WS #14052

The Middle East narrative remains the dominant market driver, with the US threatening an indefinite naval blockade of Iran and Treasury Secretary Bessent vowing 'unprecedented' economic measures. The UAE has confirmed two ADNOC vessels were attacked in the Strait of Hormuz, and the US has struck Iranian missile, drone, and radar sites in response. However, a key counter-signal has emerged: US Energy Secretary Chris Wright stated that 8-9 million barrels per day are still flowing through Hormuz, disputing lower estimates and suggesting the supply disruption is less severe than feared. This has contributed to oil prices settling down ~2% despite the geopolitical tensions, and the S&P 500 hit a record high on cooling inflation (PPI 4.7% vs 5.5% prior) and reduced Fed hike odds (now ~35% for September). The market is showing resilience, with Asian stocks set for weekly gains. Separately, Trump has imposed tariffs of up to 100% on drone imports, a new trade escalation that could impact defense and tech supply chains. The AI trade remains robust, with Nvidia's $500B infrastructure deal drawing both bullish and bearish commentary (Michael Burry calls it 'shades of Enron'), while Anthropic is reportedly preparing a $2T IPO. Reddit's inclusion in the S&P 500 is a notable single-stock catalyst.