Morning Bid: Go slow AI

• Futures markets now price in up to four Fed rate hikes as inflation concerns persist, with service sector price pressures remaining elevated despite central bank efforts to reach its 2% target
• Brent crude oil surged on Monday after weekend attacks on ships in the Gulf and Saudi Arabia's East-West pipeline, threatening global crude supply as Tehran-Gulf talks on managing the Strait of Hormuz were postponed
• AI-linked stocks declined as OpenAI and Anthropic called for development slowdown amid 'apocalyptic warnings' about threats to humanity, with MSCI's AI basket having risen over 120% since ChatGPT's 2022 launch

Summary: Morning Bid - Go Slow AI

Federal Reserve & Monetary Policy:

Markets are anticipating a Federal Reserve interest rate hike on Wednesday (September 14). Futures markets are pricing in up to four additional rate hikes beyond this week's expected increase, as the Fed's 2% inflation target remains elusive. The central bank's quarterly economic and rate projections will provide crucial guidance on future tightening measures.

Energy Markets:

Brent crude oil surged on Monday following weekend attacks in the Middle East. Saudi Arabia's East-West pipeline was targeted, threatening global crude supply. Additionally, scheduled talks between Tehran and Gulf governments regarding management of the Strait of Hormuz have been disrupted, adding to supply concerns and driving oil prices higher.

AI Sector Developments:

The artificial intelligence sector faces potential headwinds as industry leaders call for slower AI development amid warnings about threats to humanity. OpenAI CEO Sam Altman announced the company will delay its highly anticipated IPO until 2027, calling a 2026 listing "ill-advised." Anthropic's Dario Amodei also advocated for an AI slowdown, which Chinese state media characterized as targeting China. President Trump dismissed these warnings as outlandish.

Market Impact:

AI-linked stocks declined on the safety concerns, with Nasdaq futures trading lower. The MSCI AI basket has surged over 120% since ChatGPT's 2022 launch—more than double global stock benchmark gains. However, calls for slower development could significantly impact the massive AI infrastructure buildout, including data centers, chips, and computing equipment.

Key Data Release:

Canada's August CPI data is scheduled for release at 8:30 a.m. EDT.