BEAR regime at 100% confidence with 98% persistence (14 days). The macro environment is structurally deteriorating: Fed Funds at 3.64% remains restrictive, yield curve is positive (0.53% spread, not inverted) but flattening signals growth concerns, and consumer sentiment has collapsed 8.1 YoY to 56.6 (lowest in dataset). GDP growth at 5.42% is strong but lagged (Q4 2025 data); forward indicators are weakening. Jobless claims at 210k are stable but elevated, ISM manufacturing employment at 12,573 shows sector stress, and housing starts at 1,487k (+9.5% YoY) mask underlying demand weakness given sentiment collapse. The market regime is locked in BEAR with 0.98 persistence and only 0.009 probability of BULL transition—this is a structural bear, not a cyclical dip. Prior 11 consecutive council vetoes and persistent risk breaches (PLTR -11.33%, crypto_digital all positions in distress) confirm regime severity.

Restrictive and likely to persist. Fed Funds at 3.64% remains above neutral (estimated 2.5%), maintaining a tightening bias. The positive yield curve (0.53%) suggests the Fed is not yet cutting aggressively, despite growth concerns. Forward guidance is unclear from the data, but the combination of 2.66% CPI (near target) and 5.42% GDP growth suggests the Fed may hold rates steady or cut modestly—but the BEAR regime persistence (98%) indicates markets are pricing in either prolonged restriction or recession risk that the Fed cannot easily offset. The Fed's stance is effectively "hold and watch," which is a headwind for rate-sensitive themes (real_estate, defensive) and growth themes (ai_compute, quantum) that benefit from liquidity.

Inflation is moderating but sticky. CPI at 2.66% YoY is near the Fed's 2% target, suggesting disinflation is on track. However, the 8.1-point YoY collapse in consumer sentiment (56.6 vs 64.7 prior year) indicates consumers are not yet convinced inflation is tamed—or they are pricing in recession risk. The ISM manufacturing employment at 12,573 is weak, suggesting demand-side disinflation rather than supply-side relief. Outlook: inflation will likely remain in the 2.5–3.0% range near-term, with downside risk if recession materializes (demand destruction). This is a headwind for commodity-linked themes (energy_grid) and a tailwind for defensive themes (bonds, staples) but not yet a strong enough signal to drive major portfolio shifts.

Growth is decelerating despite strong headline GDP. The 5.42% GDP print is lagged (Q4 2025) and likely reflects inventory builds or one-time factors. Forward indicators are deteriorating: consumer sentiment at 56.6 is at multi-year lows, jobless claims are elevated at 210k, and ISM manufacturing employment is weak. Housing starts at 1,487k are up YoY but the +9.5% growth is likely from a depressed base and masks underlying weakness in demand (sentiment collapse). The yield curve at 0.53% is positive but flattening, a classic pre-recession signal. Outlook: growth is likely to decelerate to 2–3% in H2 2026, with recession risk rising if consumer sentiment does not stabilize. This is a major headwind for growth themes (ai_compute, quantum, biotech_health) and a tailwind for defensive themes.

Explanation: BEAR regime with 98% persistence and 0.9% BULL transition probability creates a structural headwind. Consumer sentiment collapse (56.6, -8.1 YoY) signals risk-off environment that depresses growth-stock valuations. Strong GDP (5.42%) is lagged and forward indicators (weak ISM manufacturing, elevated jobless claims) suggest deceleration. Geopolitical risk premium (Iran de-escalation per prior session) provides temporary relief but is not a macro tailwind. Fed Funds at 3.64% remains restrictive, limiting multiple expansion. AI/compute is a high-beta growth theme vulnerable to sentiment deterioration and recession risk.

Explanation: Severe headwind from multiple vectors: Fed Funds at 3.64% remains restrictive for mortgage rates and cap rates; consumer sentiment at 56.6 (lowest in dataset) signals collapsing demand; housing starts at 1,487k are up YoY but mask underlying weakness given sentiment collapse. Yield curve at 0.53% is positive but flattening, a pre-recession signal that typically precedes housing downturns. BEAR regime with 98% persistence means rates are unlikely to fall sharply near-term. Real estate is directly rate-sensitive and demand-sensitive—both are deteriorating.

Explanation: Mixed but net negative. Inflation at 2.66% is moderating, reducing commodity tailwinds; ISM manufacturing employment is weak, signaling lower industrial demand for power. However, AI infrastructure buildout (ai_compute theme) creates structural demand for grid modernization and nuclear/solar capacity. BEAR regime and recession risk are headwinds for capex spending. Net impact is negative but less severe than real_estate or ai_compute because energy_grid has structural tailwinds (AI power demand, grid modernization) that partially offset macro headwinds.

Explanation: Relatively macro-insensitive but slightly positive. Defense spending is driven by geopolitical risk and fiscal policy, not cyclical macro conditions. BEAR regime and recession risk do not directly impact defense budgets (which are structural). Geopolitical de-escalation (Iran, per prior session) is a slight headwind, but the theme remains supported by baseline geopolitical tensions and NATO spending. Fed Funds and growth outlook have minimal direct impact. Score is near-neutral with slight positive bias from structural geopolitical support.

Explanation: Severe headwind from BEAR regime and recession risk. Quantum is an early-stage, high-risk, high-beta theme that requires risk-on sentiment and abundant capital for R&D and M&A. Consumer sentiment at 56.6 and BEAR regime with 98% persistence create a structurally risk-off environment. VIX is not provided but prior session notes VIX at 31+ (extreme), confirming elevated tail risk. Jobless claims at 210k and weak ISM manufacturing signal labor market stress that reduces venture/growth capital availability. Quantum is the most vulnerable growth theme in this macro environment.

Explanation: Moderate headwind with structural tailwinds partially offsetting. BEAR regime and recession risk are headwinds for biotech equity valuations and M&A activity. However, prior session narrative shift (AI-pharma convergence: LLY-Insilico $2.75B + Merck-Infinimmune $838M) signals that biotech is benefiting from AI-driven drug discovery, creating a cross-theme tailwind. GLP-1 revolution and aging population are structural tailwinds independent of macro. Consumer sentiment collapse is a headwind for discretionary biotech (cosmetics, wellness) but less so for essential therapeutics. Net impact is negative but less severe than quantum or ai_compute due to structural tailwinds.

Explanation: Severe headwind from BEAR regime, extreme VIX (31+), and liquidity deterioration. Crypto correlates with risk appetite, liquidity conditions, and VIX—all are severely negative. BEAR regime at 100% confidence with 98% persistence means risk-off environment will persist. Prior sessions flag all 4 crypto positions (COIN, MSTR, MARA, and one other) with daily VaR >5.39%, indicating structural portfolio distress. Consumer sentiment collapse and jobless claims elevation signal liquidity tightening. Fed Funds at 3.64% remains restrictive, limiting speculative capital. Crypto is the most vulnerable theme in this macro environment; prior 11 consecutive vetoes and conviction reduction to 1 reflect this reality.

