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As everybody knows, the war President Trump launched against Iran on February 28 has caused a global energy crunch. Iran has stopped the flow of most cargo ships through the Strait of Hormuz, at the mouth of the Persian Gulf, while the US Navy is blocking some of Iran’s own oil exports. Investors think the war will end at some point this year, but Brent crude prices have still jumped from about $68 per barrel before the war to nearly $110 per barrel.

Gas prices have risen by more than $1 per gallon since the war started, to a national average of about $4.11. Diesel prices have risen by more, to about $5.32 per gallon. If oil prices stay above $100, gas and diesel prices will stay where they are and maybe go higher. A $1 jump in gas prices costs a typical driver about $40 a month in higher costs. If that lasts for the rest of the year, it will completely negate the larger tax returns many Americans received this year, on account of the 2025 tax-cut law.

Stocks plunged during the first month of the war, but they’ve since recovered and are positive for the year. The artificial-intelligence revolution is going gangbusters regardless of the war, and investors see big gains in the future. That’s why stocks are rising. But it stands to reason that stocks would be higher still without the war.

[More: Why stocks are rallying, despite the war]

GDP growth will probably end up significantly lower because of the war. In late February, right before the war began, the Atlanta Federal Reserve’s GDP Now model estimated that first-quarter GDP growth was 3.1%. The estimate has since fallen to just 1.2% growth in the first quarter. Some of that might be delayed spending or investment that will take place later in the year. But some of that lower growth comes from canceled spending that won’t get made up.

Inflation will go higher than it would have without the war. The spike in energy costs makes it more expensive to produce and transport almost every type of good. The war also disrupted shipments of many industrial chemicals from the Gulf region, causing soaring prices for products such as fertilizer. That will also raise costs throughout the supply chain, all the way to consumers.

[Check out the Weekly WTF, stuff you can hardly believe]

Before the war, the Cleveland Federal Reserve’s inflation “nowcast” was 2.4%. That’s an estimate of the real-time inflation rate, rather than the dated, backward-looking number that comes out monthly in official price reports. The inflation nowcast has since jumped to 3.6%, more than a point higher.

On the prediction market Kalshi, the odds of inflation hitting at least 4% in 2026 have jumped from just 10% before the war to 58% now.

Higher inflation usually means higher interest rates, because investors buying bonds demand a higher return to compensate for the eroding value of money. And sure enough, rates have marched upward right along with rising inflation expectations.

[See why it could take months for the Iran war to “end”]

The average 30-year mortgage rate has jumped from about 6% before the war to nearly 6.23%. That’s enough to raise the monthly payment on a typical home by about $50.

The outlook for interest rates is upward. Before the war, the odds of mortgage rates rising above 6.5% this year were just 21%, according to Kalshi. Now the odds of rates above 6.5% are 59%. Rates on most other loans will rise by about the same amount as mortgage rates.

Will the Federal Reserve cut interest rates? Before the war, prediction markets put the odds of Fed rate cuts this year at 86%. But the Fed rarely cuts rates when inflation is rising, and the war-related surge of inflation has lowered rate-cut odds to 60%. This chart shows the odds of no rate cuts in 2026, surging from 14% in February to 40% now.

The good news, if you can call it that, is that economists still don’t think the war will cause a recession.

But high levels of uncertainty will remain as the world watches to see whether Iran is able to exploit what appears to be newfound leverage over Persian Gulf energy exports. The uncertainty alone will be destabilizing, possibly for a long time.

Markets are coming around to the idea that the Iran war President Trump launched on February 28 will keep the Persian Gulf bottled up for months. There are twin blockades in the Gulf, with US forces interdicting some Iranian oil exports and Iran still blocking most tanker traffic through the strait. Pentagon officials told Congress recently that it could take six months to remove Iranian mines in the strait, a process that hasn’t even started yet.

“Gasoline and oil prices, by implication, will stay elevated through the midterm elections,” economist Tracy Schuchart of NinjaTrader wrote on April 24. “Six months is not an aggressive estimate. It is the best case.”

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The disruption to oil flows in the Persian Gulf, and the subsequent surge in prices, is an obvious problem for some parts of the economy. The “ceasefire” President Trump declared on April 7 hasn’t solved that problem. The US blockade of Iranian ports that is now underway means that even Iranian oil isn’t getting to market. That could worsen the supply crunch. Plus, Iran could retaliate by attacking more energy infrastructure in the region.

