Oil is down 20% this week. Iran hasn’t agreed to anything.

Good morning, Slaters!

Nobody signed anything on Wednesday. Markets priced it anyway.

Brent fell 8.7% to $94.62, its lowest settle since Aug. 31, with no deal with Iran. The Dow jumped 1,569 points, its best day since April 2025. The rally bought the companies that spend on AI and sold the ones that build for them, after Texas elected a governor who pledged to pause data-center approvals. That pledge is not a policy yet.

Overnight, the tests kept coming. Qualcomm (QCOM) traded about 10% lower on a profit guide that missed. AppLovin (APP) traded about 17% higher on a revenue guide well above forecasts. Seoul's Kospi fell 5.28%. And Kalshi's December Fed hike contract still sits near 80 cents, even after inflation expectations fell with oil.

A peace nobody signed, a pause nobody wrote and a Fed that hasn't blinked. Wall Street priced the first two as done deals. The third is still priced for a hike.

Let's get into it.

Oil is on track to lose about a sixth of its price this week. Tehran hasn't agreed to anything.

Brent settled at $94.62 on Wednesday, down 8.7% in one session. West Texas Intermediate fell to about $88. By Asian trading on Thursday, Brent was down about 16% for the week. If that holds through Friday, it would be the steepest weekly drop since April 2020.

Now look at what actually changed. President Trump told the Financial Times there were no immediate plans to strike Iran. Vice President JD Vance then wrote on X, "The reason we lost is the war." Crude's slide deepened during the U.S. session after that post, though the timing alone does not prove cause.

Then look at what didn't. Oil seems to be pricing Washington, not the Strait. Supreme Leader Mojtaba Khamenei said anyone expecting a shift in American policy is "seriously mistaken." The U.S. blockade and Hormuz restrictions remain, and a U.S. strike on an Iranian anti-aircraft site was confirmed this week.

So the barrel traded a military premium for a political one. United Airlines (UAL) rose 8.0% and Delta Air Lines (DAL) 7.2%. Marathon Petroleum (MPC) fell 8.1% and Valero (VLO) 5.8%. Capital Economics says renewed U.S. strikes could push Brent above $120. A price that drops 8% on a statement can climb just as fast on the next one.

The market signal?

ConocoPhillips (COP) reports this morning, among the first big U.S. producers to report since Brent fell below $100. A cut to buybacks or drilling would say management sees $90 oil as more than a one-day move. Brent below $100 into OPEC+ on Nov. 29, with no new strike, says the premium is draining. One strike headline before then says it was only deferred.

The Dow had its best day in 19 months. The chipmakers sat it out.

The Dow rose 1,569 points, or 3.03%, to 53,356 on Wednesday, its biggest one-day gain since April 2025. The S&P 500 added 1.58% to 7,688.62 and the Nasdaq 1.4%.

The Philadelphia Semiconductor Index fell 3.13% on the same day. The rally left out the year's leaders. Financial stocks rose 3.51% to a 52-week high, and homebuilder stocks jumped 7.2%. Microsoft (MSFT) rose 6.7% and Amazon (AMZN) 6.1%. The companies that build and power their data centers went the other way. Vistra (VST) lost 13.8% and CoreWeave (CRWV) 9.9%.

The builders had a specific problem. Texas Gov.-elect Gina Hinojosa campaigned on pausing data-center approvals until lawmakers pass protections. Morgan Stanley (MS) said a governor can pause approvals by executive order, but the sales-tax break and the local veto need the legislature. Riot Platforms (RIOT), which signed a 15-year lease at its Texas campus, rose 9.6%. Contracts rallied. Permits sold.

Bitcoin rode the risk-on day back above $80,000, helped by a short squeeze. The flows were thinner. Spot bitcoin ETFs took in a net $74.6 million only because Fidelity's fund drew $237 million while BlackRock's (BLK) iShares Bitcoin Trust lost $201 million.

The market signal?

This rally came with cheaper oil and a 10-year yield that closed at 4.90%, down from 4.95%. Nasdaq-100 futures traded about 0.8% lower early Thursday while Dow futures rose. If the 10-year climbs back above 4.95%, the homebuilders and banks that carried Wednesday have the least support. Vistra reports Friday, its first chance to say what the Texas pledge means for its plans.

Inflation bets fell with oil. The hike bet held anyway.

On Wednesday, the Institute for Supply Management's services survey chair said tariffs and fuel costs were the most-cited issues. Then came the line that matters: "many respondents indicated they are not yet seeing the full impact of these cost escalations or have not passed them through to customers."

Everything else moved the other way. One-year inflation swaps fell to about 2.1%, from 2.7% a week earlier. The 2-year yield touched about 4.55%, a two-month low. By those numbers, the case for a December hike just got weaker.

Yet Kalshi's contract on a quarter-point December hike held at 80 cents overnight. The survey's chair, Steve Miller, told reporters that costs already embedded in supply chains should keep flowing through to prices for the next several months, even if oil declines. ISM's prices index eased only to 73.0 from 74.0, and it has been above 70 in seven of the past eight months. ADP said private employers added 86,000 jobs in October, against forecasts near 69,000.

The Fed hasn't changed its own words either. Its October statement said activity "is expanding at a strong pace" and "inflation remains elevated." Cleveland Fed President Beth Hammack, one of two officials who voted for a hike in October, speaks this morning.

The market signal?

The bond market moved with oil. The hike contract held with the survey, the hiring data and the Fed's own words. Friday's payrolls decide which one was listening to the right thing. A firm print keeps December near 80 cents with Brent in the $90s. A soft one, followed by a tame CPI on Nov. 10, makes 80 cents look expensive.