Explanation: Strong tailwind from BEAR regime, recession risk, and sentiment collapse. Defensive themes (consumer staples, gold, bonds) benefit from risk-off environments and flight-to-safety flows. Consumer sentiment at 56.6 (lowest in dataset) signals investors are rotating to stability. Yield curve at 0.53% is positive but flattening, a pre-recession signal that typically drives bond outperformance. Fed Funds at 3.64% remains restrictive but is likely to fall if recession materializes, creating capital gains for bonds. BEAR regime with 98% persistence means defensive positioning will remain attractive. This is the only theme with a strong positive macro impact score.

STRUCTURAL BEAR PERSISTENCE: BEAR regime at 100% confidence with 98% persistence and only 0.9% BULL transition probability indicates a locked-in structural bear market with minimal near-term relief. Prior 11 consecutive council vetoes and persistent risk breaches (PLTR -11.33%, crypto_digital all positions in distress) confirm regime severity. This is not a cyclical dip—it is a regime shift that will persist for weeks to months.

CONSUMER SENTIMENT COLLAPSE: Consumer sentiment at 56.6 is down 8.1 points YoY (from 64.7), the lowest in the dataset. This signals a sharp deterioration in household confidence and spending intentions, a leading indicator of recession. Combined with jobless claims at 210k (elevated) and weak ISM manufacturing employment, this suggests demand destruction is underway. Recession probability is rising.

YIELD CURVE FLATTENING: Yield curve at 0.53% is positive but flattening (prior sessions show it was higher). A flattening curve is a classic pre-recession signal. Combined with Fed Funds at 3.64% (restrictive) and growth deceleration (lagged GDP at 5.42% vs forward indicators weakening), this suggests the Fed will be forced to cut rates, but only after recession materializes. Timing risk is high.

CRYPTO THEME STRUCTURAL FAILURE: All 4 crypto positions (COIN, MSTR, MARA, and one other) are flagged for 12–13 consecutive sessions with daily VaR >5.39%. COIN at -15.57% vs 20% threshold (77.9% consumed), MSTR at -12.13% vs 20% threshold (60.7% consumed). Prior sessions indicate NO POSITION EXITS EXECUTED despite 11 consecutive vetoes. This represents a systemic failure of risk discipline and poses tail risk to portfolio.

DEFENSE AEROSPACE BREACH PERSISTENCE: PLTR at -11.33% vs 10% threshold (113.3% consumed) for 11th consecutive session. Daily VaR -5.68% means re-breach is guaranteed on any adverse day. Prior sessions indicate conviction has not been reduced and position has not been trimmed. This is an active breach that violates risk policy.

MANUFACTURING SECTOR STRESS: ISM manufacturing employment at 12,573 is weak, signaling sector contraction. Combined with weak jobless claims (210k) and consumer sentiment collapse, this suggests manufacturing recession is underway. This is a headwind for energy_grid (lower industrial power demand) and ai_compute (lower capex spending on infrastructure) and a leading indicator of broader economic weakness.

Summary: The macro environment is in a structural BEAR regime (100% confidence, 98% persistence) with deteriorating forward indicators: consumer sentiment has collapsed to 56.6 (-8.1 YoY), jobless claims are elevated at 210k, ISM manufacturing employment is weak, and the yield curve is flattening—all classic pre-recession signals. Fed Funds at 3.64% remains restrictive, limiting growth-stock valuations and liquidity. Inflation at 2.66% is moderating but sticky. Net macro impact is severely negative for growth themes (ai_compute -0.55, quantum -0.58, biotech_health -0.28) and rate-sensitive themes (real_estate -0.62), with crypto_digital facing structural distress (-0.78). Defensive themes are the only beneficiary (+0.68 tailwind). The prior 11 consecutive council vetoes, persistent risk breaches (PLTR, crypto_digital), and 98% BEAR persistence indicate this regime will persist for weeks to months, creating a sustained headwind for growth and a tailwind for defensive positioning.

Iran's President signals readiness to end war; Trump signals exit within weeks

Multiple (GuruFocus, Benzinga, MT Newswires)

Iran's IRGC warns 18 US tech firms — including Microsoft, Apple, Google, Intel — are 'legitimate targets'

Nvidia invests $2B in Marvell; AI chip supply chain deepens

The AI Supercycle Has a New Bottleneck — Lumentum's optical chips soaring as AI market expands

Eric Jackson shorts Salesforce and other software stocks: 'AI Paradox' market hack

Despite Ongoing Iran War, Invesco Aerospace & Defense ETF (PPA) down 11.55% in past month

Lockheed Martin faces Artemis reset — NASA may phase out SLS and review Orion spacecraft role

Hegseth's Morgan Stanley broker sought BlackRock Defense Fund investment before Iran attack — insider trading allegations

Lockheed Martin wins DoW framework to quadruple Precision Strike Missile production capacity

NextEra Energy links AI factories to grid — collaboration with NVIDIA and Emerald AI on grid-integrated compute

Trump approves 10GW natural gas generation in Texas and Pennsylvania tied to Japan's $550B US investment deal

Morgan Stanley raises NextEra Energy target to $110, reiterates Overweight on load growth and data center demand

Xanadu Quantum Technologies IPO pops 15-18% in trading debut via SPAC combination

Rigetti Computing plans $100M UK investment — first major move outside US, 1,000+ qubit system within 3-4 years

Quantum computing stocks IonQ, Rigetti, D-Wave issue $930M warning to Wall Street; 80% crash risk flagged

Eli Lilly bets $2.75B on AI drug discovery via Insilico deal; also acquires Centessa for up to $7.8B

Boston Scientific loses one-third of value YTD including 9% single-session drop on March 30

FDA warns of fatal liver risks linked to Amgen Tavneos; FDA Q4 2025 adverse event monitoring flags multiple new drug safety signals

Block auto-enables Bitcoin payments for millions of US businesses via Square opt-out default

Bitcoin and crypto stocks climb on Iran de-escalation reports; BTC and ETH hit highest prices in days

Gold jumps 2.4% toward $4,560 as Powell rules out rate hikes and Iran war-end reports emerge; gold above $5,500 per separate article

Gold drops 15% with ETF outflows surging; near bear-market levels before dip-buyers step in

Sunbelt housing markets weakest since 2010 — Lennar offering biggest incentives since 2010; profits fall

Homebuilder stocks (Lennar, PulteGroup) skyrocket on Iran de-escalation talks; then fall again on Trump Iran threat escalation

Powell says energy inflation unlikely to force rate hikes; semiconductors and growth stocks rally

Iran de-escalation removes geopolitical discount on chip stocks — Nasdaq 100 +3%, semiconductors rally sharply

Powell confirms energy inflation won't force rate hikes — removes key macro headwind for growth/AI stocks

Nvidia $2B investment in Marvell deepens AI supply chain consolidation narrative

Lumentum optical chip bottleneck story signals AI infrastructure buildout expanding beyond GPU to interconnect layer

IRGC threat naming Microsoft, Google, Intel as 'legitimate targets' — residual tail risk not fully resolved despite rally

Eric Jackson 'AI Paradox' short thesis on software stocks — contrarian bearish signal on AI software layer

Prior session (cs_20260331_185959) correctly flagged the Iran geopolitical risk premium unwinding as the session's key signal. That shift is NOW PRICED — the single-session rally has absorbed the de-escalation news. The residual question is whether the IRGC threat (still on record, war not formally ended) represents unpriced tail risk. No new narrative shift this session; the prior shift is fading into consensus.

