☕ Looking inevitable

• Markets: Stocks didn’t want you starting the weekend on a bad note, so they rose yesterday. The major indexes snapped a four-day losing streak as oil prices fell and the latest inflation reading made an interest rate cut look more certain (more on that below).
• Stock spotlight: But probably no one celebrated as hard as Michael Dell, since his computer company rose enough to push him to No. 3 on the Forbes billionaire list, edging out Jeff Bezos for the spot.

HIKING TRAIL

Niv Bavarsky

The latest inflation report and subsequent reaction from the markets say that Kevin Warsh is less than a week away from raising interest rates for the first time as Fed chair. The consumer price index rose a seasonally adjusted 0.4% in August and 3.4% over the previous 12 months, challenging the narrative from July’s data that inflation was cooling.

Core CPI (which excludes volatile food and energy prices) is among the data the Fed scrutinizes for interest rate decisions. It jumped a higher-than-expected 0.3% for the month. That has traders pricing in a 90% chance of a quarter-point rate hike next week, per CME Group data.

Major drivers of overall inflation included:

• Energy: Gasoline prices climbed 3.9% over the previous month and 27.4% over the past year, fueled (sorry) largely by the war in Iran.
• Food: The food index inched up 0.1% for the month and increased 2.7% over the past 12 months.
• Electronics: While smartphone prices were down 12.2% year-over-year, computer software and accessory prices skyrocketed 25.4% over the past year, the largest annual price increase ever.

More market reactions: Treasury yields remained near multiyear highs yesterday.

Will Warsh raise rates despite Trump’s desire for cuts?

The stage is set for the Fed to raise rates for the first time in three years to steer inflation back toward its 2% annual goal, something it hasn’t achieved in five years, with investors mostly anticipating a quarter-point hike.

It’s a political conundrum for the typically tight-lipped Warsh, who President Trump selected with an expectation that he would lower rates. But high prices are also a factor in the upcoming midterm elections.

But there’s still a case for doing nothing: While the market is pricing in a rate hike as a near certainty, not everyone is convinced it’s needed. One expert told CNN a rate increase coupled with overwhelmingly high energy prices could actually slow the economy more than the “tap the brakes” the Fed intends.—DL

      

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World

Tour de headlines

Justin Sullivan/Getty Images

🥬 Massive cyclosporiasis outbreak declared over. No one’s been this happy about lettuce since women posed for stock photos: Yesterday, the Centers for Disease Control and Prevention deemed the outbreak of the gastrointestinal illness caused by a parasite found in lettuce over. The largest-ever outbreak included 12,883 lab-confirmed cases across 21 states since May 1, and was linked to iceberg lettuce grown by Taylor Farms in Mexico. Taylor Farms voluntarily recalled the possibly impacted lettuce from grocery stores and restaurants in July. The FDA is still investigating how the lettuce got contaminated and other outbreaks of the parasite—but at least you’re now likely to see fewer headlines about explosive diarrhea.—AR

🐌 Sam Altman is reportedly open to slowing AI development. The OpenAI CEO who kicked off the current AI race by unleashing ChatGPT on the world told employees the company would be open to slowing down the development of its tech, Bloomberg reported. Altman is hoping other companies will do the same, but cautioned that they might not, anonymous sources told the publication. The news comes as OpenAI and rival Anthropic (which has publicly called for a global developmental slowdown) prepare for IPOs…and after departing employees of both companies have questioned the safety of the tech.—AR

🎾 Ben Shelton will face Germany’s Alexander Zverev in US Open men’s final. Americans Ben Shelton and Frances Tiafoe battled it out in the last semifinal of the tournament last night, with Shelton beating Tiafoe in four sets and securing a spot in his first career Grand Slam final, which will be held tomorrow. Shelton will be the first Black man to play in a US Open final since Arthur Ashe, the stadium’s namesake, did so in 1972. He will attempt to become the first American man to win the US Open since Andy Roddick in 2003. The women’s final takes place this afternoon, with two-time defending champion Aryna Sabalenka facing off against Elena Rybakina.—HVL

STRAIT TALK

Gallo Images/Getty Images

Iran-backed rebels in Yemen just got a tighter chokehold on the world’s oil supply. The Houthis captured Perim Island in the Bab el-Mandeb Strait, several outlets reported yesterday. The narrow corridor, which connects the Red Sea to the ocean, is a vital conduit for Saudi Arabian oil shipments and has taken on even greater importance as Iran restricts traffic in the Strait of Hormuz.

The Houthis also advanced on Yemen’s Red Sea coast this week in a ground offensive that has killed 500 people and displaced 46,000 locals, per the UN.

Oil whack-a-mole

Gaining further control of the 20-mile-wide strait makes it easier for the Houthis to stymie Saudi oil exports—which were already down by a third in August from July amid Houthi attacks:

• Saudi oil suppliers sent some tankers through the Red Sea’s Northern exit, aka the Suez Canal, but that route is longer and costlier.
• Saudi oil is increasingly in danger even before it reaches a boat: Yesterday, the Kingdom said it shut down a pipeline that carries oil to the Red Sea as a “precautionary measure” following drone strikes from Iraq the previous day.

