WS #12287

The dominant narrative remains a broad tech selloff driven by the Moonshot AI Kimi K3 model launch, which has revived fears of Chinese AI competitiveness and undercut the case for hyperscaler capex. However, a key counter-signal has emerged: Meta (META) is in talks to lease computing power to Anthropic in a potential $10 billion deal, per NYT, corroborated by multiple Bluesky posts. This underscores AI compute scarcity and could create a new revenue stream for Meta, directly contradicting the bearish AI narrative. Additionally, the US-Iran conflict is escalating, with the US sending dozens more refueling planes to Israel ahead of possible escalation (Axios), and oil prices surging (WTI +2.74%, Brent +2.43%). This is weighing on airline stocks and risk assets. A 7.3-magnitude earthquake near the Mexico-Guatemala border triggered a tsunami warning, but initial forecasts suggest limited impact. Economic data showed strong housing starts (1.427M vs 1.31M forecast) and a University of Michigan consumer sentiment beat (54.9 vs 48.7), while inflation expectations eased (1-yr 4.2% vs 4.4% prior). These data points could provide some support to risk assets. The tech selloff is escalating, while the US-Iran conflict remains at high intensity with potential for further escalation.