SpaceX Buys Cursor for $60B as the FOMC Opens With Warsh's Debut. The BOJ Hikes to 1%, Its Highest Since 1995.

Tuesday pre-open, 6:30 AM ET. Futures are holding steady after Monday’s strong rally, consolidating gains as the market digests two major developments overnight. SpaceX announced it will acquire AI coding platform Cursor’s parent company Anysphere in a $60 billion all-stock deal, sending SPCX up roughly 10% in pre-market to $212, pushing its valuation past $2.78 trillion just four days after its record IPO. The Bank of Japan raised rates to 1% for the first time since 1995 in a 7-1 vote, a milestone that briefly pressured Asian equities before the Nikkei recovered to close slightly positive. The FOMC begins its two-day meeting today, with the rate decision and Kevin Warsh’s first press conference arriving tomorrow at 2 PM ET. Oil continues drifting lower as Brent fell 1.5% to $81.55 and WTI eased 0.4% to $80.47, though analysts warn the Strait of Hormuz reopening could take months to fully normalize flows. May housing starts plunged 15.4% to a 1.177 million annualized rate, the weakest reading in over a year, confirming that mortgage rate sensitivity remains acute. The G7 summit continues in Evian with trade and AI governance on the agenda. Markets are pricing a 99.6% probability of no rate change tomorrow.

SpaceX Acquires Cursor in $60 Billion AI Bet

SpaceX announced early Tuesday that it has signed a definitive merger agreement to acquire Anysphere, the parent company of AI coding tool Cursor, in an all-stock transaction valued at $60 billion. The deal, structured through a wholly-owned SpaceX subsidiary called X67, will convert each share of Anysphere common and preferred stock into SpaceX Class A shares using a volume-weighted average price over the seven trading days before closing. Importantly, this is not funded from SpaceX’s $75 billion IPO proceeds. The deal includes a $10 billion breakup fee and a separate $4 billion regulatory termination fee, signaling both parties’ commitment.

This acquisition is genuinely surprising in scope and ambition. Cursor’s annualized revenue run rate has reached $4 billion, growing at a pace that makes it one of the fastest-scaling enterprise software products ever. At 15x revenue, the valuation is rich but defensible if you believe AI-assisted coding becomes the default development environment. For SpaceX, the strategic logic goes beyond building rockets: Musk is effectively creating an AI-powered software stack that could integrate Cursor’s code generation capabilities into Starlink, satellite operations, and autonomous systems. SPCX jumped to $212 pre-market, giving the combined entity a $2.78 trillion market cap. The deal is expected to close in Q3 2026, pending regulatory approvals. Jim Chanos offered a contrarian note, warning that 100x revenue stocks rarely reward investors over full cycles, a fair caution given the speed at which SpaceX has sprinted from IPO to mega-acquisition in under a week.

FOMC Day 1: The Calm Before the Dot Plot

The Federal Open Market Committee begins its two-day meeting today. Markets have priced a 99.6% probability of rates holding at 3.50-3.75%, making the decision itself a non-event. What matters arrives tomorrow: the updated Summary of Economic Projections, the dot plot showing where individual committee members see rates headed, and Kevin Warsh’s first press conference as Chair.

The macro backdrop heading into this meeting is genuinely conflicted. On one hand, May CPI printed at 4.2% year-over-year and PPI hit 6.5%, both well above the Fed’s comfort zone and driven largely by the energy shock from the Strait of Hormuz closure. On the other hand, the Iran peace deal and oil’s 23% decline from April peaks suggest that inflationary impulse is already fading. Nonfarm payrolls at 172,000 in May were solid but not overheating. Michigan consumer sentiment rebounded to 48.9, though year-ahead inflation expectations remain elevated at 4.6%. The key question for tomorrow: does the dot plot median shift higher, signaling the committee leans toward hiking rather than cutting? Futures currently imply the effective fed funds rate reaches 3.8% by late 2026, suggesting the market thinks the next move is more likely up than down. Warsh has kept a deliberately low profile since being sworn in on May 22. His first public remarks will set the tone for months.

BOJ Hikes to 1%: A 31-Year Milestone

The Bank of Japan raised its key interest rate by 25 basis points to 1.0%, the highest level since 1995. The decision was split 7-1 and came despite the unusual absence of Governor Kazuo Ueda, who missed the meeting for personal reasons. Deputy Governor Uchida oversaw the proceedings. The BOJ also maintained its plan to reduce government bond purchases by 200 billion yen per quarter, with monthly JGB purchases expected to stabilize at 2 trillion yen from April 2027.

The hike was widely telegraphed, and the Nikkei’s ability to close up 0.13% at 69,404 after initially selling off shows it was priced in. The broader risk is carry trade dynamics. With Japanese rates now at 1% and rising, the yen carry trade that has funded leveraged positions globally becomes incrementally less attractive. The yen strengthened modestly overnight, and any further BOJ hawkishness could trigger unwinding pressure on risk assets similar to August 2024’s volatility episode. For now, the market views this as orderly normalization. A move toward 1.25% at the next meeting, or any surprise acceleration in bond purchase tapering, would change that calculus quickly. The dollar index (DXY) rallied to a 1.75-month high of 100.20, partly reflecting the BOJ action.

Oil: Euphoria Meets Logistics Reality

Oil continued its post-deal drift lower, with WTI settling around $80.47 and Brent at $81.55. The price action tells a story of diminished euphoria. Monday’s 5-6% plunge priced in the headline of the peace deal. Today’s modest decline reflects the market absorbing the fine print: clearing mines from the Strait of Hormuz could take six months, tankers need two to three months to reposition and reload, and several Gulf producers need time to ramp production back to pre-war levels.

