Israeli president denies pursuing regime change in Iran — goal is to ‘remove’ nuclear program
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CNBC Daily Open: U.S. economic slowdown still in the cards, Fed says
Inflation in the U.S., measured by the personal consumption expenditures price index, will rise beyond 3% in 2025, according to an updated Fed forecast. The Fed also sees economic growth slowing to 1.4% this year, down from an earlier estimate of 1.7%. In combination, both forecasts point to early signs of stagflation. Israeli President Isaac Herzog told CNBC’s Dan Murphy that a regime change in Iran was “not an official objective of ours” President Donald Trump said the fed funds rate should be at least 2 percentage points lower, and again slammed Chair Jerome Powell, calling him “stupid” The song “I Got Summer on My Mind” went viral in 2022, and could be the Fed’s — and market watchers’ — earworm this summer. The Federal Reserve on Wednesday kept interest rates in a range between 4.25%-4.5% and kept two cuts in 2025 on the table. The S&P 500 closed around the flatline Wednesday, but the Dow Jones Industrial Average closed up 0.13%.
Inflation in the U.S., measured by the personal consumption expenditures price index, will rise beyond 3% in 2025, according to an updated Fed forecast.
U.S. stocks and oil prices were little changed Wednesday. Asia-Pacific markets fell Thursday.
Israeli President Isaac Herzog told CNBC’s Dan Murphy on Wednesday that a regime change in Iran was “not an official objective of ours.”
U.S President Donald Trump insisted he had not yet decided whether to order a U.S. strike on Iran.
Institutional investors are growing more enthusiastic about emerging markets, according to Bank of America’s Fund Manager Survey.
Kevin Mohatt | Reuters
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At U.S. Federal Reserve Chair Jerome Powell’s post-meeting press conference, the topic of tariffs — specifically, their impact on prices — was a recurring one.
“Everyone that I know is forecasting a meaningful increase in inflation in coming months from tariffs because someone has to pay for the tariffs,” Powell said. “And some of it will fall on the end consumer.”
Granted, recent economic data has been upbeat, suggesting the U.S. economy has been able to — and could still — escape from tariffs mostly unscathed.
In May, a better-than-expected 139,000 jobs were added and the unemployment rate was unchanged at 4.2%. Consumer sentiment in early June was much more optimistic than forecast, according to a University of Michigan survey. And, most crucially, inflation in May — based on the consumer price index — ticked up just 0.1% for the month, lower than estimated.
But that string of positive data might have to thank the slow process by which tariffs move through the economy.
“It takes some time for tariffs to work their way through the chain of distribution to the end consumer. A good example of that would be goods being sold at retailers today may have been imported several months ago before tariffs were imposed. So we’re beginning to see some effects, and we do expect to see more of them over the coming months,” Powell said.
And even though Fed officials, at present, “don’t see signs” of the U.S. economy weakening, Powell acknowledged growth will slow “eventually.” In other words, stagflation — the toxic mix of higher prices and slower growth — could be a possibility in the months ahead.
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The song “I Got Summer on My Mind” went viral in 2022. “I Got Stagflation on My Mind” could be the Fed’s — and market watchers’ — earworm this summer.
What you need to know today
U.S. central bank holds rates, sees two cuts
The U.S. Federal Reserve on Wednesday kept interest rates in a range between 4.25%-4.5%, where it has been since December. Along with the rate decision, the committee indicated, through its closely watched “dot plot,” that two cuts by the end of 2025 are still on the table. Earlier Wednesday, President Donald Trump said the fed funds rate should be at least 2 percentage points lower, and again slammed Chair Jerome Powell, calling him “stupid.”
Fed hikes inflation and lowers growth forecasts
Inflation in the U.S., measured by the personal consumption expenditures price index, will rise beyond 3% in 2025, according to an updated Fed forecast. The central bank had in March expected the PCE to hit 2.8%. The PCE came in at just 2.1% in April. The Fed also sees economic growth slowing to 1.4% this year, down from an earlier estimate of 1.7%. In combination, both forecasts point to early signs of stagflation.
Markets flat in U.S. but fall in Asia
U.S. stocks hovered around the flatline Wednesday. The S&P 500 slipped 0.03%, the Dow Jones Industrial Average closed 0.1% down, but the Nasdaq Composite inched up 0.13%. Oil prices, likewise, were little changed. Asia-Pacific markets fell Thursday. Hong Kong’s Hang Seng Index lost as much as 2%, leading declines in the region. In Japan, shares of Nippon Steel popped more than 3% after the firm completed its acquisition of U.S. Steel.
Iran regime change ‘not an official objective’: Herzog
Israeli President Isaac Herzog told CNBC’s Dan Murphy on Wednesday that a regime change in Iran was “not an official objective of ours,” and the goal was “to remove the Iranian nuclear program.” Herzog, who accused Tehran of “rushing to the bomb,” added that a “change in [regime] can also bring peace in the region.” When asked if there was a diplomatic ramp off available to de-escalate the situation, he said “there is actually a lot of back channel.”