Meanwhile, oil prices have passed the $100-per-barrel mark for the first time since May, and were up nearly 8% this week amid escalating fighting between the US and Iran. The Houthis’ capture of Perim could push prices even higher.

Big picture: Experts say that oil disruptions give Iran more leverage in negotiations with the US.—SK

      

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ICYMI

Have you heard...

Here’s everything that didn’t make it into this week’s newsletters but we immediately sent to the group chat.

➡️ Blackstone is set to sell its stake in Bumble’s parent company, MagicLab, early next year and walk away with nearly double the initial $2.1 billion it invested in 2019 with fellow venture capital firm Accel. Publicly, it will say no one wins a breakup, but Blackstone will be the one posting from an Italian patio.

➡️ For the first time in the modern version of the show’s 42 years on the air, Jeopardy! publicly advertised a job opening for a clue writer on the show. Over 1,300 applicants submitted for the role within the eight-day window. What is a tight labor market?

➡️ Chicago was ranked the most “climate resilient” city in the world, according to AI company AlphaGeo, which forecasts geographical risks. Try making fun of the concrete beaches when they are the only ones that survive the apocalypse.

➡️ A new bakery is opening in NYC’s Williamsburg and will only be selling $60 loaves of rye sourdough. It’s time to raise rates, Warsh.

➡️ More Americans are up and moving to France. Last year, the number of Americans who applied for a first-time French residence permit increased 17.3% compared to the previous year. They say it’s for the food and culture, but the scary cigarette photos are definitely sweetening the deal.—MM, SK

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News

What else is brewing

• New estimates predict the Social Security cost-of-living adjustment for 2027 may be ~3.6%, the highest jump in three years, and the most anticipated COLA besides the crispy Diet Coke waiting in the fridge.
• Anthropic said in its recent threat report that it stopped Iran-linked operators who were trying to use Claude to target US ships.
• A federal appeals court nixed a Trump administration order keeping a Michigan coal plant open well past its planned retirement date.
• President Trump will be in Ireland this weekend as the Trump International Golf Links hosts the Irish Open.
• Norway’s Princess Astrid has died at the age of 94, two days after the funeral of her younger brother, King Harald.

Community

Crowd work

Last week, we asked, “What’s something beautiful you saw recently that made an impression?” Here are some of our favorite responses:

• “While attending a Hot August Nights car show, I saw a 1950 Oldsmobile convertible. Big engine, manual transmission, shiny wheels, and flawless black paint. It was the perfect hot rod…the best car of the day, in my humble opinion.”—Floyd from Sacramento, CA
• “The large ‘W’ made up of the freshman class at UW Wisconsin. My grandson was in that group! Go Badgers! 🦡”—Diane from Hampshire, IL
• “There’s a hawk that occasionally visits our yard and hangs out on the fence while keeping critters at bay. It never occurred to me that this hawk had a mate until this morning. While I was lining up to take a photo of the hawk on the fence, another hawk flew close by and the two flew off together. It was peaceful, serene, and magnificent all at the same time.”—Howard from Homer, AK
• “A mural recently painted by my community just outside my apartment complex in a recently renovated old factory. The artwork is beautiful, but more so it is nice to see my city moving on and evolving after so many industrial jobs left 20+ years ago.”—Kevin from Danville, VA
• “I just moved to Chicago, and the downtown skyline is visible from my neighborhood. When I was walking home late at night yesterday, there was a slight fog that was strong enough to conceal the outline of the buildings, but not thick enough to obscure the window lights. It looked like the sky itself had windows built into it, and hundreds of people were living their lives behind glass panes on the horizon. It was breathtaking, and lovely to imagine the world differently.”—Bekah from Chicago, IL

This week’s question

What’s an eatery where you are a regular—and what do you usually get there?

Sam’s answer to get the juices flowing: “I make sure to periodically visit this hole-in-the-wall Uzbek café in my neighborhood where I’m usually the only person conversing in English. I invariably get their richly spiced pilaf and dumplings topped with sour cream.”

Submit your response here.

recs

• Why scientists say three minutes of exercise could be more beneficial than 90 minutes.
• A philosophical framework to help you make hard choices.
• Could NASA’s laundry gun ever clean your clothes?
• Refresh your bedspread for fall.**

^{*A message from our sponsor. **This is a product recommendation from our writers. When you buy through this link, Morning Brew may earn a commission.}

Play

Brew Crossword: Your sample clue from our biggest puzzle of the week is “Embezzler’s downfall.” Grab your favorite beverage and play the Crossword.

Open House

Welcome to Open House, the only newsletter section willing to venture into Packers territory. We’ll give you a few facts about a listing and you try to guess the price.

Today’s home is in Lisbon, WI. This 2,288-square-foot house was built in 1974 and is situated on Mountain Meadows Drive. It’s so stylized, it’s hard to imagine the property doesn’t come with a 1950s sitcom family built in. Amenities include:

• 3 beds, 3 baths
• Heated bathroom floors
• A butterfly garden and fruit trees (of course)

How much for a home that is kinda giving Don’t Worry Darling?

Answer

$675,000

Word of the Day

Today’s Word of the Day is: apocalypse, meaning “the end of the world.” Thanks to Reid, who didn’t give a location but who we assume is holed up in a bunker, for the suggestion. Submit another Word of the Day here.