Markets

⚠️ Oil Approaching $100/Barrel

Brent crude is knocking on $100 — up 26% from sub-$70 earlier this month — as US-Iran strikes intensify. Twelve days of renewed hostilities have shattered ceasefire hopes. If you have clients asking about energy exposure or worried about inflation, this is the call to make today.

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MARKET SNAPSHOT

Yesterday's Close:

• S&P 500: 7,509.20 (+0.89%)
• Dow: 52,224.64 (+0.74%)
• Nasdaq: 25,837.21 (+1.29%) — chips led the charge

This Morning:

• Futures: Indicated lower on oil spike and Alphabet/Tesla post-earnings slide
• 10-Year Treasury: 4.63% — near 2026 highs
• VIX: 17.52 (+2.76%)

Asia Close:

• Nikkei 225: 66,422.60 (+0.46%) — tech gains
• Hang Seng: 24,892.66 (-0.95%) — profit-taking in chips
• Shanghai: 3,869 (+0.05%) — flat

Europe Midday:

• FTSE 100: 10,710 (-0.17%)
• DAX: 25,042 (-0.45%)
• CAC 40: 8,336 (-0.85%)
• Stoxx 600: 643.32 (-0.56%) — oil weighing on sentiment

Commodities & Crypto:

• WTI Crude: ~$94/barrel and climbing (+30% since war began)
• Gold: $4,089/oz (-0.99%) — down as yields rise
• Bitcoin: $65,880 (-0.96%)

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TODAY'S CALENDAR

Economic Data:

• 🇪🇺 ECB Rate Decision — No action expected, but Lagarde's tone on geopolitical risks will matter

Fed Watch:

• Rate hike odds for next week's meeting: 28% (up from just 11% a week ago)
• Year-end hike probability: 87%
• Translation: The inflation narrative is back in play

Notable Earnings (After Yesterday's Close):

• Alphabet (GOOGL): Beat on revenue ($119.8B vs $116.9B est), slight miss on EPS ($2.85 vs $2.89). Stock down 4%+ after hours on $205B capex bomb.
• Tesla (TSLA): Record revenue ($28.2B vs $25.7B est), big profit miss ($0.33 vs $0.51 EPS). Down 4%+. Regulatory credits collapsed 67%.

Today's Reports:

• Company: Ticker Notes

• Intel: INTC After close — all eyes on turnaround
• Honeywell: HON Industrial bellwether
• T-Mobile: TMUS Wireless growth story
• Union Pacific: UNP Rail demand indicator
• Lockheed Martin: LMT Defense spending beneficiary
• Comcast: CMCSA Media/broadband
• RTX: RTX Aerospace & defense
• Freeport McMoRan: FCX Copper — China proxy
• Blackstone: BX Private equity health

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TOP 5 HEADLINES

Both megacaps beat revenue expectations and both fell 4%+ after hours. The market's message: we don't care what you sold, we care what you kept.

Alphabet: $119.8B revenue (+24% YoY), cloud up a staggering 82%. But they raised full-year capex to $195-205 billion — that's not a typo — and CFO warned of "modest margin pressure" from leasing third-party compute capacity. They're paying SpaceX $920 million per month for GPU access. The AI arms race has entered its "spend everything" phase.

Tesla: Record 480,126 deliveries produced record $28.2B revenue. But operating margin collapsed to 1.4% (from 4.1%), free cash flow went negative for the first time since early 2024, and regulatory credits — Tesla's secret margin padding — fell 67% to just $146 million. The $7,500 EV credit is gone and so is easy profit.

📧 Why it matters: If your clients own big tech, they need to understand: these companies are profitable, but they're entering a phase where every dollar of AI revenue requires $2-3 in infrastructure spending. This is the buildout before the harvest.

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Brent crude touched $94 overnight — up 30% since the US-Iran conflict began. Renewed strikes over the past 12 days have killed peace talks and raised fears of shipping lane disruptions.

The math: $100 oil adds roughly 0.3-0.4% to headline inflation, which is why Treasury yields are spiking and rate hike odds are climbing. The Fed was done hiking. Now the market's not so sure.

📧 Why it matters: Energy, defense, and inflation-protected assets are in play. Clients worried about their portfolios should understand: geopolitical risk just became the market's primary driver.

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The European Central Bank meets today. No rate change expected, but Lagarde's comments on inflation (oil!) and growth (slowing) will set the tone for European markets.

Context: European stocks are down across the board this morning on the oil spike. The war premium is real.

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One week ago: 11% chance of a July hike. Today: 28%.

The culprit is crude. If oil sustains above $90, the Fed's "higher for longer" becomes "higher still." The 10-year at 4.63% is pricing this in.

Why it matters: Rate-sensitive sectors (real estate, utilities, high-yield bonds) got crushed yesterday. Defensive plays aren't defensive when yields are rising.

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The SOX (semiconductor index) ripped 5% yesterday — its best day in over a month — on AI optimism before the Alphabet report. Super Micro surged 12% on margin guidance.

But this morning? Chips are giving back gains as oil and Tesla/Alphabet sentiment weigh. AMD down 3% despite signing a major deal with Anthropic.

The takeaway: The AI trade isn't broken, but it's getting more volatile. These names move on capex guidance now, not just demand stories.

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