Guidelines for AI, Middle East Oil Flows, State of the Retail Trade 10/5/26

Markets hit record highs on narrowing mega-cap leadership even as AI safety incidents, Mideast oil risk, and stretched valuations raise caution flags.

• Market breadth narrows again: Jefferies data cited shows Magnificent Seven added 0% to S&P gains in H1, but mega-caps (MSFT, NVDA, AAPL) now drive most of the second-half move, per Strategas's Chris Verrone.
• Global rates flagged as 'WBI': Verrone calls French-German bond spread widening and the 10-year's jump from 3.9% to near 5.4% "wonky but important," while Japan's 30-40yr curve has quietly stabilized.

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