WS #13164

The dominant theme is the US-Iran conflict, which is ESCALATING. Multiple sources (Axios, Bloomberg, CBS/WSJ via Bluesky, and GDELT) report that the US and Israel are preparing a major joint bombing campaign targeting Iran's energy infrastructure, with strikes potentially beginning this weekend and concluding by Monday before US markets open. Iran's Tasnim news agency, citing a senior security official, says Iran has prepared a comprehensive response plan targeting critical infrastructure of Israel and US energy infrastructure in the region, and that the Strait of Hormuz remains closed. This escalation is driving oil prices higher (Brent +1.5% to $88.22) and is a key input for inflation, which the Fed's three dissenting members (Hammack, Kashkari, Logan) publicly defended their rate-hike stance on Friday, warning that high inflation could become entrenched. The Fed held rates at 3.50-3.75% but the dissent signals a hawkish tilt. In equities, the MAG7 divergence is stark: Amazon surged +15.3% after blowout earnings (AWS growth, AI capex paying off), Microsoft +3%, Alphabet +6.9%, Nvidia +2.9% (reclaiming world's largest company), while Apple fell -7.35% on weak guidance and supply constraints, and Meta is under pressure. This is a clear counter to the 'tech selloff' narrative—AI capex fears are being assuaged by AMZN/MSFT results. Also notable: the Fed's Warsh is considering reducing the frequency of FOMC meetings (NYT), a potential structural change. The Reflecting Pool case (DOJ dropping charges) is political noise, not market-moving. The Texas Stock Exchange launched full production trading, a minor structural event. The S&P 500 closed +0.70% at 7,489.72, Nasdaq +1.00%, Dow +0.53%, with VIX down 6.44% to 15.99, suggesting risk appetite despite geopolitical tensions.