WS #13930

The dominant theme remains Middle East tensions with the Strait of Hormuz closure, but this window shows a notable de-escalation signal: the US and Iran are reportedly extending a ceasefire under an Islamabad MoU, with Polymarket odds on a ceasefire by August 14 and 31 being actively traded. However, this is countered by fresh escalatory actions: a Ukrainian strike damaged all four AVT units at Russia's Orsk oil refinery, and the US military struck a tanker (M/V Vela Nova) attempting to break the blockade, with oil prices holding near $89 Brent. The IEA now forecasts a global oil deficit of 1.8 million bpd this quarter, and both IEA and OPEC have cut demand forecasts due to the Hormuz closure, with IEA predicting the first annual demand decline since COVID. This mixed picture keeps oil prices elevated, supporting energy stocks while pressuring airlines and shipping. On the macro front, July CPI came in at 3.4% YoY (core 2.5%), in line with expectations, reducing September rate-hike odds to ~40-48%, which is bullish for equities and gold (gold up 1.5% to $4,438/oz). The AI infrastructure supercycle narrative is strongly reinforced by CoreWeave's blowout Q2 (revenue +112% YoY, backlog +246% to $104B, raised guidance), Super Micro's strong guidance, and Nebius's surge, lifting AI and semiconductor stocks (NVDA +2-3%, MU +$66B market cap on UBS PT hike). However, there are counter-signals: a marketwatch article warns of dot-com bubble euphoria, and GOOGL shows bearish technicals despite Pixel 11 launch. Overall, the market is in a 'risk-on' mode driven by AI earnings and cooling inflation, but geopolitical and oil risks remain elevated.