WS #13413

The dominant market narrative is a sharp oil selloff and equity rally driven by hopes for a US-Iran deal to reopen the Strait of Hormuz. Treasury Secretary Bessent said a deal could be reached 'today or tomorrow,' and Secretary of State Rubio confirmed progress, though Iran insists talks are only with Oman. This is corroborated by multiple sources (AP, Al Jazeera, GDELT, oilprice.com) and has driven WTI down ~5.8% to $75.68 and Brent below $80. The S&P 500 and Dow hit record highs, with Palantir and Caterpillar earnings beating estimates. However, there are counter-signals: Iran has made new demands (ending naval blockade, lifting oil sanctions, transit fees), and a vessel was struck near Hormuz, indicating continued risk. The Fed's new chair Warsh is withholding forward guidance, adding uncertainty. In MAG7, Microsoft's cloud growth ex-frontier-model companies is slowing to ~15%, contrasting with Alphabet's 82% cloud growth and $514B backlog, suggesting divergent AI narratives. Amazon's Bezos plans to sell $4B in shares, a potential overhang. SpaceX reports earnings after close, with shares down ~40% from peak, and Tesla merger rumors persist. Overall, the theme is ESCALATING in terms of deal optimism but with significant caveats.