#005 — Warsh flipped the dot plot to a hike, Accenture crashed 18% on a beat, Intel hit an ATH

Nine of 18 Fed officials now project a rate hike by December. Kevin Warsh’s first meeting flipped the dot-plot median from 3.4% to 3.8%, and he refused to submit his own dot.

Today:

Warsh’s first meeting flipped the dot plot to a hike
Accenture beat by 9 cents, crashed 18%, worst day in 25 years
Intel hit an all-time high on a Trump post about Apple chips
Trump signed a 14-point deal with Iran at Versailles. Talks collapsed in 24 hours.
Kroger turned eCommerce profitable for the first time

THE FED

Warsh held rates, refused to submit his own dot, and rewrote the year’s script.

The FOMC voted 12-0 to hold the federal funds rate at 3.50%-3.75% on June 17. Unchanged since December 2025. The dot-plot median for end-2026 jumped to 3.8% from 3.4% in March. In March, the median implied a cut. Now it signals a hike.

Chair Kevin Warsh, confirmed 54-45 on May 13 and sworn in May 22, secured unanimous consent in his first meeting. The April vote had split 8-4. He also cut the FOMC statement from 300+ words under Jerome Powell to roughly 130. No forward guidance language.

Then he declined to submit his own dot. “I have refrained from offering any projections of my own, consistent with my long-held views on the SEP.”

What the dots now say:

9 of 18 officials project rates above the current range by year-end
8 project no change
1 projects a cut
Warsh abstained, leaving only 18 dots instead of the usual 19

Where inflation landed:

2026 PCE raised to 3.6% (from 2.7% in March), a 0.9-point upward revision in a single quarter
Core PCE raised to 3.3% (from 2.7%)
17 of 18 officials see upside inflation risks
May CPI hit 4.2% YoY, a three-year high. Energy jumped 23.5%, driving 60%+ of the monthly increase.

Market reaction: The Dow fell 507 points (-0.98%) on June 17. S&P 500 -1.21%. Nasdaq -1.34%. The 2-year Treasury yield spiked 16bps to 4.216%, the biggest single-day Fed-meeting jump since March 2008. The 10-year rose 6.9bps to 4.497%.

The next day: S&P +1.08%, Nasdaq +1.91%, Russell 2000 +2.12%. The bounce came on the Intel-Apple deal and the Iran framework, not a rethink on rates.

Warsh also announced five internal task forces: communications, balance sheet, data infrastructure, technology and productivity, and inflation frameworks. All concluding by year-end. Gregory Daco, EY-Parthenon chief economist: “I think this might be the last time we see the dot plot.”

Why it matters: The dot-plot flip reprices everything downstream. The 30-year fixed stays elevated because the Fed is actively selling its MBS portfolio. A rate hike on top means mortgage spreads stay wide. Money market funds and short-duration bonds now yield more than they have in years, but RSU holders at tech companies just got another reason to worry about growth-multiple compression. Warsh’s refusal to submit a dot, combined with five year-end reviews, signals a regime change at the Fed, not just a policy tweak.

Contrarian read: The dots are a collection of 18 individual guesses, and the Fed’s track record of hitting them is dismal. In June 2024, the median dot called for one cut; the Fed delivered 100bps. The 9-vote hike majority assumes inflation stays above 3%, but WTI crude fell from $119 to $76 in three months after the Iran MOU. If energy retreats further, the hike case weakens fast.

THE EARNINGS

Accenture beat by 9 cents and lost 18% in a day. Worst drop in 25 years of public trading.

Accenture ($ACN) reported Q3 FY2026 on June 18: revenue $18.72B (+6% USD, +3% local currency). Diluted EPS $3.80, up 9% YoY, beating the $3.71 consensus by $0.09. Operating margin expanded 20bps to 17.0%.

None of it mattered. The stock closed at $127.98, down 17.97%. The largest single-day percentage decline since Accenture’s July 2001 IPO. The 52-week range is now $125.60 to $307.77.