Trump says he hasn’t decided on Iran strikes
For the second time in two days, Trump on Wednesday met his national security team in the White House amid the Israel-Iran conflict. The closed-door gathering took place as Trump insisted he had not yet decided whether to order a U.S. strike on Iran. The same day, U.S. Ambassador to Israel Mike Huckabee said evacuation flights and cruise ship departures were being arranged for American citizens seeking to leave Israel.
[PRO] Investor interest in emerging markets
Trump hit developing economies, such as Vietnam and India, especially hard with his “reciprocal” tariffs. The clock is ticking down on Trump’s 90-day pause on those tariffs — but institutional investors are actually growing more enthusiastic about emerging markets, according to Bank of America’s most recent Fund Manager Survey.
And finally…
Andrew Caballero-Reynolds | Afp | Getty Images
Trump and India’s Modi split over U.S. role in Pakistan ceasefire
During a Tuesday phone call between Indian Prime Minister Narendra Modi and Trump, the former expressed his frustration with the U.S. President’s repeated claims that he had played a significant role in brokering a ceasefire between the two nuclear-armed countries.
“Prime Minister Modi firmly stated that India does not and will never accept mediation. There is complete political consensus in India on this matter,” Foreign Secretary Vikram Misri said in a statement.
Modi “clearly conveyed” to Trump that the U.S. played no role in the mediation between India and Pakistan and denied any discussion of a trade deal, said Misri.
The 35-minute call was initiated by Trump, he added.
Israel-Iran live: Israeli hospital suffers ‘direct hit’ as IDF strikes Iranian nuclear reactor
UK government’s top legal adviser ‘has questions’ on legality of Israel’s actions in Iran. Attorney General Richard Hermer’s thinking complicates UK’s potential involvement.
By Mark Stone, US correspondent
The UK government’s top legal adviser has raised questions over whether Israel’s actions in Iran are lawful, according to a source familiar with discussions inside the government.
The source suggested to Sky News that Attorney General Richard Hermer’s thinking, which has not been published, complicates the UK’s potential involvement in the Iran-Israel conflict.
If the attorney general deems Israel’s actions in Iran to be unlawful then the UK is restricted in its ability to help to defend Israel or support the US in any planned attacks on Iran.
Israeli president denies pursuing regime change in Iran — goal is to ‘remove’ nuclear program
Israeli President Isaac Herzog said Wednesday that his country was not pursuing regime change in Iran. The goal was “to remove the Iranian nuclear program,” Herzog told CNBC. On June 13, Israel launched a series of airstrikes against Iran, targeting locations it said were related to the country’s nuclear program. Both sides have since been trading strikes, with the G-7 condemning Iran as “the principal source of regional instability and terror,” and reiterating that “Iran can never have a nuclear weapon” The International Atomic Energy Agency on June 9 urged Iran to “fully cooperate” with the agency.
Israeli President Isaac Herzog said Wednesday that his country was not pursuing regime change in Iran, and its attack on Tehran was aimed at eliminating its nuclear capabilities.
Speaking to CNBC’s Dan Murphy, Herzog said that regime change was “not an official objective of ours,” and the goal was “to remove the Iranian nuclear program.”
Herzog, who accused Tehran of “cheating” and “rushing to the bomb,” added that a “change in [regime] can also bring peace in the region.”
The International Atomic Energy Agency in a statement on June 9 urged Iran to “fully cooperate” with the agency, or else it would “not be in a position to provide assurance that Iran’s nuclear programme is exclusively peaceful.”
On June 13, Israel launched a series of airstrikes against Iran, targeting locations it said were related to the country’s nuclear program. Both sides have since been trading strikes.
“One has to be tough sometimes in order to remove imminent threats. That’s exactly what we’re doing,” Herzog told CNBC, adding that the strikes on Iran have had a genuine impact on its nuclear program.
U.S. president Donald Trump reportedly said on Wednesday that Iran was “very close” to having a nuclear bomb, putting him at odds with the testimony of his National Intelligence Director Tulsi Gabbard gave to the U.S. Congress in March.
“The IC [intelligence community] continues to assess that Iran is not building a nuclear weapon and Supreme Leader Khamanei has not authorized the nuclear weapons program he suspended in 2003,” Gabbard said.
Earlier this week, the Group of Seven countries expressed support for Israel, while condemning Iran as “the principal source of regional instability and terror,” and reiterated that “Iran can never have a nuclear weapon.”
This was in contrast to China’s stance. In the aftermath of the Israeli attack, Chinese Foreign Minister Wang Yi said that Beijing “explicitly condemns Israel’s violation of Iran’s sovereignty,” and said that it supports Iran in “safeguarding its national sovereignty and defending its legitimate rights and interests.”
When asked if there was a diplomatic ramp off available to de-escalate the situation, Herzog said “there is actually a lot of back channel. National talks and dialogue with world leaders is actually quite intensive.”