PPA defense ETF down 11.55% in past month DESPITE active Iran war — war-is-good-for-defense thesis empirically failing

Hegseth/Morgan Stanley/BlackRock insider trading allegations introduce governance/reputational overhang on defense sector

Lockheed Martin Artemis reset — NASA phasing out SLS, Orion role under review — space program revenue at risk

LMT Precision Strike Missile production quadrupling — genuine positive contract catalyst

Iran de-escalation reports directly undercut the war-premium thesis that has been the sector's primary narrative driver

LMT stock -9% over 30 days despite active conflict — price action diverging bearishly from war narrative

NARRATIVE SHIFT CONFIRMED AND DEEPENING: The defense sector is exhibiting a structural narrative failure — the 'war premium' thesis is empirically not materializing in price action. PPA down 11.55% during active US-Iran conflict is a direct falsification of the consensus defense playbook. This session adds two new negative catalysts: (1) insider trading allegations against Hegseth's broker create a political/governance overhang that could trigger Congressional scrutiny of defense contracts, and (2) NASA's Artemis reset threatens LMT's space revenue stream. Combined with Iran de-escalation removing the war catalyst, the defense narrative is shifting from 'geopolitical beneficiary' to 'overvalued on war premium that never materialized.' This is the session's highest-conviction narrative shift — the market is beginning to price the END of the war premium, not its continuation.

NextEra-NVIDIA-Emerald AI grid-integrated AI factory collaboration — direct cross-theme bridge between energy and AI compute

Trump approves 10GW natural gas generation tied to Japan $550B trade deal — policy tailwind for NEE specifically

Morgan Stanley raises NEE target to $110, reiterates Overweight on data center demand

NEE up 33.7% over past year, 13.7% YTD — strong price momentum validating narrative

Iran de-escalation reduces energy supply shock risk — oil price normalization benefits grid economics

Powell ruling out rate hikes removes key headwind for capital-intensive utility/infrastructure buildout

Energy grid narrative continues to strengthen on the AI-power demand convergence thesis. The NEE-NVIDIA collaboration is the most concrete cross-theme signal this session — it operationalizes the 'AI needs power' thesis into a specific business model. No narrative shift; this is continuity and strengthening of an established thesis. Note: prior session veto on energy_grid thesis increase remains relevant — the narrative is strong but risk regime constraints apply.

Xanadu Quantum IPO +15-18% in debut — new entrant adds market excitement and validates sector interest

Rigetti $100M UK investment — international expansion signals confidence in commercial timeline

Rosenblatt reiterates Buy on RGTI with $40 price target

IonQ 2026 revenue guidance $225-245M with $370M backlog — strongest fundamental anchor in sector

Motley Fool '$930M warning' and '80% crash risk' articles — valuation skepticism narrative persisting

RGTI trading at $13.32 vs $40 target — wide gap reflects speculative premium

Quantum narrative is modestly positive this session driven by the Xanadu IPO excitement and Rigetti's international expansion. However, the persistent valuation-skepticism articles (80% crash risk, $930M warning) continue to cap sentiment. No shift — this is the ongoing tension between speculative enthusiasm and fundamental reality that has characterized quantum for multiple sessions. Conviction remains at 1 per prior session risk constraints.

LLY AI-drug deal ($2.75B Insilico) + Centessa acquisition ($7.8B) — LLY executing aggressive M&A strategy reinforcing AI-pharma convergence thesis flagged in cs_20260331_143000

Boston Scientific -33% YTD including 9% single-session drop — medtech under severe pressure, creating valuation opportunity signal

Intuitive Surgical oversold signal — technically exhausted, analyst consensus revising estimates higher

FDA liver risk warning on Amgen Tavneos + Q4 adverse event monitoring flags — regulatory headwind noise

Envista +42.5% over past year — dental/specialty health sub-sector outperforming

The AI-pharma convergence narrative flagged as a shift in cs_20260331_143000 is CONTINUING TO STRENGTHEN with LLY's Centessa acquisition adding to the Insilico deal. This is narrative continuity, not a new shift. The BSX drawdown is notable — a high-quality medtech at -33% YTD in a sector with strong structural tailwinds is a potential contrarian signal, but this is a valuation observation, not a narrative shift. Prior session's biotech_health thesis increase was vetoed on risk grounds; the narrative case remains intact.

Block/Square auto-enables Bitcoin payments for millions of US businesses — opt-out default is a structural adoption accelerant, not incremental

Bitcoin and crypto rally on Iran de-escalation — geopolitical risk-off unwind benefits crypto

Block Cash App: Bitcoin volume topping $58B, BNPL expansion — fundamental business momentum

Iran de-escalation and Powell rate comments provide macro tailwind

Persistent portfolio risk flags: COIN -13.93%, MSTR -12.04%, MARA -10.33% drawdowns — structural damage not healed by single-session rally

The Block/Square Bitcoin auto-enablement is a genuinely significant adoption catalyst — shifting Bitcoin merchant acceptance from opt-in to opt-out for millions of US businesses is a structural change in payment infrastructure. However, this positive narrative signal is overwhelmed by the persistent portfolio risk crisis (13+ consecutive sessions flagged, all positions in deep drawdown). The narrative is improving but the risk situation is unchanged. No new shift — the adoption story is incrementally positive but not sufficient to alter the risk calculus.

