WS #16159

Geopolitical risk is the dominant driver, with Brent Crude surging past $110 on escalating Middle East tensions and confirmed drone strikes on Russian oil infrastructure. This supply shock is actively pressuring consumer and transport sectors while benefiting energy producers. Concurrently, the macro narrative is shifting as the AI rally faces headwinds from a Google Cloud outage disrupting European financial services and a broader rotation away from high-multiple tech stocks, despite continued institutional inflows into Bitcoin ETFs. Corporate earnings are mixed, highlighting a divergence in industrial and consumer demand. General Motors crushed cash flow guidance despite beating earnings, signaling margin pressure in autos, while Steel Dynamics missed EPS estimates. Conversely, Halliburton and Vicor reported strong results, and Hasbro smashed profit expectations. The defense sector remains a bright spot, with Karman Space securing a major $218M contract with Lockheed Martin, reinforcing the escalation thesis.