, and lifted its dividend for a fifth straight year. Orders at its retail stores rose 11%. (SEC filing)
The pop was about profit, not demand, and that distinction matters. Revenue was flat and sales at stores open at least a year still fell 2%, so the beat came from fatter margins and a strategy of owning more of its own stores rather than a recovering consumer. La-Z-Boy is a useful read on big-ticket spending tied to housing and interest rates, both of which stay under pressure now that the Fed has signaled no relief. Management guided next quarter, its seasonally weakest, to $490 million to $510 million in sales. Home-furnishings peers like Williams-Sonoma and RH may catch a sentiment lift, though these gains were specific to La-Z-Boy.
Sensei’s Insight: The 17% jump was margins and a fresh $300 million buyback, not demand: revenue was flat and same-store sales fell 2%. With the Fed signaling no rate cuts, big-ticket furniture demand stays soft, so watch whether the margin discipline holds when sales can’t grow.
🎬 Netflix Denial Knocks Lionsgate, but Buyout Bet Holds
Lionsgate, the studio behind John Wick and The Hunger Games, jumped about 14% earlier this week to a record high after Semafor reported that Netflix was among companies weighing a takeover. Netflix shot the rumor down within hours, saying flatly it was “not interested,” and Lionsgate fell about 6% yesterday. The telling part is that it held most of the gain, closing near $15.45 rather than giving it all back. Netflix never made a formal offer, so traders who chased the spike on an unconfirmed report were left holding a stock priced for a deal that may not come. (Yahoo Finance)
That the premium survived a flat denial says investors still expect someone to buy this studio. Lionsgate has been viewed as a takeover target since it split from the Starz network in 2025, it owns a library of more than 20,000 film and television titles, and the activist investor Anson Funds has pushed for a sale. Hollywood dealmaking is the theme of 2026: the Justice Department cleared the Paramount and Warner Bros. Discovery merger just last week. The lesson for anyone tempted by a one-day pop is older than streaming. An unconfirmed rumor is not a deal until the buyer says so.
Sensei’s Insight: Netflix’s denial only knocked Lionsgate back partway because investors still expect a buyer, with an activist pushing a sale and a 20,000-title library in play. The premium holds until a deal appears or the takeover thesis breaks. Chasing the rumor itself rarely pays.
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🛒 May Retail Sales Beat, Consumer Still Spending
American shoppers are still spending, and that is making the Fed’s job harder. Retail sales rose 0.9% in May, well above the 0.5% economists expected and the fourth strong month in a row, with total sales hitting $763.7 billion. Spending at gas stations jumped 3.4% on the month and 26.5% over the year, a direct result of war-driven fuel prices rather than more driving. Strip out the volatile categories and core sales still rose 0.7%. The resilience landed hours before the Fed meeting and fed its hawkish turn, though economists warn the boost from larger tax refunds is fading and the saving rate has hit a four-year low. (Reuters)
💨 Trump Pays $765M to Kill Four Wind Leases
The Trump administration is now paying companies to abandon offshore wind rather than just blocking it. The Interior Department said yesterday it will hand developer Invenergy $765 million to scrap four offshore wind leases off New York, Maine, and California, with the company redirecting the money into natural-gas plants and geothermal projects. After courts repeatedly struck down its attempts to halt offshore wind by order, the administration switched to buying developers out, a tactic that has now reached about $2.6 billion across several deals. Seven states, led by New York, are suing, calling the payments an unlawful use of federal funds. The shift is a negative for offshore wind and a tailwind for natural gas and geothermal. (Reuters)
📉 CME’s Terry Duffy to Step Down, Shares Slip
The company that runs the world’s largest futures and derivatives markets is changing hands at the top. CME Group said yesterday that Terry Duffy, who has led it for more than 25 years, will step down as chief executive on March 1, 2027 and become executive chairman, with insider Lynne Fitzpatrick, the current president and finance chief, taking over. The stock fell about 4% on the news. The transition matters beyond CME’s own shareholders because the exchange operates the FedWatch tool, the gauge traders everywhere use to read the odds of the Fed’s next move, which puts its plumbing at the center of how markets price rate decisions. (CME Group)
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This content is for informational and educational purposes only and does not constitute financial advice. Always do your own research. Not financial advice (NFA).