WS #7964

The dominant signal in this window is a sharp escalation in the stagflation narrative, driven by new data and official warnings. US consumer sentiment hit an all-time low in May, with long-term inflation expectations worsening due to the Iran war, per Bloomberg. Top EU officials warned that oil and gas prices will remain elevated through at least end-2027, keeping pressure on inflation and growth. This is corroborated by oilprice.com reporting that oil markets are ignoring red flags as the global energy crisis deepens, with Brent crude at $104.2 (+1.57%) and WTI at $97.54 (+1.24%). The Iran war's impact is broadening: a Bloomberg piece discusses how it could affect summer flights, and Kenya's government warned citizens of tougher economic times ahead due to the war's fallout. Separately, traders are now betting that the Fed under Warsh will hike rates by December, per Bloomberg — a significant shift from prior rate-cut expectations. This hawkish repricing is a key development that counters any dovish thesis. On the geopolitical front, Ukraine's Foreign Minister says US-brokered talks with Russia are running out of steam, signaling potential stalling in diplomatic negotiations. Meanwhile, Ukraine struck a Russian FSB headquarters and destroyed an anti-aircraft system, and a drone strike on Gazprom Neft's 300k bpd refinery is raising supply concerns, nudging oil higher and boosting energy stocks. In corporate news, Dell stock is up nearly 30% in two weeks after Trump's 'go out and buy a Dell' comment, and Meta quietly released a Reddit-like app 'Forum', causing RDDT to drop on competition fears. The WHO raised the Ebola public health risk to 'very high' in DR Congo, and the US CDC is actively engaged in finding therapies for the new strain. The stagflation theme is ESCALATING with new data points and official warnings, while the Fed rate hike narrative is shifting from dovish to hawkish.