WS #7632

The dominant narrative remains ESCALATING geopolitical risk in the Middle East, with fresh developments reinforcing the bearish outlook. Iran's updated proposal for a nuclear deal has been deemed insufficient by the White House, while US and Israeli military preparations for potential strikes on Iran are reportedly escalating as soon as this week. The EU has officially warned of a 'stagflationary shock' from the Iran war, cutting growth forecasts and raising inflation expectations. Oil prices remain elevated above $100/bbl with the Strait of Hormuz closed. A counter-signal emerged: US negotiators have agreed to temporarily lift Iran's oil sanctions during nuclear talks, though Iran pushes for permanent removal. Separately, the CDC is enhancing Ebola screening for travelers amid a Congo outbreak, but this is low-probability for market impact. On the corporate front, Adani Enterprises settled with OFAC for $275M over Iran sanctions violations, and Meta is cutting 8,000 jobs to fund $145B AI spending. Amazon's Alexa+ launched AI podcast generation. HIVE stock rallied 35% on an AI gigafactory announcement. The Fed narrative is shifting: Yardeni warns the Fed may need to hike in July to appease bond vigilantes, with 30-year yields above 5%.