WS #13053

The dominant signal in this window is the continued strength of Microsoft (MSFT), which surged ~15% at the open following its Q4 earnings beat, 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: Israel acknowledges targeting a government office adjacent to a UNESCO-listed palace in Iran, and Houthis are bombing Saudi oil infrastructure, while a QatarEnergy LNG tanker crawled through Hormuz for the first time in three weeks. Oil supply tightness is reinforced by Shell's Q2 profit more than doubling to $9.84B on Middle East supply shock, with a $3B buyback sustained. 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, Starbucks (SBUX) beat Q3 and raised FY EPS guidance, while Crocs (CROX) sank on weak Q3 guidance. 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.