WS #14235

The dominant market narrative remains the US-Iran/Hormuz crisis, which is ESCALATING. Oil prices are holding near $88-89 Brent / $82-83 WTI, with multiple sources (Reuters, GDELT, E24, Vietnamese outlets) confirming continued attacks on tankers and stalled US-Iran talks. Iran's Vice President Aref explicitly warned of an economic war, signaling Tehran's intent to use the strait as leverage, while a WSJ report indicates Trump wants to annex the Strait of Hormuz, further escalating tensions. This continues to support energy names (XOM, CVX) and pressure airlines (DAL, UAL) and shipping (MATX, ZIM). A potential counter-signal emerged: reports that Gulf states are secretly shipping fuel with transponders off, and the US Energy Secretary claims the strait is 'open', but this is contradicted by the Kpler data showing near-zero traffic. The situation remains highly volatile with no de-escalation in sight. In AI/tech, a major development is the reported $3B investment by Nvidia in SB Energy tied to the OpenAI data center deal, which follows Nvidia's earlier scaling back of its funding guarantee for the Ohio OpenAI data center. This suggests Nvidia is deepening its financial entanglement in AI infrastructure, which could be seen as positive for Nvidia's growth but also raises risk concerns. Additionally, Chinese hedge funds are rotating out of Nvidia and US hyperscalers into hardware makers like Micron and SanDisk, reflecting a shift in the AI trade. This is a bearish signal for NVDA and MSFT but bullish for MU and WDC. The Anthropic IPO is reportedly targeting a $2 trillion valuation, which could have significant implications for the AI sector and its investors (GOOGL, AMZN, MSFT, NVDA). Macro data shows Japan's Q2 GDP grew at a weaker-than-expected 1.1% annualized, and Japan's 10-year JGB yield hit a three-decade high of 2.925%, reflecting global bond selloff and BOJ rate hike expectations. The US posted its largest July budget deficit in history at -$432B, with interest on debt rising to $118B, which could fuel concerns about fiscal sustainability and support gold. The euro rose to a two-month high as Fed rate hike bets faded, and gold is near $4,400/oz. These factors suggest a supportive environment for gold (GLD) and potentially bearish for the US dollar. Other notable items: Trump ordered the Pentagon to scale back US-South Korea military drills, which is bearish for defense names (LMT, RTX, NOC). The Meta trial over child safety could force fundamental changes to Instagram and Facebook, posing a risk to META. The Ebola outbreak in DR Congo is now the deadliest in history, but has limited direct US market impact. The Russia-Ukraine war continues with Ukrainian strikes on Russian infrastructure, including a record 600 drones toward Moscow, and a Russian missile hit on ArcelorMittal Kryvyi Rih, which could impact steel prices. Overall, the market is likely to remain volatile with energy and gold as key beneficiaries, while airlines, shipping, and tech (especially NVDA) face headwinds.