WS #14823

The geopolitical situation in the Middle East has escalated sharply, marked by Houthi missile attacks on Saudi Arabia that triggered a 4% jump in crude oil prices. This supply shock is the dominant market driver, creating a bifurcated impact: energy stocks (XOM, CVX) are rallying while airlines (DAL, UAL) and shipping (MATX) face margin compression from higher fuel costs and route disruptions. Iran's proposal to reopen the Strait of Hormuz in 7 days amid US conditions adds a volatile diplomatic layer, though the immediate market reaction is priced in as a risk premium rather than a resolution. In the technology sector, Google is advancing its AI infrastructure with a planned orbital TPU mission on SpaceX, signaling a shift in compute strategy. Meanwhile, Meta faces a significant legal setback as a New Mexico jury found the company liable for data privacy violations, compounding existing antitrust pressures. The UK's Nscale AI neocloud secured $3.36B in financing ahead of a US IPO, highlighting continued capital intensity in the AI infrastructure space. Macro-financially, the US 30-Year Yield remains at multi-decade highs, though the Fed has denied inflation as the primary cause. A US Appeals Court ruling against Kalshi, allowing states to regulate event contracts, introduces regulatory uncertainty for prediction markets. Additionally, Costco's earnings beat was largely driven by a one-time tariff refund, masking underlying demand trends, while the Bitget crypto hack continues to weigh on sentiment in the digital asset sector.