WS #6316

The dominant narrative remains the Iran war and its economic fallout, with the 60-day War Powers deadline expiring on May 1. The Trump administration argues the ceasefire has 'terminated' hostilities, while Democrats and legal experts dispute this. Republicans in Congress are deferring to Trump, with no vote on authorization. This creates legal and political uncertainty. Oil prices hold steady at ~$111/bbl, with Brent at $111.66. The war is driving inflation: Eurozone inflation hit 3% in April (energy up 10.9%), and the ECB warns of recession risk if oil exceeds $150. The EU-Mercosur trade deal took provisional effect, a counter-signal that could boost trade but is not directly market-moving for US equities. On the corporate front, Apple reported a record quarter (revenue $111.2B, +17% YoY) driven by iPhone 17 demand, but Tim Cook warned of 'significantly higher memory costs' due to the AI-driven RAM shortage ('RAMaggedon'), which could pressure margins. Apple is pursuing tariff refunds and plans to reinvest in US manufacturing. Meta raised $25B via bond sale to fund AI capex ($125-145B range), but lost 20 million daily active users, sending shares down ~8.5% in after-hours. Alphabet surged ~10% on strong cloud revenue, highlighting divergence in AI spending effectiveness. The yen weakened after Japan's intervention, with USD/JPY at ~157. The US jobless claims hit a 57-year low, signaling a tight labor market. The Federal Reserve kept rates at 3.5-3.75%, with dissent on a hike. Overall, the market is caught between resilient earnings (S&P 500 at records) and escalating geopolitical/energy risks, with the SPR release acting as a key counterweight to the oil supply thesis. The narrative is STABLE on the Iran war front (ceasefire holding but deadline passed), ESCALATING on inflation and energy costs, and MIXED on tech earnings (Apple strong, Meta weak, Alphabet strong).