WS #8457

The dominant signal in this window is the escalation of Iran-US tensions, with reports of Iran launching missiles and explosion sounds in Bushehr, contradicting the previous narrative of a potential ceasefire. This is corroborated by multiple sources (Alpaca, Jetstream, Polymarket trades on Iran ceasefire/peace deal). The Strait of Hormuz blockade continues to impact global supply chains, with Australia reporting fertilizer and fuel supply gaps. Oil prices are expected to remain elevated, with Polymarket trades indicating bets on crude hitting $140 by end of June. The Iran war may be winding down, but the era of $60 oil could be over, as noted by MarketWatch. This escalation counters the previous ceasefire thesis and is bearish for equities (SPY, QQQ) and bullish for energy (XOM, CVX, XLE). On the earnings front, Gap (GPS) shares cratered 14% after reporting soft comparable sales and a cautious outlook, despite beating Q1 EPS estimates. SentinelOne (S) announced a restructuring plan to cut 8% of staff, focusing on AI, data, and cloud, with Q1 revenue missing estimates and Q2 guidance falling short. PagerDuty (PD) popped after reporting strong Q2 results and guidance, unveiling a new CEO and share buyback. Costco (COST) reported revenue beats at $70.53B (+12% YoY) but EPS missed slightly at $4.93 vs $4.97 expected. Dell (DELL) shares surged nearly 30% after stronger-than-expected earnings, with AI credited as a key driver. Asana (ASAN) traded higher on Q1 financials and the acquisition of StackAI. In AI infrastructure, Apollo and Blackstone are shopping a $36B debt deal to buy Google chips for Anthropic, signaling massive capital deployment into AI compute. This is bullish for GOOGL (Google's TPU chips) and NVDA (GPU demand), though NVDA was flat to down despite the positive macro. IBM and Red Hat launched a $5B Project Lightwell for open source security, using AI. The AI narrative remains strong but faces headwinds from rising oil prices and Treasury yields (10-year near 4.40%), which increase the discount rate for future tech earnings. Geopolitically, South Korea and the US will hold high-level security talks on June 2-3. Guatemala requested US military cooperation against drug trafficking. Europe is hit by a record-breaking heatwave, which could impact energy demand and agricultural commodities. The White House is pushing Congress to approve a $250 bill with Trump's image, a non-market story but notable for political noise. Overall, the market narrative is shifting from a potential Iran ceasefire to renewed escalation, which is bearish for risk assets and bullish for energy and defense. The AI trade remains intact but faces macro headwinds. Earnings season continues with mixed results: consumer discretionary (Gap) weak, tech (Dell, Asana, PagerDuty) strong, but SentinelOne shows cracks in cybersecurity. The $36B Apollo-Anthropic deal underscores the massive capital flows into AI infrastructure, which is a key positive for the sector.