WS #16829

The dominant market narrative has shifted sharply following the Democratic sweep in the US midterm elections, which has triggered a broad-based rally in equities (SPY +0.9%, QQQ +0.8%) and a corresponding sell-off in the US dollar and Treasury yields. This political realignment is driving a rotation out of growth and tech names associated with the previous administration (notably Tesla and Trump Media) while boosting defensive and value sectors. Concurrently, geopolitical tensions in the Middle East have escalated, with Iran claiming the destruction of four oil tankers near the Strait of Hormuz. This supply shock is keeping Brent crude elevated above $100, creating a mixed macro environment where risk assets are rallying on political relief while energy and inflation-linked assets remain supported by physical supply risks. In the technology sector, AMD has delivered a standout performance with record Q3 revenue of $13.38B, driven by a near-doubling of data center sales on EPYC and MI450 GPU demand. This earnings beat serves as a critical counter-signal to the broader tech selloff, validating the structural AI demand thesis despite the political headwinds. Meanwhile, Google is accelerating its AI infrastructure spend with a $15 billion commitment to data centers in Malaysia, signaling that hyperscalers are doubling down on capacity regardless of the political landscape. The Eurozone faces its own inflationary pressure with CPI hitting 4.0%, complicating the ECB's path and adding a layer of global macro uncertainty to the US-driven political rally.