WS #13052

The dominant signal in this window is the sharp divergence between AI winners and losers, with Microsoft (MSFT) surging ~9% premarket on a Q4 earnings beat ($90B revenue, Azure +43%, commercial RPO $678B +84% YoY), validating enterprise AI monetization and driving tech futures higher. This directly counters the prior stagflation narrative and Meta's (META) post-earnings weakness. Meanwhile, geopolitical risk escalates: Iran claims it destroyed three US F-35 jets and killed US personnel in missile strikes, vowing further retaliation, while Israel acknowledges targeting a government office adjacent to a UNESCO-listed palace in Iran. Oil supply tightness is reinforced by Goldman Sachs highlighting the biggest diesel supply squeeze since 2020, with Brent near $86-$90. The US Q2 GDP came in at 1.5% (miss vs 2.1% expected), confirming stagflation, but the market is rotating into AI winners. On earnings, Shell (SHEL) crushed Q2 estimates with $9.84B profit (more than doubled) and announced a $3B buyback, Starbucks (SBUX) beat Q3 and raised FY EPS guidance, and Bloom Energy (BE) topped $1B quarterly revenue for the first time. Conversely, Crocs (CROX) sank on weak Q3 guidance, and Check Point Software (CHKP) issued below-consensus Q3 outlook. The macro narrative is shifting from pure stagflation to an 'AI-led divergence' theme, with MSFT's blowout acting as a counter-signal to the bearish tech thesis. The Fed held rates steady at 3.50%-3.75% with a 9-3 vote, but three dissents for a hike signal internal division; Warsh's presser was described as 'a little bit rocky.' The Bank of England also held rates at 3.75%, with Bailey saying nothing suggests a move toward a hike.