WS #6136

The dominant theme remains the Iran conflict, which is ESCALATING. The US has rejected Iran's proposal to reopen the Strait of Hormuz and defer nuclear talks, with Secretary of State Marco Rubio calling it 'completely unacceptable' and citing 'deeply fractured' Iranian leadership. This has dampened hopes for a resolution, keeping oil prices elevated (WTI above $99, Brent above $111) and geopolitical risk high. Goldman Sachs warns oil could trade near $120 if the war drags on, raising its base case for Brent to $90 by late 2026. A Japanese tanker is attempting to cross the Strait of Hormuz, and the first LNG tanker since the war began appears to have traversed the strait, offering a potential early signal of easing, but analysts caution that one tanker does not guarantee a trend. The BOJ held rates at 0.75% but raised inflation forecasts sharply, signaling a hawkish tilt. ECB data released this morning shows a sharp rise in consumer inflation expectations (1-year ahead to 4.0% from 2.5%) and the most pronounced bank credit tightening since 2023, driven by the Iran war, reinforcing stagflation fears. China's top leadership pledged more 'forceful' measures to bolster the economy as the Iran war dims the outlook. Nvidia hit a record market cap of $5.26 trillion, becoming the most valuable company ever, as AI demand remains robust ahead of Big Tech earnings this week. Qualcomm's stock surged on news it is developing AI chips for OpenAI, a significant new AI partnership. Google has signed a classified AI deal with the Pentagon, and over 600 Google employees protested the move. China officially blocked Meta's acquisition of Manus, a $2B AI startup, citing national security, which is a draconian signal for tech transfer. BP reported a massive Q1 profit beat, confirming the bullish energy thesis. Smithfield Foods beat Q1 estimates. The attempted assassination of Trump adds political uncertainty but is unlikely to materially shift markets near-term. Overall, the narrative is ESCALATING on geopolitical risk, with energy stocks benefiting and growth/multiple stocks under pressure from higher rates and inflation, but AI-related tech (NVDA, QCOM) shows counter-signal strength.