Good morning. On Fortune’s radar today:
- Apple stock takes a hit after ‘all-glass’ iPhone canceled.
- Crude awakening: Oil over $90, again.
- The stock market will test Warsh but don’t panic—the S&P 500 is going to 8,080, analyst says.
- Iran is behaving as if it has already won the war.
- AI capex: There’s more than you think.
- It’s not on the same scale as the S.S. Californian’s failure to respond to the Titanic, but it does involve Mark Zuckerberg.
➡️ Did someone forward you this email? If you would like to receive this information directly, every morning before the markets open in New York, sign up here.
APPLE CRUMBLE
Apple stock takes a hit after ‘all-glass’ iPhone canceled, Jefferies says
Apple stock lost 1.53% yesterday and a further 0.23% overnight after Jefferies analyst Edison Lee and his colleagues published a note to clients (seen by Fortune) that said, “Our supply chain checks suggest that the all-glass iPhone [scheduled for launch in September 2027] has been canceled.”
“We view this as a major setback to efforts to bring in higher-priced iPhones amid soaring memory costs,” the analysts said, reducing their earnings estimates. They believed that the phone would have had a price of $2,060 and if its design was extended across the other iPhones it would have led to price increases there, too. “The foldable iPhone will now be the only key driver of higher [average sales price] and margin,” they said.
However! Sources told Apple-whisperer Mark Gurman (Bloomberg) that the company—currently transitioning from old CEO Tim Cook to new chief exec John Ternus—still intends to launch a “glass-centric” version of the phone in 2027. Note the slightly different terminology: “All-glass” and “glass-centric” are not the same thing. Gurman reported that the new phones “will make use of a new glassy look … Glass is used on the front and back of the phones — known internally as V73 and V74 — and the material will curve into the sides of the devices, with a metal band in the middle.”
Gurman partially confirms the Jefferies note: “A more aspirational version championed by Apple’s design studio used even more glass, instead of metal, but was scrapped early on. With that approach, the company encountered problems connecting the glass panels together. The design didn’t hold up when Apple had to figure out how to produce it at large volumes, according to the people.”
- Apple may scrap its all-glass iPhone. Wall Street hasn’t been this alarmed since Steve Jobs’ death - Sebastian Herrera
THE MARKETS
Stocks hit pause as oil goes over $90 again
- S&P 500 futures were flat this morning. The index closed flat yesterday, too.
- In Europe, the Stoxx 600 was down 0.18% in early trading and the U.K.’s FTSE 100 was down 0.24% before lunch.
- Asia: South Korea’s KOSPI was down 0.73%. Japan’s Nikkei 225 was up 2.08%. India’s Nifty 50 was down 0.47%. China’s CSI 300 was down 0.81%.
- Brent crude went back over $90 per barrel this morning, although it has since settled back at $89.
- Bitcoin was $64.1K.
Chart via TradingEconomics.com
76% of S&P 500 companies beat earnings forecasts
With 90% of the S&P 500 having reported Q2 earnings, 76% beat earnings-per-share expectations, according to Savita Subramanian and Victoria Roloff at Bank of America. “All signs point to another exceptionally strong earnings season,” they said via email.
‘Markets have a history of testing new Fed chairs’ (but it will be OK in the end)
The S&P 500 will hit 8,080 by the end of this year according to a new forecast from Bob Edwards, CIO of Edwards Asset Management ($3 billion under management). “Respect the bull market, but expect the sawtooth pattern higher to continue,” he said in an email to Fortune. The index will power higher in part due to healthy rotation and “rolling corrections” in overbought areas like the Magnificent Seven and semiconductors.
“Markets have a history of testing new Fed chairs, so a 7% to 10% second-half correction would not surprise me. Consider it a familiar rite of passage and not necessarily the end of the bull market,” he said.
MORE FROM FORTUNE
Arianna Huffington says even high-flying CEOs are unhappy and feel stuck in their multimillion-dollar jobs: ‘It’s a trap’ - Orianna Rosa Royle
AI’s biggest buildout is here. These stocks offer a way to invest in the data center boom - Camila Grigera Naón
Record beef prices are minting fortunes for ranchers—but straining the American farmers who fatten their cattle - Sasha Rogelberg
CareScout CEO: the hidden economic cost of an aging baby Boomer generation - Samir Shah
Trump’s $200 billion tariff hit swells budget deficit to $2.1 trillion for 2026, CBO confirms - Nick Lichtenberg
SUBOPTIMAL
Iran is behaving as if it has won its war against the U.S.