The trigger: Q4 revenue guidance. Midpoint $18.08B vs. Wall Street’s $18.47B consensus. Full-year growth narrowed to 3%-4% local currency from 3%-5%. That 1-point top-end cut on a ~$74B revenue base translates to roughly $740M less than the high end of prior guidance.

What spooked the room:

Q4 guidance midpoint $18.08B vs. $18.47B consensus
CEO Julie Sweet cited ~$100M Q3 revenue deficit from Iran-war EMEA disruptions, with ~$400M cumulative hit expected by Q4
Morgan Stanley analyst James Faucette downgraded to Equal Weight on June 15, three days before earnings, cutting his target from $240 to $177

The offensive bet: Accenture announced $4.175B in cybersecurity acquisitions alongside the guidance cut. Majority stake in Dragos (valued at $3.2B), the OT/ICS security specialist, plus all of runZero and NetRise. Accenture spent $1.47B on all acquisitions in all of FY2025.

Sector contagion: Infosys ($INFY) fell 9.66%. IBM fell 5.05%. Cognizant and Capgemini dropped 5.5%-10.8%.

Why it matters: Accenture is the canary for enterprise tech spending. Its 9,000-client base spans every major industry. When it guides lower, CFOs at Fortune 500 companies are tightening IT budgets. The Iran war isn’t just a geopolitical headline; it’s actively delaying managed-services contracts across EMEA. If you hold IT services stocks, the read-through is immediate.

Contrarian read: $ACN at $128 trades at roughly 9x forward earnings with $10.8B-$11.5B of free cash flow guidance unchanged. The company beat EPS estimates in every one of the past four quarters. EMEA operating margin actually expanded to 14% from 12% despite the war disruption.

THE DEAL

Intel hit an all-time high on a Trump post about Apple chips. The government’s $8.9B stake is now worth $36B.

Donald Trump posted on Truth Social on June 18: “Apple has agreed to work with Intel to design and build its Chips in America.” Neither Apple ($AAPL) nor Intel ($INTC) confirmed the deal publicly. $INTC surged to an intraday all-time high of $135.48, closing at $133.99, up 10.64% from the prior close of $121.10.

The 52-week range: $18.97 to $135.48. That’s a trailing-12-month gain of roughly 544%.

CEO Lip-Bu Tan, the former Cadence Design Systems chief who oversaw 3,200% stock appreciation there, took over Intel in March 2025 after Pat Gelsinger was ousted following a $16.6B loss and a 60% share-price decline. Tan cut headcount from 108,900 to 85,100 and revived the foundry business. Intel began risk production of the 18A-P chip node on June 16, delivering 9% higher performance at the same power level vs. the base 18A process.

What’s in the deal:

Apple would use Intel’s 18A-P node for lower-end chips (older M-series for iPad Pro and MacBook Air, non-Pro iPhone variants)
TSMC retains 90%+ of Apple’s chip supply. Full 18A-P production not expected until mid-2027
The Wall Street Journal first reported the preliminary agreement on May 8, after more than a year of Trump-administration-driven negotiations
Tim Cook acknowledged on Apple’s Q2 2026 earnings call that iPhone 17 production was “constrained” by TSMC’s supply limits

The government trade: In August 2025, the US acquired a 9.9% stake in Intel, 433.3 million shares at $20.47/share, for $8.9B funded by CHIPS Act grants and the Secure Enclave program. That stake is now worth roughly $36B. An unrealized gain of ~$26.5B, or ~300%, in under a year.

Why it matters: If Apple, the world’s most demanding chip customer, is willing to commit volume to Intel’s 18A-P, it signals yield maturity that could unlock Nvidia and other high-margin foundry customers. Washington’s equity stake means the US government has a structural interest in Intel’s success, a political moat no competitor can replicate. For $AAPL holders, the deal reduces single-supplier risk to TSMC, whose advanced capacity is oversubscribed by Nvidia’s AI GPU orders.

Reality check: Intel has never successfully mass-manufactured chips for a third-party customer at leading-edge scale. The 18A-P is in risk production, not high-volume production. Full ramp is mid-2027 at earliest. The stock is up 544% in 12 months. A single yield failure could reprice $INTC sharply.

