WS #12678

The dominant theme this window is the escalation of the Middle East conflict, with multiple corroborating reports of a widening war. Oil prices spiked to $100/barrel for the first time since May, with Brent easing to ~$97.63 and WTI near $89.77. The conflict has expanded beyond the Strait of Hormuz: Houthi militants attacked two Saudi oil tankers in the Red Sea, threatening the Bab el-Mandab Strait, and Saudi Arabia launched strikes on Yemen's Red Sea coast. A new front opened in the Black Sea where drone attacks halted operations at Russia's CPC terminal, forcing Kazakhstan to cut production. US strikes against Iran continued for a 13th consecutive night, and President Trump warned China and Russia against supplying weapons to Iran. The market is now pricing in the risk of a prolonged conflict, with the S&P 500 down ~2% since the strikes began. However, oil prices eased on Friday as some profit-taking occurred, providing a slight counter-signal to the bearish energy narrative. On the corporate front, Paramount agreed to delay its $110B merger with Warner Bros. Discovery until June 2027 amid legal challenges, which could cost Paramount over $1.9B in ticking fees. Intel shares plunged ~15% after its Q2 earnings miss and lowered full-year revenue growth outlook, dragging down the semiconductor sector (SOX -4.5%). Alphabet shares are in correction territory as investors question returns on AI spending after Q2 free cash flow turned negative. Meta's stock continued its losing streak (down 7 days in a row) amid broader tech weakness. The Nasdaq fell 0.64% while the Dow gained 0.45%, reflecting a rotation out of tech into value. New US tariffs of 10-12.5% on 60 trade partners were imposed under Section 301, facing a fresh lawsuit from the Liberty Justice Center. The ICC voted to remove Chief Prosecutor Karim Khan, a development with geopolitical implications. NATO countries pledged €70 billion to Ukraine in 2026, per final declaration of Ankara summit, signaling continued Western support. The US Treasury kept South Korea on its currency monitoring list. Eurozone PMI surprised to the upside at 51.9, but the outlook remains clouded by geopolitical risks. Wildfires in Spain forced evacuation of NASA's Deep Space Network complex in Madrid, temporarily suspending operations. Meta paused its plan to charge a subscription for smart glasses feature after backlash. Prentis, a new AI lab co-founded by Reid Hoffman, is in talks to raise $100M at $1B valuation. DeepSeek CEO claimed Huawei hardware can replace Nvidia GB300, though requiring 4x chips and 2 years behind. Jensen Huang posted his first X post supporting open-weight AI models, signed by 25 companies including Microsoft and Meta. Narrative arc: The Middle East conflict is ESCALATING, with new fronts in Red Sea and Black Sea. Tech selloff is STABLE but with MAG7 divergences (INTC -15%, GOOGL correction, META 7-day losing streak). Tariff regime is STABLE with new Section 301 tariffs replacing expired ones. Paramount-WBD merger is DE-ESCALATING (paused).