WS #7113

The dominant macro narrative remains ESCALATING: US inflation jumped to 3.8% in April (a three-year high), driven by surging energy costs from the Iran war, with gas up 28.4% YoY. This makes Fed rate cuts unlikely and even raises the possibility of hikes. The Iran conflict intensifies with multiple reports of Israeli strikes on southern Lebanon, UAE reportedly striking inside Iran, and Iran expanding control over the Strait of Hormuz, impacting global shipping. Oil tops $100 with no near-term relief. On the corporate side, TSMC approved a $20B capex increase for its Arizona subsidiary, a strong bullish signal for semiconductors and AI infrastructure. New Fortress Energy secured $885M financing at 12% interest for Brazil operations, indicating high-yield energy financing demand. eBay rejected GameStop's $56B bid (carried forward from prior window). Counter-signals are absent to offset the bearish macro drivers. The prevailing narrative is ESCALATING: inflation is rising, the Iran conflict is intensifying with no diplomatic resolution, and oil prices remain elevated.