Gold near $4,500-$5,500 range with conflicting signals — 15% drop with ETF outflows, then rebound as dip-buyers step in

Gold rising on Iran war fears, then also rising on de-escalation (Powell rate comments) — dual-driver confusion

Powell rules out rate hikes — removes one of gold's key macro supports (inflation hedge premium)

Iran de-escalation reduces flight-to-safety demand — direct headwind for defensive positioning

S&P 500 futures +1%, Nasdaq +3% on de-escalation — risk-on rotation away from defensives

Jamie Dimon warns markets won't calm until Iran conflict formally ends — residual uncertainty supports some defensive bid

Defensive theme faces a mixed session. Gold's narrative is internally contradictory — it rallied on war fears AND on de-escalation (via Powell), suggesting the gold bid is more about macro uncertainty than a single driver. The Iran de-escalation is a net negative for defensive positioning as risk appetite returns. The 15% gold drawdown with ETF outflows earlier in the session suggests the defensive bid was already being unwound before the de-escalation news. Modest negative score reflects the risk-on rotation headwind.

Sunbelt housing markets weakest since 2010 — Lennar offering biggest incentives since 2010, CEO using 'margin as circuit breaker'

Lennar profits fell in latest quarter; stock down 20.7% over past month, 20.1% over past year

Homebuilder stocks briefly rallied on Iran de-escalation talks (March 24) then fell again on Trump Iran threat escalation

High interest rate fears continue to dampen housing market prospects

Vulcan Materials down 13.7% over past month — construction materials weakness confirms demand softness

Powell ruling out rate hikes is a mild positive — removes worst-case scenario for mortgage rates

Real estate narrative remains structurally weak. The Lennar 'biggest incentives since 2010' headline is a significant fundamental signal — it suggests the Sunbelt housing boom has definitively turned. Powell's rate-hike-off comment is a modest positive but insufficient to reverse the fundamental demand weakness. No narrative shift; this is continuation of an established bearish trend. The Iran de-escalation provides a temporary relief rally but does not address the underlying affordability and demand issues.

IRAN DE-ESCALATION WHIPSAW — RESOLUTION PHASE: The dominant cross-theme pattern this session is the geopolitical risk premium unwinding simultaneously across ai_compute (chip rally), crypto_digital (BTC/ETH up), real_estate (homebuilder relief), and defensive (risk-on rotation away from gold/bonds). The prior session (cs_20260331_185959) flagged this as a narrative shift; it is now CONSENSUS and likely priced in a single session. The alpha question shifts to: what is NOT yet priced? Answer: the IRGC threat against 18 US tech firms remains on record with no formal retraction — this residual tail risk is being ignored by the market in the euphoria of de-escalation.

POWELL RATE-HOLD CROSS-THEME AMPLIFIER: Fed Chair's statement that energy inflation won't force rate hikes is a second-order catalyst amplifying the de-escalation rally. This benefits ai_compute (growth stock discount rate), real_estate (mortgage rate ceiling), energy_grid (utility financing costs), and crypto_digital (risk appetite). The combination of geopolitical relief + rate-hold confirmation in a single session creates an unusually powerful simultaneous tailwind — but also raises the question of whether this is a 'buy the news' exhaustion point.

AI-ENERGY CONVERGENCE DEEPENING: NextEra-NVIDIA-Emerald AI grid-integrated factory collaboration, combined with LLY's AI drug discovery bets, confirms that the AI compute narrative is migrating into adjacent sectors (energy_grid, biotech_health) as a primary value creation engine. This cross-theme connection — flagged in prior sessions — is now being operationalized with specific partnerships and capital commitments. The energy_grid theme is increasingly a derivative AI play, not just a utility/infrastructure story.

DEFENSE NARRATIVE FAILURE AS CROSS-THEME SIGNAL: The defense sector's inability to rally despite active US-Iran conflict (PPA -11.55% during war) is a cross-theme signal for the geopolitical risk premium broadly. If defense can't benefit from an active war, the geopolitical risk premium embedded in other themes (defensive gold, energy supply shock premium) may also be overpriced. This supports the de-escalation rally being more durable than a typical relief bounce.

INSIDER TRADING ALLEGATIONS (HEGSETH/DEFENSE) — GOVERNANCE CONTAGION RISK: The Morgan Stanley broker/BlackRock defense fund story introduces a political governance risk that could trigger Congressional scrutiny of defense procurement. If this story gains traction, it could create regulatory headwinds for the entire defense_aerospace theme independent of the Iran war outcome — a slow-burn negative catalyst that the market is not yet pricing.

Summary:
Session 4 of the March 31 council sequence. The dominant macro event — Iran de-escalation signals from both the Iranian president and Trump — is creating a broad risk-on rally (Nasdaq +3%, oil tumbles, semiconductors surge) that the prior session (cs_20260331_185959) correctly anticipated as the key narrative shift. That shift is now PRICED and should not be re-flagged as new alpha.

THIS SESSION'S HIGHEST-CONVICTION NEW SIGNAL: The defense_aerospace narrative failure. PPA is down 11.55% during an active US-Iran war — a direct empirical falsification of the 'war is good for defense' thesis. This session adds two compounding negatives: (1) Hegseth/Morgan Stanley insider trading allegations creating governance/political overhang, and (2) NASA Artemis reset threatening LMT's space revenue. Combined with de-escalation removing the war catalyst, the defense narrative is undergoing a genuine shift from 'geopolitical beneficiary' to 'war premium that never materialized.' This is flagged as the session's single narrative shift.

CONTINUITY SIGNALS: The AI-pharma convergence (biotech_health, flagged in cs_20260331_143000) continues to strengthen with LLY's Centessa acquisition. The NextEra-NVIDIA grid-AI factory collaboration operationalizes the energy_grid/ai_compute cross-theme thesis. The Block/Square Bitcoin auto-enablement is a structural adoption catalyst for crypto_digital, though overwhelmed by persistent portfolio risk flags.

RISK REGIME NOTE: Three prior sessions have been vetoed (PRS >0.70). The de-escalation rally provides temporary relief to crypto and defense drawdowns but does not resolve the structural risk positions (COIN, MSTR, MARA, SMR, PLTR). A single adverse session can re-breach thresholds. The BEAR regime at 98% persistence means this rally should be treated as a relief bounce within a structural bear, not a regime change.

The Iran de-escalation rally (Nasdaq +3%, semiconductors surging) has removed the geopolitical discount that was the prior session's key narrative shift — now priced. Nvidia's $2B Marvell investment deepens AI supply chain consolidation. Powell ruling out rate hikes removes the key macro headwind for growth/AI multiples. TSM and ASML show exceptional 6m momentum (+59.9% and +91.7%) and strong relative strength vs SPY (+17.8 and +28.1). GOOG Sharpe of 2.0 is best-in-class. The AI supercycle structural thesis (optical interconnect bottleneck, grid-integrated AI factories via NEE-NVIDIA) continues to expand into adjacent sectors. 6m theme avg momentum of +16.4% is solid.

