In Mission: Impossible, Ethan Hunt is always given a nearly impossible mission to accomplish. The objective is crystal clear, the deadline is urgent, and a plan is quickly formulated to achieve the mission. Like Hunt, President Donald Trump, Fed Chair Kevin Warsh, and Treasury Secretary Scott Bessent have clear missions. Their plans for accomplishing these missions are less clear.
Despite these uncertainties, the S&P 500 rose today to 7,600.50, nearly matching its June 2 record high. It's been a tug-of-war this summer between FEMO (fabulous earnings momentum) and these uncertainties. The S&P 500 has been fluctuating around 7,500 since May 14. We aren't convinced that the summer stall is over, but it might be.
I. Trump's Mission
It's Tehran's "last chance." So said President Donald Trump today about his latest decision to pause a massive military strike on Iran scheduled for this past weekend. Presumably, bombs will drop again if the latest round of negotiations doesn't deliver a peace deal quickly that opens the Strait of Hormuz and denuclearizes Iran. Oil prices fell, and stocks rallied impressively on the news today (chart).
However, Iranian Foreign Ministry spokesperson Esmaeil Baqaei explicitly stated that no direct negotiations with the United States are underway or scheduled. Tehran maintains that it has not sent negotiators abroad nor hosted foreign delegations for peace talks.
In an effort to keep oil prices from moving higher, the Trump administration is continuing to tap the Strategic Petroleum Reserves, which were already down sharply when they were tapped in 2022 in response to the Russian invasion of Ukraine.
II. Warsh's Mission
Fed Chair Kevin Warsh is like a secret agent with a clear mission to "deliver price stability." However, he is very secretive about his plan for doing so. He hasn't set a deadline for accomplishing his mission because his five special task forces are working on plans to reform the Fed. These plans won't be released until the end of this year.