THE FRAMEWORK

Trump signed a 14-point deal with Iran at Versailles. The follow-up talks collapsed within 24 hours.

President Donald Trump signed the 14-point Memorandum of Understanding at the Palace of Versailles on June 17, during a G7 dinner hosted by Emmanuel Macron. Iranian President Masoud Pezeshkian signed electronically from Tehran.

“It’s signed. Signed in Versailles. Just signed it.” Trump handed the document and pen to Secretary of State Marco Rubio. Macron told him: “Good job.”

The deal sets a 60-day negotiation window for a final agreement, running to approximately August 16. The US begins removing its naval blockade within 30 days. Iran ensures free commercial passage through the Strait of Hormuz for 60 days. Oil export waivers take effect immediately.

What the MOU promises:

Immediate ceasefire on all fronts, including Lebanon
$300B reconstruction fund with regional partners (no funding sources specified)
All US sanctions terminated per a final-deal schedule
Iran reaffirms no nuclear weapons. Enriched uranium downblended on-site under IAEA supervision, not shipped out.
All frozen Iranian assets released (~$100B+ globally)

Then it fell apart. Technical talks at Burgenstock, Switzerland, scheduled for June 19, were postponed after Israeli strikes killed at least 22 people in Lebanon. VP JD Vance cancelled his travel. Iran’s Foreign Minister Abbas Araghchi told mediators the Lebanon ceasefire could “make or break” the US-Iran process.

Iran’s Parliament Speaker Mohammad Bagher Ghalibaf added a contradiction on day one: “The Strait of Hormuz will not return to pre-war conditions.” He said Iran would charge passage fees, directly contradicting the MOU’s free-passage provision.

Why it matters: Oil’s war-spike is mostly unwinding. Brent fell roughly 33% from its $120 peak to ~$80. If the 60-day talks produce a final deal, US sanctions lift in full, Iran’s ~$100B in frozen assets flows back, and ~20% of the world’s oil transits through a reopened Hormuz, suppressing prices further and easing Fed rate pressure. But shipping insurance premiums are still 12-32x pre-war levels ($3-8M per tanker transit vs. the pre-conflict 0.25% of vessel value). They won’t normalize until insurers see months of stability. The structural risk: no final deal means all of this unwinds on August 16.

THE EARNINGS

Kroger turned eCommerce profitable for the first time. The stock dropped 8%.

The Kroger Co. ($KR) reported Q1 FY2026: revenue $46.12B, beating the $45.59B estimate by ~$530M. Adjusted EPS $1.58, up 6% YoY from $1.49. And the milestone: eCommerce, including retail media, turned profitable for the first time in Kroger’s history.

New CEO Greg Foran, the former Walmart US president who took over February 9 after Rodney McMullen resigned over an ethics violation, delivered his first earnings call. $KR closed at $56.61, down 8.43%. 52-week range: $56.32 to $76.58.

The numbers:

Digital sales +19% YoY
Identical sales +1.0% ex-fuel. Strip out the 130bps IRA pharmacy headwind and underlying comp was +2.3%.
Gross margin 22.7% (from 23.0%), compressed by higher fuel mix, transport costs, and egg deflation
Kroger Precision Marketing profit grew >20%
Net debt-to-adjusted EBITDA: 1.75x, well below the company’s 2.30x-2.50x target range
Full-year guidance held: identical sales ex-fuel +1%-2%, adjusted EPS $5.10-$5.30, FCF $2.7B-$2.9B

Why it matters: After half a decade of burning capital on Ocado-powered fulfillment centers and last-mile delivery, the digital channel is now accretive. That validates grocery eCommerce can work at scale without Amazon-sized subsidy. Kroger Precision Marketing’s >20% profit growth shows grocery chains monetizing loyalty data into a higher-margin revenue stream than food itself. The IRA pharmacy headwind is a sleeper: drug-pricing provisions are compressing pharmacy margins industry-wide, and Kroger is absorbing 130bps of comp drag because of it.

That’s the brief.

Tomorrow we do it again.

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