The prior session's narrative shift (Iran risk premium unwinding) is NOW PRICED — no new alpha from de-escalation. IRGC threats against 18 US tech firms remain on record with no formal retraction, representing unpriced tail risk. 3m theme avg momentum is -0.46% — the near-term trend is flat to negative. Theme avg relative strength vs SPY is -1.71. MSFT and SMCI show deeply negative Sharpe (-0.094 and -0.18). Macro impact score is -0.55 in a structural BEAR regime at 98% persistence. Eric Jackson's 'AI Paradox' short thesis on software adds contrarian pressure. Prior session's +1 delta proposal was vetoed — conditions have not materially changed. Portfolio drawdowns are manageable (NVDA -2.52%, AMZN -1.27%) but SMCI at -6.57% and META at -5.8% warrant monitoring.

Powell ruling out rate hikes removes the worst-case scenario for mortgage rates — a genuine positive for rate-sensitive real estate. TOL shows positive 3m momentum (+10.3%) and relative strength vs SPY (+5.67). O (Realty Income) and SPG show positive relative strength (+12.6 and +5.5). Iran de-escalation provides a temporary relief bid for homebuilders. Portfolio drawdowns are mostly benign — VMC, MLM, SPG, RKT all at 0.0% portfolio drawdown. Theme avg 3m momentum of +2.03% is modestly positive. Conviction is already at floor (1), limiting downside.

Macro impact score of -0.62 is the second-worst in the portfolio. Sunbelt housing markets are weakest since 2010 — Lennar offering biggest incentives since 2010, profits falling, stock down 20.7% over past month. Consumer sentiment at 56.6 (lowest in dataset) signals collapsing demand. Fed Funds at 3.64% remains structurally restrictive for mortgage rates. LEN Sharpe is -0.684, AMT Sharpe is -1.008, SHW Sharpe is -0.402. RKT daily VaR at -5.12% is elevated. The Iran de-escalation relief rally for homebuilders was immediately reversed on Trump escalation threats — price action confirms structural weakness. Conviction is already at minimum (1); no room to reduce further.

The NextEra-NVIDIA-Emerald AI grid-integrated factory collaboration is the most concrete operationalization of the AI-power convergence thesis this session. Trump's approval of 10GW natural gas generation tied to Japan's $550B US investment deal is a direct policy tailwind. Morgan Stanley raises NEE target to $110 with Overweight on data center demand. NEE shows +28.7% 6m momentum and +20.65% relative strength vs SPY — the strongest utility in the portfolio. GEV is exceptional: +46.9% 3m momentum, +36.9% relative strength vs SPY, Sharpe of 2.205. UEC shows +27.6% 3m momentum and +20.1% relative strength. Theme avg relative strength vs SPY is +3.57 — the only growth-adjacent theme with positive RS. Powell rate-hold removes financing cost headwind for capital-intensive infrastructure. Narrative score of 0.52 is the strongest positive narrative in the portfolio.

Prior session's +1 delta proposal was vetoed on risk grounds — the underlying risk conditions have not fully resolved. SMR remains a critical risk position: portfolio drawdown -7.76% vs 12% threshold (64.7% consumed), daily VaR -9.87% (portfolio's most dangerous single position), 3m momentum -34.75%, and max drawdown -80.82%. CEG portfolio drawdown at -8.6% and GEV at -6.09% are elevated. FSLR daily VaR at -5.44% is above the 5.39% threshold flag. Theme HHI of 0.1806 indicates moderate concentration. Macro impact score of -0.35 reflects net negative macro environment. The Risk Sentinel will likely flag SMR as a blocking condition for any conviction increase. Narrative is strong but risk regime constraints apply — same conditions that drove the prior veto persist.

Quant signals remain surprisingly strong: theme avg 6m momentum +25.6%, 3m momentum +22.0%. LMT, RTX, NOC, LHX all show strong relative strength vs SPY (+28.9, +10.3, +23.9, +22.2). All Sharpe ratios are positive and solid (LHX 1.952, RTX 1.311, PLTR 1.152). Lockheed Martin wins DoW framework to quadruple Precision Strike Missile production — genuine contract catalyst. NATO spending commitments remain structural regardless of Iran outcome. Portfolio drawdowns are mostly manageable (RTX -0.98%, NOC -1.63%). Macro impact score of +0.15 is the second-best in the portfolio.

THIS SESSION'S HIGHEST-CONVICTION NARRATIVE SHIFT: Defense sector exhibiting structural narrative failure — PPA down 11.55% during active US-Iran conflict is a direct empirical falsification of the 'war premium' thesis. The market is beginning to price the END of the war premium, not its continuation. Hegseth/Morgan Stanley/BlackRock insider trading allegations introduce governance/political overhang that could trigger Congressional scrutiny of defense contracts. NASA Artemis reset threatens LMT's space revenue stream. Iran de-escalation directly undercuts the primary narrative driver. PLTR portfolio drawdown at -9.36% vs 10% threshold (93.6% consumed) — re-breach is one adverse day away with -5.68% daily VaR. Prior session proposed +1 delta for defense_aerospace and was vetoed. The narrative shift is confirmed and deepening — this is the strongest signal to reduce conviction this session. Macro impact score +0.15 is near-neutral and does not offset the narrative failure.

Xanadu Quantum IPO +15-18% in debut validates sector interest and adds market excitement. Rigetti's $100M UK investment signals confidence in commercial timeline and international expansion. IonQ 2026 revenue guidance of $225-245M with $370M backlog is the strongest fundamental anchor in the sector. Rosenblatt reiterates Buy on RGTI with $40 price target (vs $13.32 current — significant upside if thesis plays out). GOOG Sharpe of 2.001 provides a quality anchor in the theme. Conviction is already at floor (1).

Macro impact score of -0.58 is the second-worst in the portfolio — BEAR regime with 98% persistence is structurally hostile to early-stage, high-beta, R&D-dependent themes. 3m theme avg momentum is -19.94% — severe near-term deterioration. IONQ and RGTI relative strength vs SPY are -30.76% and -31.94% — catastrophic underperformance. IONQ and RGTI daily VaR at -8.17% and -8.78% are extreme. Portfolio drawdowns: IONQ -12.62%, RGTI -11.56% — both approaching or at concerning levels. HHI of 0.3061 indicates high concentration risk. Motley Fool '$930M warning' and '80% crash risk' articles persist. Narrative score of 0.18 is the weakest positive in the portfolio. Conviction at 1 (floor) — no further reduction possible, no increase warranted.

The AI-pharma convergence narrative flagged as a shift in cs_20260331_143000 continues to strengthen: LLY's Centessa acquisition ($7.8B) adds to the Insilico deal ($2.75B), confirming LLY is executing an aggressive AI-driven M&A strategy. This is thesis-level confirmation, not incremental news. CRSP shows +13.65% 3m momentum and +5.86% daily VaR is manageable. ABBV shows positive relative strength vs SPY (+0.04) and stable portfolio drawdown (0.0%). LLY portfolio drawdown is 0.0%. Structural tailwinds (GLP-1 revolution, aging population, CRISPR) are independent of macro cycle. Macro impact score of -0.28 is the most benign among growth themes. Boston Scientific -33% YTD creates a potential contrarian valuation opportunity in high-quality medtech.

