WS #13405

The dominant market narrative is a sharp risk-on rally driven by optimism over a US-Iran deal to reopen the Strait of Hormuz, with Treasury Secretary Bessent stating an agreement could come 'today or tomorrow.' This has sent oil prices down over 5% (WTI ~$76, Brent ~$79.7), fueling record highs in the S&P 500 and Dow, with the Nasdaq up over 2%. However, this optimism is being challenged by fresh geopolitical friction: an Indian vessel was hit by a projectile near Yemeni waters (crew rescued), and Iran denies talks are underway, while a separate attack near the Strait of Hormuz pushed oil prices back up ~3% in some reports. The US military's near-depletion of long-range precision missiles (ATACMS/PrSM) adds a strategic risk that could limit future escalation options. Earnings season remains a key driver: Palantir's blowout quarter (revenue +93%, guidance raise) has lifted the entire AI complex, while Novo Nordisk raised guidance on GLP-1 strength despite a DKK 6.3B impairment. Amazon faces a new antitrust lawsuit from New Jersey AG over driver pay, and Jeff Bezos plans to sell $4.1B in shares, pressuring the stock. The macro backdrop includes a coordinated US-Japan yen intervention using a repo facility, which is a counter-signal to yen weakness and Treasury sell-off fears. Overall, the market is in a 'risk-on' mode but with underlying geopolitical and military-readiness risks that could quickly reverse sentiment.