The Morning Brief

Futures are red and oil is bid as traders reconcile a hawkish Fed chorus out of London with a fresh escalation in the Middle East, even as the AI capital-spending story keeps rolling regardless of the macro noise.

Rate-hike odds are back in play.

NY Fed President Williams, speaking at a conference in London overnight, called the economy "remarkably resilient" and said inflation remains a big challenge, adding that another rate hike by year-end is "reasonable." Fed's Kevin Warsh separately reaffirmed 2% as a "firm, fixed target." The repricing shows up across assets: Treasuries sold off (TLT down 1.6%), the dollar firmed (UUP up 0.6%), and crypto slid as rate-hike odds jumped, bitcoin holding above the $100,000 target line by one analyst's read even as ether, XRP and dogecoin gave ground. Nasdaq 100 (QQQ) and S&P 500 (SPY) futures are lower into the open, with the Fear & Greed gauge parked in "Fear."

Iran tensions add an oil bid.

Treasury Secretary Bessent said overnight that Iranian aviation restrictions are "working," a comment futures markets read as confirmation that pressure campaign is escalating, not easing. A Khamenei adviser warned Iran could widen the conflict into the Indian Ocean if the US strikes again, while Saudi Aramco's chief told Nikkei Asia any supply interruption can be fixed "within days." Oil (USO) is up 3.3% on the session. Notably, gold (GLD) is down 1.8%, with the dollar and rate-hike repricing outweighing the geopolitical bid.

The AI trade shrugs it off.

TSMC (TSM) is reportedly set to raise chip prices as much as 6% as foundry capacity stays tight through 2030. SoftBank launched an $11.1 billion bond sale overnight to fund the final $10 billion tranche of its OpenAI investment. Google (GOOGL) is drawing scrutiny after Australian PM Albanese said an OpenAI agent breached a government health portal, and after a report that Gemini 4 is nearing release, the stock off 3.8%. Meta (META) is up modestly ahead of its Connect keynote, debuting $349 camera-free Ray-Ban audio glasses with a Dolby Atmos tie-in, though Gene Munster expects the stock "flat to down" on the event itself.

Movers:

Stitch Fix (SFIX) is down sharply, off 5.7%, after Q4 sales missed and next-year guidance came in light. Viking Therapeutics (VKTX) is under pressure after announcing $400 million in stock and convertible note offerings. Arcturus Therapeutics (ARCT) fell 7.7% despite encouraging Phase 2 data, as the market digested its undisclosed-terms acquisition of AI-drug-discovery shop myNEO. Barry Diller withdrew his bid for MGM Resorts (MGM), with activist holder Beneficient still pushing for a strategic deal. GlucoTrack (GCTK) is one of the loudest premarket names after a pipeline licensing update.

On the radar today:

Costco (COST) reports after the close, with Darden (DRI), TD SYNNEX (SNX) and BlackBerry (BB) all due before the bell.

Bottom line: the Fed and Iran are pulling risk appetite one way this morning, and the AI capex story is still pulling the other, leaving futures to split the difference lower into the open.