Prior session's +1 delta proposal was vetoed twice (cs_20260331_143000 and cs_20260331_170000) on risk grounds — the blocking conditions (PLTR breach, crypto_digital crisis) have not been resolved. NVO shows -23.49% 3m momentum and -23.21% relative strength vs SPY — severe underperformance dragging theme avg. Theme avg relative strength vs SPY is -10.41%. ISRG portfolio drawdown at -3.35% and Sharpe of -0.188. NVO Sharpe of -0.998 is deeply negative. FDA liver risk warning on Amgen Tavneos adds regulatory noise. Macro impact score of -0.28 remains negative. The narrative case is intact but the risk regime constraints that drove prior vetoes persist — proposing the same +1 delta without resolved risk conditions would repeat the veto pattern.

Block/Square auto-enabling Bitcoin payments for millions of US businesses via opt-out default is a genuinely structural adoption catalyst — this shifts merchant Bitcoin acceptance infrastructure in a way that is not easily reversed. Bitcoin and crypto rally on Iran de-escalation and Powell rate-hold comments. Block Cash App Bitcoin volume at $58B+ with BNPL expansion shows fundamental business momentum. XYZ portfolio drawdown at -1.68% is relatively contained. Narrative score of 0.22 is modestly positive. Conviction is at floor (1).

Macro impact score of -0.78 is the worst in the entire portfolio. 13+ consecutive sessions flagged with all positions in deep drawdown. COIN portfolio drawdown -12.73% vs 20% threshold (63.7% consumed), MSTR -10.7% (53.5% consumed), MARA -8.64% (43.2% consumed). All four positions have daily VaR above the 5.39% threshold flag. Theme avg 6m momentum is -39.48% and 3m momentum is -19.48% — catastrophic. Theme avg relative strength vs SPY is -11.0%. MSTR Sharpe is -0.842, MARA Sharpe is -0.083. BEAR regime at 98% persistence with extreme VIX (31+) is structurally hostile to speculative crypto. The Block/Square adoption catalyst is positive but overwhelmed by the persistent portfolio risk crisis. Prior 11+ consecutive vetoes have not produced position exits — the systemic risk discipline failure persists. Conviction at floor (1); the Risk Sentinel has mandated IMMEDIATE EXIT of all positions.

Macro impact score of +0.68 is the strongest positive in the entire portfolio — the only theme with a strong macro tailwind. BEAR regime at 98% persistence means defensive positioning will remain attractive for weeks to months. JNJ shows +20.12% 3m momentum, +23.49% relative strength vs SPY, and Sharpe of 1.87. GLD shows +26.33% 3m momentum, +13.19% relative strength vs SPY, and Sharpe of 1.407. Theme avg 6m momentum of +23.64% and 3m momentum of +13.17% are the strongest in the portfolio. Theme avg relative strength vs SPY of +12.21 is the best in the portfolio. All portfolio drawdowns are minimal (KO -0.09%, PG -0.19%, JNJ/GLD/TLT all 0.0%). Lowest theme avg volatility (18.84%) and lowest daily VaR values in the portfolio. Consumer sentiment at 56.6 (lowest in dataset) signals sustained flight-to-safety flows. Conviction at 9 (near maximum) is appropriate.

Narrative score of -0.15 is modestly negative this session — Iran de-escalation and risk-on rotation (S&P futures +1%, Nasdaq +3%) are creating headwinds for defensive positioning. Gold's narrative is internally contradictory — 15% drop with ETF outflows earlier, then rebound, suggesting the gold bid is uncertain. Powell ruling out rate hikes removes one of gold's key macro supports (inflation hedge premium). TLT Sharpe is -0.757 and PG Sharpe is -1.049 — bonds and consumer staples are underperforming on a risk-adjusted basis. Jamie Dimon's warning that markets won't calm until Iran formally ends suggests the de-escalation rally may be premature, which would restore defensive demand. Conviction at 9 is near maximum — limited upside from here even if conditions improve further.

DEFENSIVE theme remains the portfolio's highest-conviction structural position — macro impact +0.68, theme avg relative strength vs SPY +12.21, 3m momentum +13.17%, near-zero portfolio drawdowns across all positions, and BEAR regime at 98% persistence guaranteeing sustained flight-to-safety flows. JNJ (+23.49% RS vs SPY, Sharpe 1.87) and GLD (+13.19% RS vs SPY, Sharpe 1.407) are the portfolio's strongest risk-adjusted performers. Within growth themes, ENERGY_GRID presents the best asymmetric opportunity if the SMR risk position is resolved — GEV (Sharpe 2.205, +46.9% 3m momentum, +36.9% RS vs SPY) and NEE (+20.65% RS vs SPY) are the portfolio's best growth-side performers, and the NextEra-NVIDIA-Emerald AI grid-factory collaboration operationalizes the AI-power convergence thesis into a concrete business model that the market is still pricing in.

CRYPTO_DIGITAL SYSTEMIC FAILURE + PLTR BREACH PERSISTENCE: After 13+ consecutive flagged sessions with no position exits executed, the crypto_digital theme represents an active systemic failure of risk discipline. COIN at -12.73% portfolio drawdown (63.7% of 20% threshold consumed), MSTR at -10.7% (53.5%), MARA at -8.64% (43.2%) — all with daily VaR above 5.39% in a BEAR regime with 98% persistence. A single adverse session can push COIN to breach. Simultaneously, PLTR at -9.36% portfolio drawdown (93.6% of 10% threshold consumed) with -5.68% daily VaR means re-breach is one bad day away for the 12th+ consecutive session. The defense_aerospace narrative shift (PPA -11.55% during active war = war premium thesis empirically failing) adds a new structural headwind to the theme that contains the portfolio's most dangerous single position. The combination of unresolved position exits, persistent threshold proximity, and a structural BEAR regime at 98% persistence creates compounding tail risk that no conviction increase in any theme can offset.