Yet investors think each side has strong economic incentives to move past the war. The Iranian regime needs oil revenue, which it won’t get if the US blockade continues indefinitely. So it may have to agree to some kind of deal that reopens the Strait of Hormuz to tankers. Trump needs to show American voters some relief in energy prices. That may force him to make concessions to Iran, which in a way, he has already done by ending or at least postponing the bombing.

Beyond the war, investors like what they see. The S&P 500 stock index has recovered most of the losses caused by the war, and is now positive for the year. Investors are buying because they think future gains are coming and don’t want to get locked out. And Wall Street is getting re-enthused about the fundamentals behind rising stock values.

Here are four reasons 2026 could turn out to be a good year for investors, especially if the Iran war recedes.

Corporate profits are strong. This chart from investing giant BlackRock shows that expectations for earnings growth in 2026 have actually gone up since the war started. That’s true for the US market, for Europe, and for emerging markets, as well.

Several factors are goosing the outlook.

Read more

The inflation rate jumped from 2.4% in February to 3.3% in March. It will almost certainly be higher in April.

The jump in prices is entirely due to soaring energy costs caused by the war against Iran that President Trump launched on February 28, 2026. The biggest gain in any major category was in energy, where prices jumped 12.5% year-over-year. Gasoline prices rose 18.9%, and as every driver knows, that is old news. The official government numbers come from mid-March. The average pump price as of April 10 is $4.15 per gallon, a 40% increase over pre-war prices.

Before the war, inflation was close to becoming a non-issue. The inflation rate of 2.4% was close to the Federal Reserve’s goal of 2%. The court-ordered repeal of Trump’s emergency tariffs lowered import taxes, easing price pressures. Once the Fed feels inflation is under control, it has newfound freedom to cut interest rates, if the economy needs a boost.

The Fed will not cut rates while an energy shock is sending inflation higher. It may have to raise rates, to keep inflation from getting worse. Trump has been imploring the Fed to cut rates, yet his own decisions—first, to impose massive tariffs, and then, to launch a war on Iran—are the biggest factors preventing the Fed from doing the very thing he wants.

[Here’s the economic toll of the Iran war (so far)]

Trump ignored decades of war planning when he launched the Iran war, clearly dismissing the obvious possibility that Iran would respond by blocking oil shipments through the Strait of Hormuz, a chokepoint 20% of the world’s oil exports must pass through. Iran’s closure of the strait sent oil prices soaring from about $65 per barrel before the war to as high as $109. Stocks fell, a lot of businesses put investments on hold, and the world waited to see if Trump could solve the problem he created.

So far, he hasn’t. Trump declared a ceasefire on April 7, but there’s no agreement on terms between Trump and the Iranian regime. Iran, meanwhile, now has total control of the Strait of Hormuz. More than 100 cargo ships per day passed freely before the war. Now, Iran charges a “toll” of up to $2 million per ship. And it is only allowing around 15 ships per day through the strait. The outcome of the war, so far, is that Iran is using newfound leverage over the strait to create a global oil shortage and jack up prices.

After Trump announced the ceasefire, oil prices dropped from $109 per barrel to around $95. They’ll likely stay in that range for as long as Iran puts strict limits on transit volumes through the strait. Trump has complained about Iran’s stranglehold on the strait, but he’s also desperate for a way out of a war that was starting to look open-ended, in a year with midterm elections less than seven months away.

[5 huge problems with the US-Iran ceasefire]

With oil prices still 45% higher than they were before the war, and other energy costs surging as well, higher inflation is basically guaranteed for the next several months. Producers now bearing the higher cost of energy will pass that increase onto consumers. Since many producers bank inventories, higher input costs may not show up in final prices for three or four months. So consumers paying more for gasoline and other energy products today will get hit later with higher costs for many other products, including food.

How could a president be this stupid? Trump explicitly campaigned for president in 2024 by telling voters he would lower costs. His “drill, baby, drill” mantra is supposed to connote abundant, cheap energy, not shortages and spiking prices.

Trump fancies himself a gut-level dealmaker whose intuition eclipses expert analysis. The Iran war and its aftermath show Trump to be a reckless and impulsive bumbler whose terrible decision-making has made life harder for literally billions of people. It’s hard to think of an American president who has done more to mock voters by blatantly violating his own campaign promises.