The IEA has warned that even with a full reopening, the global market could face a surplus of roughly 5 million barrels per day once Iranian, Saudi, Kuwaiti, Iraqi, and Emirati supply fully returns alongside sustained high output from the US, Brazil, and Venezuela. That oversupply scenario is bearish for crude in the medium term, potentially pushing prices into the mid-$70s by late summer. OPEC’s next meeting will be critical: the cartel faces the challenge of managing returned supply without collapsing prices entirely. Energy equities will remain under pressure as the war premium continues to drain from the complex, but the broader market benefits through lower input costs, better consumer sentiment, and an improving Fed calculus on inflation.

Housing Starts Collapse, Confirming Rate Sensitivity

May housing starts fell 15.4% month-over-month to a seasonally adjusted annual rate of 1.177 million units, well below expectations and 8.7% below the year-ago pace. Building permits edged down 0.7% to 1.413 million, and existing home sales printed at 4.17 million with a median price of $429,300 and 4.5 months of inventory.

The message is unambiguous: the housing market is buckling under elevated mortgage rates. With the 30-year fixed rate hovering near 7%, builder sentiment has cratered and new construction activity is pulling back sharply. This is the data point that argues most forcefully for eventual rate relief. The Fed cannot hold at 3.75% indefinitely if housing investment keeps deteriorating at this pace. Residential construction represents roughly 3-5% of GDP, and the multiplier effects through lumber, appliances, furnishings, and labor markets are significant. Warsh will almost certainly be asked about housing affordability tomorrow. Expect him to acknowledge the weakness while emphasizing that inflation must come down first.

Broadcom’s AI Guidance Miss Still Reverberating

Broadcom’s Q2 results from June 4 continue to shape semiconductor sentiment. The company reported record revenue of $22.2 billion with AI semiconductor revenue of $10.8 billion, up 143% year-over-year. But Q3 AI chip sales guidance of $16 billion missed analyst estimates of $17.2 billion, and management notably declined to raise its full-year AI revenue forecast of $56 billion. Shares fell 14% on June 4 and have not recovered.

The Broadcom miss matters because it raised questions about the pace of AI infrastructure spending growth. The company reiterated fiscal 2027 AI semiconductor revenue exceeding $100 billion, but the near-term softness suggests hyperscaler ordering patterns may be lumpier than expected. HBM (High Bandwidth Memory) and advanced packaging remain first-order constraints on industry growth. The SIA’s June 1 report estimating that semiconductor technologies account for 95% of an AI data center rack’s value underscores why any deceleration in this cycle gets amplified across the entire supply chain. Watch Accenture’s Q3 earnings Thursday for a read-through on enterprise IT spending and AI bookings.

Asia and Europe Overnight

Japan’s Nikkei 225 closed up 0.13% at 69,404, recovering from early losses triggered by the BOJ rate hike. The index briefly topped 70,000 intraday for the first time ever before pulling back. Hong Kong’s Hang Seng surged 1.9% to 24,718, its best session in two weeks, buoyed by the Iran peace deal momentum and a rebound in Chinese property names. China’s CSI 300 rose 2.4% to 4,892.

European markets opened higher, with the DAX gaining 1.1% to 24,894, touching new record territory. The Stoxx 600 added 0.2% to 634. European bourses are benefiting from the dual tailwind of falling oil prices and a weaker euro, though energy stocks remain a drag on the indexes. The G7 summit in Evian enters its second day with France pushing for coordinated action on AI governance, trade imbalances, and the Iran deal’s reconstruction framework. Disagreements between the US and European members on AI regulation are expected to produce managed tensions rather than any binding agreement.

Geopolitical Tracker

US-Iran: Formal signing ceremony confirmed for Friday, June 19, in Switzerland. Ceasefire continues to hold. The Strait of Hormuz is being reopened to shipping, but mine-clearing and tanker repositioning will take weeks to months. Nuclear enrichment issues carved out for separate negotiations. Market largely pricing the deal as done; residual risk centers on hardliner opposition in Tehran or a last-minute disagreement on sanctions timing.

G7 Summit (Evian, Day 2): Leaders continue discussions on trade, AI governance, and post-conflict reconstruction. France has invited India, Brazil, South Korea, Egypt, and Kenya as guest participants. Macron is pushing for coordinated AI regulation while the US resists binding multilateral frameworks. Expect a communique that papers over disagreements with broad language.

Ukraine-Russia: Senate vote on $1.3B security assistance and $8B arms sales package still pending. Fighting continues along the Pokrovsk and Huliaipole axes with over 100 daily combat engagements. Ceasefire negotiations remain stalled. The conflict has taken a back seat in market consciousness but remains a source of structural geopolitical risk.

Taiwan Strait: PRC coast guard incursions near Pratas Islands continue at a low-grade escalation pace. Taiwan completed HIMARS live-fire drills last week. No major new developments, but the pattern of incremental Chinese pressure persists.

Key Events Today and This Week

Tuesday pre-market note, June 16, 2026, 6:30 AM ET. S&P 500 futures at 7,554 (flat), Nasdaq 100 futures at 26,470 (+0.01%), Dow futures at 51,731 (-0.01%). SpaceX acquires Cursor parent Anysphere for $60B in all-stock deal; SPCX +10% pre-market at $212. FOMC meeting begins, decision tomorrow 2 PM. BOJ hikes to 1%, highest since 1995. WTI crude at $80.47 (-0.4%), Brent at $81.55 (-1.5%). Housing starts plunge 15.4% to 1.177M. VIX at 16.20 (+0.7%). Gold at $4,300 (-0.5%). Bitcoin at $66,304 (+1.8%). DXY at 100.20 (+0.35%). 10Y yield at 4.48%. G7 summit continues in Evian. Iran signing Friday in Switzerland. Markets closed Friday for Juneteenth. For internal use only. Not investment advice.