WS #13079

The dominant signal in this window is the sharp divergence between Microsoft and Meta earnings reactions, which is escalating from the previous window. Microsoft's Q4 results (revenue $90B, +18% YoY; Azure +43%; EPS $4.81 vs $4.24 est.) drove a historic ~$480B single-day market cap gain, validating AI capex returns. In contrast, Meta's Q2 miss (EPS $6.18 vs $7.14 est.; free cash flow -91% YoY; weak Q3 guidance) triggered a 9.4% selloff, extending its record losing streak. This creates a MAG7 carve-out: MSFT bullish, META bearish, contradicting the macro 'tech selloff' narrative. Meanwhile, the US-Iran war is escalating: US launched large-scale strikes on Iran, Saudi Arabia joined strikes in Iraq, Egypt was hit by a drone strike for the first time, and the Senate rejected a war powers resolution 49-50. Oil prices remain elevated (WTI ~$84, Brent ~$90) but gas prices fell 3.7% in Europe. The US Q2 GDP slowed to 1.5% (below 2.1% est.), but consumer spending rose 3.2% and core PCE inflation cooled to 3.3% YoY. The Fed held rates at 3.5-3.75% with 3 dissents favoring hikes, keeping September rate hike odds elevated. Corporate insiders are the most bearish in 20 years (MarketWatch). Arm Holdings reported a clean beat-and-raise quarter (Q1 revenue $1.29B, +22% YoY; EPS $0.45 vs est.; data center royalties doubled; AGI CPU demand exceeds $2B), reinforcing the bull case after the recent AI-driven selloff. This is a positive signal for ARM and the broader AI semiconductor space. Additionally, a drone strike on LNG vessels in Egypt's Damietta port signals a potential new front in the US-Iran war, threatening Suez Canal navigation and Saudi oil exports. This is a bearish development for global energy security and could push oil prices higher. The US also issued new sanctions targeting Iran's Mahan Air support networks in China, India, Russia, and Iran.