WS #6098

The dominant narrative remains the Iran-US conflict and its economic fallout, now in a fragile ceasefire phase but with the Strait of Hormuz still tense. Oil prices remain elevated around $105-$110/barrel, with WTI crude up over 8% to $104.40 and Brent above $101 after Trump ordered a naval blockade. The ceasefire extension offers a diplomatic opening but tensions persist, with Iran claiming the US intends to sustain conflict until regime change. The White House is not actively considering Iran's proposal. This has triggered a cascade of effects: US gasoline prices hit $4/gallon, consumer sentiment plunged to a record low of 47.6, and inflation expectations spiked to 4.8%. The Fed is signaling it will look through the energy shock, with markets now pricing a potential rate cut later this year. Airlines are slashing forecasts—United Airlines cut its 2026 EPS guidance to $7-$11 from $12-$14 due to jet fuel costs, and Southwest warned on Q2 earnings. European airlines face a jet fuel crisis with IEA warning of potential shortages within six weeks. Defense stocks are giving back gains as investors 'buy the rumor, sell the war.' Meanwhile, the US Treasury froze $344M in crypto linked to Iran, and Tether froze a similar amount at law enforcement request. The UK is considering a rent freeze to protect household budgets from the Iran war fallout. On the tech side, Intel surged 24% on AI-driven CPU demand, AMD rose 12%, and TSMC hit a record high on Taiwan easing single-stock investment caps. Meta announced 8,000 layoffs (10% of workforce) and a multi-year deal to use Amazon's Graviton chips. Google plans to invest up to $40B in Anthropic. DeepSeek released its V4 model, claiming cost efficiency 98% less than GPT-5.5 Pro. The narrative arc is STABLE on the Iran front, with the ceasefire holding but no clear path to lasting peace, while tech/AI themes remain strong but are showing signs of rotation. In this window, the attempted assassination of President Trump at the White House Correspondents' Dinner is the dominant breaking news, with the suspect charged with attempted assassination. This is a high-significance political event that could inject volatility into markets, particularly defense and security-related stocks. Separately, China blocked Meta's acquisition of Manus, escalating US-China AI rivalry, which is bearish for Meta and bullish for Chinese AI chipmakers. DeepSeek's V4 model release with Huawei chip support is a positive for Chinese tech. Oil prices continue to spike, with Brent at $109.7 and WTI at $97.54, driven by the ongoing Strait of Hormuz crisis. The UK is considering a rent freeze to mitigate Iran war fallout, which is bearish for UK real estate. Tesla and Boeing are set to report earnings this week, with Tesla facing headwinds from the Iran war and Boeing from the 737 MAX issues. The Fed's Powell signaled a cautious approach, looking through the oil shock, which is neutral for markets. Overall, the window is dominated by the assassination attempt and the Iran war's persistent effects, with tech/AI themes providing a counterbalance.