Summary: Session 4 of the March 31 council sequence. The dominant cross-theme event — Iran de-escalation + Powell rate-hold confirmation — created a broad risk-on rally that the prior session (cs_20260331_185959) correctly anticipated and flagged as the key narrative shift. That shift is NOW PRICED and should not drive new conviction increases. The session's highest-conviction NEW signal is the DEFENSE_AEROSPACE narrative failure: PPA down 11.55% during active US-Iran conflict is a direct empirical falsification of the 'war premium' thesis, compounded by Hegseth/Morgan Stanley insider trading allegations and NASA Artemis reset. I am recommending -1 delta on defense_aerospace (6→5) — the narrative shift is confirmed, deepening, and the quant signals (strong momentum, positive RS) are diverging from the price reality of the sector ETF, suggesting the individual stock momentum is lagging the broader sector deterioration. All other themes hold at current conviction: ai_compute (4, no new shift, prior shift priced), real_estate (1, floor, structural weakness confirmed), energy_grid (2, strong narrative but SMR risk blocks increase — same conditions as prior veto), quantum (1, floor, catastrophic momentum and RS), biotech_health (6, narrative intact but risk blocking conditions unchanged from prior vetoes), crypto_digital (1, floor, systemic risk crisis unresolved), defensive (9, near-maximum, strongest macro tailwind in portfolio). The BEAR regime at 98% persistence, unresolved crypto_digital position crisis, and PLTR near-breach condition continue to dominate the risk calculus. The de-escalation rally is a relief bounce within a structural bear — not a regime change.

14TH CONSECUTIVE SESSION FLAGGED — systemic risk discipline failure. NO POSITION EXITS EXECUTED despite 11+ consecutive vetoes demanding immediate exit.

All 4 positions have daily VaR exceeding 5.39%: MARA -8.00%, MSTR -7.52%, COIN -6.57%, XYZ -5.39%. These are the highest VaR positions in the portfolio.

Portfolio drawdowns deepening: COIN -12.70% vs 20% threshold (63.5% consumed), MSTR -10.68% (53.4%), MARA -8.59% (43.0%). One 2-day adverse move breaches COIN.

Theme avg volatility 71.39% annualized — highest of all themes. Theme avg 3m momentum -19.48% — worst of all themes. Theme avg relative strength vs SPY -11.0%.

Concentration HHI 0.306 exceeds 0.25 threshold — concentrated risk in a structurally broken theme.

Negative Sharpe ratios on MSTR (-0.842) and MARA (-0.083) confirm these positions are destroying risk-adjusted returns.

Macro impact score -0.78 (worst of all themes). BEAR regime with 98% persistence guarantees continued risk-off pressure on crypto proxies.

IONQ portfolio drawdown -12.62% and RGTI -11.56% vs 25% threshold (50.5% and 46.2% consumed respectively). These are deep drawdowns for speculative positions.

IONQ daily VaR -8.17% and RGTI daily VaR -8.78% — among the highest in the entire portfolio. A single adverse day could push either past 20% drawdown.

Theme avg volatility 67.65% annualized — second highest after crypto. Theme avg 3m momentum -19.94% — worst of all themes.

Theme avg relative strength vs SPY -20.23% — worst of all themes by a wide margin, confirming severe underperformance.

Concentration HHI 0.306 exceeds 0.25 threshold — concentrated in 4 names with extreme dispersion (GOOG Sharpe 2.0 vs IBM -0.058).

Macro impact score -0.58 — early-stage speculative theme in a structural BEAR with 0.9% BULL transition probability.

PLTR portfolio drawdown -9.26% vs 10% theme max_drawdown threshold = 92.6% consumed. Was in ACTIVE BREACH for 11 consecutive sessions (peaked at -14.48%), now marginally below threshold but daily VaR -5.68% guarantees re-breach on any adverse day.

PLTR is the single most dangerous position in this theme: 57.72% annualized volatility (nearly 3x theme avg ex-PLTR), -13.82% 3m momentum, -14.0% relative strength vs SPY.

Theme conviction at 6 is the joint-highest growth theme — but PLTR risk contaminates the entire theme's risk profile.

Excluding PLTR, the theme is strong: LMT/RTX/NOC/LHX/GD all have positive momentum, positive relative strength, and Sharpe >0.95. The theme's risk is concentrated in one position.

SMR portfolio drawdown -7.76% vs 12% threshold = 64.7% consumed. Daily VaR -9.87% is the SINGLE HIGHEST VaR IN THE ENTIRE PORTFOLIO. One adverse day pushes SMR past threshold. Flagged for 5+ consecutive sessions.

Theme avg volatility 62.38% annualized — third highest. SMR alone at 105.09% vol is an outlier that distorts theme risk.

CEG portfolio drawdown -8.54% vs 12% threshold = 71.2% consumed. Daily VaR -4.74%. CEG is approaching breach territory.

GEV portfolio drawdown -6.09% vs 12% threshold = 50.8% consumed with -4.40% daily VaR.

FSLR 3m momentum -26.77% and SMR 3m momentum -34.75% show severe deterioration in the weakest names.

Macro impact score -0.35 with ISM manufacturing weakness signaling lower industrial power demand.

Theme avg volatility 44.62% with multiple positions showing daily VaR >3%: SMCI -7.53%, AMD -5.79%, AVGO -4.03%, ASML -3.83%, NVDA -3.73%.

Theme avg 3m momentum -0.46% has turned negative. MSFT (-19.0%), AVGO (-20.88%), AMZN (-10.65%), AMD (-8.69%) show broad deterioration.

SMCI is a structural drag: -66.18% max drawdown, -6.57% portfolio drawdown, -7.53% daily VaR, negative Sharpe (-0.178), -23.38% 6m momentum.

Macro impact score -0.55 — high-beta growth theme in structural BEAR with restrictive Fed (3.64%) limiting multiple expansion.

Conviction at 4 is moderate but theme carries 10 positions with 25% max allocation — largest capital exposure in portfolio.

Relative strength vs SPY -1.71% — theme is underperforming the benchmark despite being the highest-allocation theme.

NVO is a significant drag: -23.49% 3m momentum, -23.21% relative strength vs SPY, -0.998 Sharpe, -4.69% daily VaR, -56.46% max drawdown.

Theme avg 3m momentum -5.16% and relative strength -10.41% show broad weakness despite AI-pharma narrative tailwind.

CRSP daily VaR -5.86% exceeds 3% threshold significantly for a moderate risk tolerance theme.

Conviction at 6 (joint-highest growth theme) may be premature given BEAR regime persistence and -0.28 macro impact score.

Concentration HHI 0.223 approaching 0.25 threshold — LLY dominance creates single-stock risk.

LEN portfolio drawdown -6.88% vs 10% threshold = 68.8% consumed. Daily VaR -4.01% could push to breach in 1-2 sessions.

RKT daily VaR -5.12% is extreme for a moderate risk tolerance theme, though portfolio drawdown is 0% (new position or recovered).

Macro impact score -0.62 (second worst) — directly rate-sensitive theme with Fed Funds at 3.64% and consumer sentiment at 56.6.

Conviction already at 1 (minimum) — appropriately sized for risk environment.

Portfolio drawdowns near zero across all positions (max -0.19% on PG). Theme is performing as designed.

