MW The stock market is poised to go crazy if Warsh gives it the go-ahead, these strategists say

By Steve Goldstein

The research service Citrini says the S&P 500 can clear the 8,000 level before any worries emerge

Wall Street enthusiasm may be stoked further depending on what Kevin Warsh says this week.

There's an undeniable enthusiasm on Wall Street: The SpaceX IPO went as smoothly as could have been imagined, the hometown basketball team just won its first title in 53 years, and the stock market is poised to rally thanks to a peace deal that after 40 or so false starts really seems to be happening.

The research service Citrini just authored a note sharing that upbeat undertone. A new Substack post from the Citrini team, led by James van Geelen, says there's a scenario where, in their words, the "market could go absolutely insane," which they quantify as meaning the S&P 500 rising another 10% to 15% and artificial-intelligence names doubling in value. Even without losing sanity, they say, the S&P 500 SPX will reach 8,000 before any worries meaningfully threaten the cycle.

They pose the theory that the stock market is vacillating between thematic momentum and macro conditions. Last year, it was tariffs and a growth scare, and this year it was the Iran conflict, that temporarily dislodged the enthusiasm over AI.

There's a new macro concern, namely the worry that the Federal Reserve will begin lifting interest rates this year, which really only started getting priced into the futures market in May. There are multiple reasons for the repricing of Fed expectations: the uptick in inflation readings, the strengthening jobs-market data and hawkish actions by the central bank.

Now it appears that the Strait of Hormuz may finally reopen. But that won't be seen in the data right away. "There will still be indirect, lagging inflationary ripple effects on different timeframes. June and July [inflation data] may be hot for reasons that were set in motion before Memorial Day. We are naming this dynamic the Echo Shock: measured inflation peaking just as actual pricing pressure at the source reverses," they say.

Besides the Iran situation, they also point out that there is no evidence of inflationary pressure on wages, as evidenced by real wage growth - that is, wages adjusted for inflation - turning sharply negative. "So far, this remains a strictly supply-driven inflation shock and hence is unlikely to have legs," they say.

The Citrini team also takes aim at the labor market, which, despite strong payrolls data, is not overheating, in their view. Data from the job openings and labor turnover survey, or JOLTS, is not nearly as rosy as the payrolls data suggest, and in any event the current level of job creation isn't excessive by historical standards.

"Macro data is inherently extremely noisy, even without the enormous macroeconomic shocks we've been hit by such as the tariffs from Liberation Day or the Iran war. It has served us well to not over-extrapolate short periods of macro data to draw strong conclusions," they say.

Armed with that perspective, their view is that the Fed, now led by Chair Kevin Warsh, won't do anything - choosing neither to hike rates nor to immediately shrink the balance sheet. "We think Warsh holds until something in his framework - median and trimmed-mean CPI, with the willingness to underwrite deflationary technology trends - screams higher, and we don't see what that is going to be in the near future," they say.

Tim Duy, the chief U.S. economist at SGH Macro Advisors, agrees that if Warsh sounds dovish at his maiden press conference on Wednesday, stocks will be racing higher.

"Warsh could lean on trimmed mean inflation, lower oil prices, and the promise of AI to strike a decidedly dovish tone and, like [former Fed Chair Jerome] Powell, throw Fed hawks under the bus. We don't know how much lower pricing for the December meeting can fall given that the data still favors more risk of rate hikes than cuts, but we are confident that risk assets can jump higher," says Duy.

Duy, it should be noted, doesn't share the dovish Citrini take on the Fed. He assigns a 70% chance to a Fed hike in September - the market probability is more like one in four - as he says core nonhousing services inflation is a major red flag that above-target price growth has become embedded.

The market

U.S. stock futures (ES00) (NQ00) were rallying with oil futures (CL00) down about $5 per barrel. Yields BX:TMUBMUSD10Y are falling, and gold (GC00) and bitcoin (BTCUSD) are rallying.

 
Key asset performance                                                Last       5d       1m       YTD     1y 
S&P 500                                                              7431.46    0.65%    0.31%    8.56%   24.33% 
Nasdaq Composite                                                     25,888.84  0.70%    -1.28%   11.39%  33.40% 
10-year Treasury                                                     4.448      -12.00   -14.50   27.60   -0.80 
Gold                                                                 4358.6     0.11%    -4.64%   0.61%   28.04% 
Oil                                                                  80.21      -12.13%  -21.74%  39.71%  12.21% 
Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

The U.S. and Iran both said a deal has been reached to end the fighting and reopen the Strait of Hormuz.

Fox $(FOX)$ said it's going to buy Roku $(ROKU)$ for $160 a share, an 11% premium to Friday's close.

Anthropic dispatched staff to Washington after being hit with export restrictions on its most powerful AI models.

The Empire State manufacturing survey slumped in June but remained in positive territory at 5.7, on a -100 to +100 scale. Industrial production and home-builder confidence data are set for release.

Elon Musk said he would be surprised if SpaceX revenue didn't top $1 trillion by 2031.

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The chart

Correlation doesn't prove causation, but, wow, the correlation here is striking. Goldman Sachs strategists led by Ben Snider say the difference in profitability explains the higher valuations assigned to different stock-market indexes. If the relationship continues to hold, that spells trouble ahead: The AI capex boom will likely weigh on return on equity among megacap tech stocks in coming years, as depreciation expenses build and as those companies raise capital to pay for the expenditure.

Top tickers

Here were the most active stock-market tickers on MarketWatch as of 5 a.m. Eastern.

 
Ticker  Security name 
SPCX    Space Exploration Technologies Corp. 
NVDA    Nvidia 
TSLA    Tesla 
MU      Micron Technology 
AMD     Advanced Micro Devices 
TSM     Taiwan Semiconductor Manufacturing Co. 
MSFT    Microsoft 
INTC    Intel 
AAPL    Apple 
RKLB    Rocket Lab 

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June 15, 2026 08:43 ET (12:43 GMT)

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