But we’re not going back to pre-war norms any time soon. Nearly six weeks of fighting caused massive disruption to energy markets and ground some economic activity to a halt. Some economic losses won’t be recovered. Other things will take weeks or months to return to pre-war levels. Some things may change permanently.

Here’s where we stand:

Oil prices fell from around $110 before the ceasefire to about $98 after. That triggered a robust stock rally on April 8. But oil prices are still 50% higher than they were before the war. And they may stay there for a while. While a ceasefire may set the stage for shipping to resume through the Strait of Hormuz, where 20% of the world’s oil exports must pass, conditions are different now.

Before the war, ships passed freely. Now Iran is exerting control over the strait, deciding who sails through and charging a “toll” of around $2 million per ship, or about $1 per barrel. Iran is also throttling traffic. In the first days after the ceasefire, tanker traffic through the strait was only about 10% of pre-war volume. Oil prices may stay near current levels for the indefinite future, especially if Iran’s new controls over the strait look to be permanent.

[See 5 huge problems with the Iran war ceasefire]

Gas prices have risen by about $1.20 per gallon since the war started, to a national average of about $4.17. Diesel prices have risen by more, to about $5.70 per gallon. If oil prices stay in the $90s, gas and diesel prices are unlikely to drop by much. A $1 jump in gas prices costs a typical driver about $40 a month in higher costs. The total hit to drivers from the jump in gas prices is $8 billion and rising.

Stocks enjoyed a strong rally after the ceasefire, but the S&P 500 index is still about 2% lower than pre-war levels. Trump bragged repeatedly when the Dow Jones index hit 50,000 for the first time on February 6. The Dow is now below 48,000.

GDP growth will probably end up lower because of the war. In late February, right before the war began, the Atlanta Federal Reserve’s GDP Now model estimated that first-quarter GDP growth was 3.1%. The estimate has since fallen to just 1.3% growth in the first quarter. Some of that might be delayed spending or investment that will take place later in the year. But some of that lower growth comes from canceled spending that won’t get made up.

Inflation will go higher than it would have without the war. The spike in energy costs makes it more expensive to produce and transport almost every type of good. The war also disrupted shipments of many industrial chemicals from the Gulf region, causing soaring prices for products such as fertilizer. That will also raise costs throughout the supply chain, all the way to consumers.

Before the war, the Cleveland Federal Reserve’s inflation “nowcast” was 2.4%. That’s an estimate of the real-time inflation rate, rather than the dated, backward-looking number that comes out monthly in official price reports. The inflation nowcast has since jumped to 3.4%, a full point higher.

On the prediction market Kalshi, the odds of inflation hitting 4% in 2026 have jumped from just 10% before the war to 54% now.

Higher inflation usually means higher interest rates, because investors buying bonds demand a higher return to compensate for the eroding value of money. And sure enough, rates have marched upward right along with rising inflation expectations.

The average 30-year mortgage rate has jumped from about 6% before the war to nearly 6.4%. That’s enough to raise the monthly payment on a typical home by about $100.

The outlook for interest rates is upward. Before the war, the odds of mortgage rates rising above 6.5% this year was just 21%, according to Kalshi. Now the odds of rates above 6.5% are 73%. Rates on most other loans will rise by about the same amount as mortgage rates.

The ceasefire has led to slight improvements in the economic outlook. Inflation expectations have dipped slightly since April 7, for example. But high levels of uncertainty will remain as the world watches to see whether Iran is able to exploit what appears to be newfound leverage over Persian Gulf energy exports. The uncertainty alone will be destabilizing, possibly for a long time.

Gasoline prices have followed oil prices higher, as they always do. US pump prices have risen by more than $1.10 per gallon since the war began.

Diesel prices, as you can see in the chart above, have jumped by more than gasoline prices. That means the cost of producing and transporting goods, including food, is going up. Those higher costs will hit consumers.

Mortgage rates have jumped because investors now expect higher inflation than they did before the war. When bond buyers think inflation is going higher, they demand a higher return to buy bonds, to compensate for the eroding value of money. A half-point increase in mortgage rates raises the monthly payment on a typical home by about $110 per month.

Stock values have declined since the war started, as investors struggle to price in how long the war will last, how high energy prices will go, and how much that will affect corporate profits. Some analysts think it’s surprising stocks haven’t fallen further.

