WS #11722

The US-Iran military escalation is the dominant macro theme, with Strait of Hormuz traffic collapsing to near-standstill (only 2 tankers passed Thursday, down from 47 a week ago). The US struck over 170 Iranian military targets in two days, and Iran retaliated with ballistic missiles targeting US-allied countries (Bahrain, Kuwait, Qatar, Jordan). This threatens the fragile June 17 ceasefire and risks a full re-closure of the strait, which would spike oil prices and disrupt global supply chains. However, markets are showing resilience: US stocks opened higher (S&P 500 +0.06%, Nasdaq +0.18%), led by a semiconductor rebound (SOXX +5%) as investors rotate back into AI beneficiaries. The CFTC blocked CME's plan for 24/7 oil futures trading, a regulatory move that may limit hedging options but does not change physical supply dynamics. Oil prices eased slightly (Brent ~$77.87) after spiking to $80.59 on Wednesday, suggesting the market is pricing in a lower probability of sustained disruption. The Fed minutes from the June 16-17 meeting (released today) showed inflation concerns prevailed, with rates held at 3.5-3.75%. The committee noted upside risks from tariffs, Hormuz closure, and AI buildout, but expects inflation to slow in H2 2026. This is a counter-signal to the prevailing bearish inflation narrative, as the Fed is not panicking. On the tech front, Meta launched Muse Spark 1.1 with a paid API tier, directly competing with Anthropic and OpenAI for developer tools. This reinforces the AI capex visibility theme (Meta's 14GW capacity by 2027). Micron crossed $1,000 after boosting US investment to $250B through 2035, and MARA Holdings surged 14% on a 2 GW Texas AI campus plan. These are bullish signals for AI infrastructure stocks (MU, META, MARA) and counter the recent tech selloff. PepsiCo missed Q2 EPS, citing tighter consumer budgets, sending shares lower. This is a negative for consumer staples (PEP) and signals weakening demand. The dominant narrative is ESCALATING geopolitical risk but DE-ESCALATING tech selloff, with AI infrastructure stocks rallying on capex visibility. The carry-forward from prior SA includes Meta's AI model launch and Micron's investment plan, both confirmed and reinforced this window.