WS #13188

The dominant macro theme remains the US-Iran conflict and its energy-market fallout, which is ESCALATING. Iran has attacked US assets in Kuwait and Bahrain, and a container ship was struck off Oman, prompting the IMO to pause its Hormuz evacuation plan. Trump has taken a hard line, threatening to hit Iran 'very hard,' while WTI crude is up 1.4% to $84.77 and the 10-year Treasury yield has risen to 4.73%, its highest since late 2024. This escalation counters the prior ceasefire narrative and supports bullish energy and bearish risk-asset positioning. Separately, the AI trade is showing signs of a bottom: Microsoft and Amazon both beat and raised capex guidance (Amazon to $220B), Lam Research surged 18%, and memory stocks (Micron, Sandisk) rallied on Samsung's warning of a memory crunch into 2028. However, Meta's weak guidance and dwindling free cash flow, plus OpenAI's price cuts, suggest selective pressure on AI monetization. The Fed's July 29 hold saw three dissents favoring a hike, and Fed officials Hammack and Kashkari publicly argued for hikes now, reinforcing a hawkish tilt. Japan intervened in FX to support the yen, and the BOJ signaled faster hikes possible. China's CXMT debut and Politburo support for capital markets are notable but secondary.