Wall Street's AI rotation crossed the Pacific overnight

South Korea's Kospi closed down 5.28% at 5,383.80 on Thursday. Taiwan's Taiex fell about 3.2%. Hong Kong's Hang Seng jumped 3.67%. Same night, opposite directions.

Korean newspapers tied the chip selling, much of it by foreign investors, to the Democratic sweep and new political risk around U.S. data-center construction. That is how Wednesday's rotation out of chip stocks crossed the Pacific. Prices suggest money left markets heavy in AI hardware for ones that are not, though the motive is unconfirmed.

Japan ran the same split inside one market. The Nikkei 225 fell 1.79% while the broader Topix rose about 0.8%. Toyota led the other side. It raised its full-year operating profit forecast by ¥500 billion to ¥3.9 trillion and lifted its buyback limit to ¥1.3 trillion. The stock closed up about 17% in Tokyo, and its U.S.-listed shares (TM) traded about 8% higher overnight.

Read Toyota's numbers closely, though. It cut its revenue forecast to ¥53.5 trillion, and full-year net profit is still expected to fall 7.2%. Investors paid for profit and a smaller share count. The sales forecast went the other way.

The market signal?

Asia is pricing a U.S. policy that doesn't exist yet. Congress changes hands in January, and Texas has not said what a pause would cover. If foreign selling in Seoul continues Friday with no project cancelled, this is positioning. If a U.S. developer or utility discloses a Texas delay first, Seoul was early, not wrong.

Qualcomm promised more sales and less profit. The stock took the second half.

Qualcomm (QCOM) closed Wednesday up 5.33% at $173.19. Overnight it traded near $156, down about 10%, after a report that gave investors two answers at once.

The first answer was good. Qualcomm guided fiscal first-quarter revenue to $10.4 billion to $11.2 billion, a $10.8 billion midpoint that topped estimates. Automotive revenue rose 89% to more than $2 billion, a first for the company.

The second answer was the one the market sold. The adjusted earnings guide of $2.15 to $2.35 a share centers on $2.25, below what analysts expected. Then came the reason: a broad increase in input costs across wafers, packaging and memory. Qualcomm is raising its own prices but doesn't expect the full benefit in chip margins until the second half of fiscal 2027.

Now look at the software side of the same trade. AppLovin (APP) grew revenue 55% to $2.185 billion and guided fourth-quarter revenue to $2.365 billion to $2.395 billion, well above the $2.25 billion consensus. Its adjusted EBITDA margin was 84%. Arm (ARM) beat too, but licensing did the work, up 50%, while royalties grew 8%. It traded about 4% lower early Thursday.

The market signal?

The AI trade is now sorting by who pays the input bill. Software selling ads keeps its margin. Hardware buying memory and packaging gives some away. Watch whether Qualcomm holds the overnight drop at the open, and whether Arm's royalty growth moves off single digits in the December quarter. A beat built on licensing is a down payment. Royalties are the rent.

Private credit's troubled loans now come with two prices

Blue Owl Capital Corp. (OBDC) said loans on non-accrual, where borrowers have stopped paying interest in cash, were 2.9% of its portfolio at cost on Sept. 30. At fair value, the same bucket was 0.8%.

Here is the mechanic. Cost is what the fund lent. Fair value is what it says those loans are worth today. When the second number sits far below the first, troubled loans are carried at a steep discount to the money that went out the door. The two figures use different denominators, so they don't convert into a recovery rate. But the gap shows the marks are doing real work.

Blackstone's (BX) private credit fund, BCRED, reported 2.7% at cost and 1.7% at fair value. Its payment-in-kind income, interest paid with more debt instead of cash, fell to 5.9% of investment income from 7.8% in the fourth quarter of 2025.

The pressure sits on the exit door. Several semi-liquid private credit funds got third-quarter withdrawal requests above their 5% quarterly caps, with BCRED near 10%. Meanwhile, risk appetite in private markets is pointed elsewhere. Alphabet's (GOOGL) Isomorphic Labs is in talks to raise about $5 billion at about a $50 billion valuation, Bloomberg reported, with no drug in human trials yet.

The market signal?

Private lenders are marking troubled credit down while venture investors price a preclinical drug platform at $50 billion. Watch Blue Owl's earnings call today and fourth-quarter redemption requests. If requests stay near double the caps, these marks get tested by investors who want their cash back.

• The jobs tape runs through Friday. Jobless claims and preliminary productivity data arrive this morning, followed by Hammack. October payrolls land Friday, with economists expecting about 65,000 jobs and a 4.2% unemployment rate. That is the real test for the 80-cent December contract.
• Oil meets the income statement. ConocoPhillips (COP) and EOG Resources (EOG) both report today, setting plans against Brent in the $90s. The Bank of England also decides today, with markets pricing more than a 90% chance of a quarter-point hike to 4.00%. Central banks are still leaning hawkish into what is shaping up as crude's worst week since 2020.
• Washington's plumbing is shifting, too. A federal judge let single-stock perpetual futures keep trading on Kalshi and Coinbase (COIN), but found the challengers likely to win their argument that the CFTC overstepped. The CFTC must answer the group, which includes Cboe (CBOE), by Friday. Next week, Treasury sells $125 billion of 3-year, 10-year and 30-year debt. It is the first test since Treasury dropped "at least" from its promise to keep coupon sizes steady.
• The market signal across all three? Each one tests a price that moved on words. Payrolls test a hike bet propped up by a survey line. Producers and the Bank of England test an oil drop built on a political shift. The court and the auctions test rules that changed on paper this week. Whichever cracks first sets the tone into next Tuesday's CPI.

That's it for today's Slate. Jobless claims and a Fed hawk this morning, ConocoPhillips and the Bank of England today, and payrolls tomorrow. Stay close to the feed.

Today's reply prompt: Is Brent in the $90s the new normal, or a pause before the war premium returns? Tell us how you're positioned.