Countries in the Gulf region have come to accept that Iran has won control of the Strait of Hormuz and that this will be the new normal, the WSJ reports. They don’t like it, but it’s better than all-out war, and governments are making alternative arrangements for shipping and exports. Iran has continued to sporadically bomb targets in countries allied to the U.S., including the U.A.E., Saudi Arabia, and Egypt.
Iran is behaving as if it has won the conflict. In the last 24 hours, Supreme Leader Ayatollah Mojtaba Khamenei appointed veteran war leader Mohsen Rezaei as secretary of Iran’s Supreme National Security Council, securing the loyalty of one of his top lieutenants, the FT said.
And, “Iranian President Masoud Pezeshkian says Supreme Leader Mojtaba Khamenei conveyed a message of unity during a recent seven-hour meeting. Pezeshkian confirmed that Khamenei is in perfect health despite making no public appearances since taking power,” Al Jazeera reported.
- Context: Khamenei was reportedly injured in the war and has not been seen in public since he succeeded his father—so the idea that he may be strong enough to host a seven-hour meeting comes as a surprise.
At the weekend, Iran made a series of demands for financial reparations from the U.S.
Yesterday, President Trump responded by making a series of compensation demands of his own, “for all of the people that they have killed and gravely wounded with their roadside bombs and many conflicts.” None of these demands are likely to be acceptable to the Iranians.
As the stalemate continues, the price of oil continues to rise. Trump’s “tougher stance lowers chances of a near-term agreement and keeps markets wary,” Saxo Bank’s strategy team warned in a note this morning.
CHART OF THE DAY
Analysts are bad at guessing AI capex
Wall Street analysts have consistently under-forecast how much capital expenditure companies have made on AI buildout, according to this chart from Ohsung Kwon and his colleagues at Wells Fargo. And judging by that 56% gap for the current period, they’ll continue to underestimate it for a while longer.
NUMBER OF THE DAY: Midterm losses
19
The number of times the party that holds the White House has lost seats in the U.S. House in the last 21 midterm elections, according to Jason Pride and Michael Reynolds at Glenmede ($53 billion under management). “Democrats have a plausible path to the House, but the Senate map is a steeper climb, with little room for losses across competitive races,” they said.
THE FRONT PAGES TODAY
How AstraZeneca’s $400bn tie-up with US rival Bristol Myers unravelled - FT
Congress' disappearing town halls - Axios
How a Tesla-SpaceX Merger Gives Musk a Shortcut to His $1 Trillion Payday - WSJ
Intel Raises $20 Billion in Upsized Share Sale for AI Plans - Bloomberg
How a Counterintelligence Inquiry Into Trump’s Russia Ties Was Derailed - NYT
ONE MORE THING
If a stricken yacht calls for help in the middle of the ocean and Mark Zuckerberg isn’t around to hear it, does it make a sound?
The crew of a yacht owned by Mark Zuckerberg did not hear a radio call for a maritime assist from a small skiff that ran out of fuel off the coast of Alaska, and by the time it did, another nearby ship had already rendered assistance, a spokesperson for the Meta CEO said.
The skiff had issued a call for assistance through the U.S. Coast Guard last week and a nearby small cruise ship, the Wilderness Legacy, towed it into nearby Farragut Bay in Southeast Alaska and refueled it, according to the AP.
Although it was closer, Zuckerberg’s yacht, called Launchpad, had not responded to the call.
Michael Love, a passenger who said he was on the Wilderness Legacy, said, “Our boat rescued a stranded vessel last night and apparently we did that after the Coast Guard radioed Mark Zuckerberg’s yacht — which was closer — and they repeatedly refused to respond. (There was near unanimous booing when the captain announced this).”
Neither Zuckerberg nor his family was on the yacht and the crew were tuned to a different channel than the one the Coast Guard used, Meta said.
- Would you like to sponsor this newsletter? Contact Polly Raven (polly.raven@fortune.com) for details.