EU: Oil Prices Cool

**Notes/Observations** - Volatility remains the dominant story, driven more by technicals and stretched positioning than any fundamental shift.

The global tech/AI selloff (SOX closed down 8%) spilled into Asia overnight - the Kospi swung wildly intraday - and into a mixed European open.

The Stoxx 600 is flat as the tech rout loses some steam, but defense weakness drags the DAX (Rheinmetall), while the FTSE 100 holds flat as real estate and housebuilding strength offsets software and defense losses.

Luxury lifts the CAC 40 (LVMH ), the semiconductor-heavy AEX edges up (ASML).

Sterling firms against the euro and gilt yields fall as UK leadership concerns ease.

Bunds are supported by the tech weakness - In a historic first, the US Senate voted to require congressional approval before further US military action in Iran, marking a significant bipartisan pushback against unilateral executive war powers.

The largely symbolic resolution passed thanks to four GOP defections and two Republican absences, despite prior failed attempts.

While it is unlikely to immediately constrain ongoing operations or policy, the vote introduces political friction and oversight pressure on the Trump administration.

It coincides with the Pentagon’s request for ~$80B to replenish munitions and cover Iran-related costs, even as the ceasefire/deal has already compressed geopolitical oil risk premia and cast uncertainty over future defense supplemental spending. - President Trump accused major oil companies of gouging consumers by failing to lower gasoline prices at the pump in line with the sharp decline in crude oil costs.

In a Truth Social post, he stated that companies are not passing on savings “commensurate with the sharply lower prices they are paying for oil,” and directed the Department of Justice to immediately investigate the issue. - GPU compute spot prices keep softening into late June, tracking the correlated decline in the UBS Hyperscaler Basket and LLM Token Expenditure Index as enterprises shift from agentic exuberance to budget rationing and efficiency scrutiny.

H100 and H200 rentals eased amid generational handoff pressure, while Blackwell variants (B200 ~$4.22–$4.45/hr, B300 in the mid-$4–7 range) normalized faster than expected as supply ramps met optimizing demand.

RTX 5090 remains the efficient experimentation layer gaining share.

The market seems to be no longer just asking whether frontier models get smarter, but whether incremental compute produces net work reduction ex hallucination issues or merely expensive inventory with depreciation schedules— marking the shift where full data centers risk becoming cleanup liabilities rather than moats. - Germany’s Defense Ministry has confirmed the cancellation of the long-delayed F126 frigate program and intends to purchase 8 MEKO A-200 frigates instead.

The decision represents a major setback for Rheinmetall (its stock experiencing worst session in 25 years ), which had been positioned to take over the troubled F126 program from Damen and secure a significant contract; the shift to TKMS’s MEKO platform comes despite recent expectations from Rheinmetall management for a Q2 resolution in their favor. - Russia is reportedly grappling with severe contract soldier recruitment challenges, with inflows dropping by a third in Moscow and halving nationwide, alongside poor-quality recruits causing high desertions and units at 30–40% capacity.

This has prompted discussions of a new mobilization wave as early as October 2026, after parliamentary elections.

Same time, s ecurity services are urging Putin to postpone the September Duma elections following Ukrainian strikes on Moscow, amid economic strains including acute fuel shortages and rationing.

Targeted attacks on refineries have turned fuel supply disruptions into a political risk, triggering regional limits, price spikes, halted sales in Crimea, and eroding public confidence in wartime stability.

These intertwined military and domestic pressures are forcing the Kremlin to consider stringent options, from mobilization to emergency measures. - Micron reports Q3 FY2026 earnings tonight facing a high bar.

Sentiment is for memory chips very bullish, with Street expectations around $34–35B revenue and ~$20 EPS on ~80% gross margins, but investors are already pricing in a strong AI/HBM-driven cycle peak and want clear signals on sustainability.

The bigger emerging question is competition: China’s CXMT is playing by different rules: state-backed patience allows it to ramp capacity aggressively, absorb losses longer, and use today’s rich commodity margins as funding to build domestic supply chains and HBM capabilities.

Traders are also circulating Counterpoint Research note warning that “a sharp correction in memory prices from the second half of 2027 cannot be completely ruled out” if new fab capacity expansions become visible - the topic which could be discussed during MU earnings call. - Cerebras reported its first quarterly results since its IPO, with Core Revenue of $191.3M (up sharply y/y) and Adj.

EBITDA turning positive at +$12.7M.

Hardware revenue grew 60% and Cloud/Services surged 167%, driven by accelerating demand for its wafer-scale AI inference technology.

The company guided Q2 Core Revenue at ~$194M and FY26 Core Revenue at $855–865M (+69% y/y at midpoint), with cloud growth expected to accelerate in the second half as new data centers come online and the OpenAI multi-year deal (>$20B) ramps further.

CEO Andrew Feldman highlighted Cerebras’ speed advantage (“fast tokens are the most valuable”), citing momentum with pioneering customers including OpenAI (already running GPT-5.x models) and the newly finalized AWS Bedrock partnership.

Management emphasized that data center capacity—not demand or supply—is the primary near-term constraint, with meaningful AWS contribution expected in 2027. - SK Hynix has confirmed plans to raise KRW 45.5T (~$29.4B) through an ADR listing on Nasdaq.

The company intends to is