Theme avg volatility 18.84% — lowest of all themes. All daily VaR readings below 2.72%.

TLT Sharpe -0.757 and PG Sharpe -1.049 are negative but acceptable for hedge positions in a BEAR regime.

Conviction at 9 is appropriate. Macro impact score +0.68 (only positive theme) confirms defensive positioning is correct.

No inter-theme correlation exceeds 0.40. Highest pair is ai_compute <> crypto_digital at 0.389 and ai_compute <> quantum at 0.355 — both below the 0.70 concentration threshold. Portfolio diversification is structurally sound at the theme level.

However, FUNCTIONAL correlation risk exists: ai_compute, quantum, and crypto_digital are all high-beta risk-on themes that will sell off simultaneously in a BEAR regime despite low statistical correlation. Combined these themes represent conviction-weighted exposure that amplifies drawdowns in risk-off events.

Defensive theme shows -0.023 correlation with ai_compute and -0.007 with crypto_digital — confirming it provides genuine portfolio hedge value.

COIN (crypto_digital): Portfolio drawdown -12.70% vs 20% threshold = 63.5% consumed. Daily VaR -6.57% means breach reachable in ~1.1 adverse days. 14TH CONSECUTIVE SESSION FLAGGED. NO EXIT EXECUTED.

IONQ (quantum): Portfolio drawdown -12.62% vs 25% threshold = 50.5% consumed. Daily VaR -8.17% means breach reachable in ~1.5 adverse days.

RGTI (quantum): Portfolio drawdown -11.56% vs 25% threshold = 46.2% consumed. Daily VaR -8.78% means breach reachable in ~1.5 adverse days.

MSTR (crypto_digital): Portfolio drawdown -10.68% vs 20% threshold = 53.4% consumed. Daily VaR -7.52% means breach reachable in ~1.2 adverse days.

PLTR (defense_aerospace): Portfolio drawdown -9.26% vs 10% threshold = 92.6% consumed. Daily VaR -5.68% means RE-BREACH ON ANY ADVERSE DAY. Was in active breach for 11 consecutive sessions.

CEG (energy_grid): Portfolio drawdown -8.54% vs 12% threshold = 71.2% consumed. Daily VaR -4.74% means breach reachable in <1 adverse day.

MARA (crypto_digital): Portfolio drawdown -8.59% vs 20% threshold = 43.0% consumed. Daily VaR -8.00% — extreme single-day risk.

SMR (energy_grid): Portfolio drawdown -7.76% vs 12% threshold = 64.7% consumed. Daily VaR -9.87% (PORTFOLIO HIGHEST) means BREACH ON ANY ADVERSE DAY.

AMD (ai_compute): Portfolio drawdown -7.74% vs 15% threshold = 51.6% consumed. Daily VaR -5.79%.

LEN (real_estate): Portfolio drawdown -6.78% vs 10% threshold = 67.8% consumed. Daily VaR -4.01%.

Summary:
PRS 0.74 — 12TH CONSECUTIVE VETO. BEAR regime locked at 100% confidence, 98% persistence, 0.9% BULL transition probability. This is a structural bear market, not a cyclical correction.

THREE UNRESOLVED CRISES PERSIST WITH NO REMEDIATION:

(1) CRYPTO_DIGITAL — IMMEDIATE EXIT REQUIRED (14th consecutive session): All 4 positions remain in portfolio despite 11+ vetoes demanding exit. Combined daily VaR across COIN/MSTR/MARA/XYZ exceeds $27,000. Theme is structurally broken: -19.48% 3m momentum, -39.48% 6m momentum, -11.0% relative strength, 71.39% volatility, -0.78 macro impact. Every session these positions remain is a violation of risk discipline.

(2) PLTR — TRIM OR EXIT (12th+ consecutive session): Portfolio drawdown -9.26% vs 10% threshold = 92.6% consumed. Was in ACTIVE BREACH for 11 sessions. Daily VaR -5.68% guarantees re-breach on any adverse day. PLTR contaminates an otherwise strong defense_aerospace theme (LMT/RTX/NOC/LHX/GD all performing well).

(3) SMR — EXIT REQUIRED (6th+ consecutive session): Portfolio drawdown -7.76% vs 12% threshold = 64.7% consumed. Daily VaR -9.87% is the SINGLE HIGHEST in the entire portfolio. One adverse day breaches threshold. SMR's 105% annualized volatility is incompatible with energy_grid's moderate risk tolerance.

ADDITIONAL CONCERNS: CEG approaching breach at 71.2% consumed. IONQ and RGTI in quantum showing deep drawdowns (-12.62%, -11.56%) with extreme VaR. Consumer sentiment collapse to 56.6 (-8.1 YoY) is a leading recession indicator that will pressure all growth themes.

WHAT IS WORKING: Defensive theme performing exactly as designed (near-zero drawdowns, +0.68 macro tailwind, conviction 9). Defense_aerospace ex-PLTR is the strongest growth theme (+22% 3m momentum, +13% relative strength). Real_estate appropriately at conviction 1.

SYSTEMIC RISK DISCIPLINE FAILURE: 11+ consecutive vetoes have produced only conviction reductions on quantum and crypto to 1 — but NO POSITION EXITS. The portfolio continues to carry ~$27K+ daily VaR in crypto alone, ~$10K daily VaR in SMR, and ~$5.7K daily VaR in PLTR. These are not investment positions — they are unmanaged losses. Until crypto is fully exited, SMR is exited, and PLTR is trimmed, no conviction increases are permitted.

Summary: VETOED: PRS 0.74 exceeds 0.70 veto threshold — 12th consecutive veto. THREE UNRESOLVED CRISES: (1) Crypto_digital flagged for 14th consecutive session — all 4 positions with daily VaR >5.39%, NO EXITS EXECUTED despite 11+ prior vetoes. COIN at -12.70%, MSTR at -10.68%, MARA at -8.59% vs 20% threshold. (2) PLTR at -9.26% vs 10% threshold (92.6% consumed) — was in active breach for 11 sessions, re-breach guaranteed with -5.68% daily VaR. (3) SMR at -7.76% vs 12% threshold (64.7% consumed) with -9.87% daily VaR (portfolio's most dangerous single position). BEAR regime at 100% confidence, 98% persistence, 0.9% BULL transition. Consumer sentiment collapsed to 56.6 (lowest in dataset). No conviction increases permitted until: (1) ALL crypto_digital positions exited, (2) SMR exited, (3) PLTR trimmed or exited. This is a systemic failure of risk discipline — the portfolio is carrying positions that have been flagged as critical for 11-14 consecutive sessions with zero remediation.. Only conviction decreases applied.

Summary: 21 orders, 7 sells, 14 buys, turnover 5.59%, regime sizing 50%