The United States isn’t as vulnerable to a foreign energy shock as it was during the energy crises of the 1970s. That’s largely because of huge efficiency gains. The “energy intensity” of the US economy has dropped by 68% since 1970, according to Dept. of Energy data. That means energy costs are a much smaller factor in everything the nation produces. Many factors account for that, including more efficient cars and other types of transportation, better building insulation, and many technological breakthroughs that save energy.

For the same reasons, ordinary Americans spend a lot less on energy than they used to, as a portion of their overall outlays. So higher energy prices don’t hurt as much as they did during the energy crises of the 1970s.

To understand the severity of the current energyshock, it helps to look at oil and gasoline prices adjusted for inflation. In “real,” inflation-adjusted terms, prices are high but not stratospheric.

But rising gas prices are still a burden for millions of American drivers. A $1 increase in pump prices costs the average driver about $35 a month in higher costs. Trump has repeatedly insisted the war will end soon, clearly trying to talk energy prices down. Yet the war obviously hasn’t ended—and gas prices continue to rise.

Instead, Trump is falling back on a playbook he thinks has served him well during a long career in real estate, celebrification, hucksterism, and populist politics: Brag. Threaten. Browbeat. And if that doesn’t work, bail out while declaring victory.

Trump’s playbook has been remarkably effective when applied to gullible humans. But financial markets have built-in bullshit detectors, because of all the money at stake. You can fool markets temporarily, but as Trump ought to be learning, you can’t fool them for long.

Trump tried to swindle financial markets during the April Fools’ Day speech in which he insisted the Iran war is going great while unwittingly demonstrating that it is not. He never should have given the speech. By hyping it as Trump’s first prime-time public address since the war started, the White House created the expectation of some breakthrough announcement. What Trump delivered instead was more like a desperate effort to repeat the lies he has been telling about the war, except for a much larger audience.

Read more

President Trump mocks green energy as a scam and rails against fuel-economy standards as “hidden taxes.” Presidents George W. Bush and Ronald Reagan rolled back conservation efforts put in place by their predecessors. Even President Jimmy Carter, a devoted environmentalist, provoked mockery back in 1977 when he beseeched Americans to turn down their thermostats, in his infamous “sweater speech.”

For all the fits and starts, however, American efforts to boost energy-efficiency since the oil crises of the 1970s are paying a huge dividend now. Americans are feeling some pain from the war with Iran that Trump kicked off on February 28. Iran’s closure of the Strait of Hormuz has produced the biggest disruption to global oil supplies in history, according to the International Energy Agency. Oil prices have jumped by more than 50% and now hover above $100 per barrel. Gasoline prices have followed oil prices upward, with pump prices now above $4 per gallon.

Yet the effect on the US economy has been tame compared with the soaring prices, gas lines and recessions that accompanied the oil shocks of the 1970s. Few economists think the Iran war will cause a recession, and investors generally expect a bull market in stocks to resume once the war ends. Unless the war drags on for months, it will be little more than an economic speed bump in 2026.

[See Trump’s 6 craziest Iran war statements]

Energy efficiency is a major reason why. Vehicles, buildings, appliances, factories and many other things use far less energy than they used to, thanks to a combination of regulations, government incentives, and technology breakthroughs. Household spending on energy is just 3.7% of all spending today, the lowest on record except during the anomalous Covid pandemic in 2020. That’s down from a peak of 9.2% in 1982.

For all the attention gasoline prices get, they account for just 2% of consumer spending today. That’s just one-third of the spending devoted to motor fuel in the early 1980s.

The sharp decline in energy spending is an important economic cushion. “Energy goods and services (including utilities) account for just 3.7% of the consumer wallet,” Bank of America explained in a March 31 research note. “While we remain vigilant to downside risks from the Iran war, it helps that the economy has become much more energy-efficient over time, making it more resilient to energy shocks.”

[$4 gas hurts, but not like it used to]

It also helps that renewable energy is gradually replacing fossil fuels. Since 2000, the portion of American energy coming from renewables has grown from 3.3% to about 12%. Adding nuclear power brings the share of energy from non-carbon sources to about 20%. That’s a crucial hedge during an oil crisis, because renewables and nuclear power are domestic and can’t be disrupted by any other country acting outside US borders.

Green-energy advocates can overstate the benefits of renewables, such as claiming they’re cheaper without accounting for infrastructure costs or government (taxpayer) subsidies. But it’s undeniable that domestically produced wind, solar and hydro power are more secure than oil subject to geopolitical anomalies.

Trump seems to think that the United States should be immune to an oil price spike related to his Iran war, because America produces about as much oil as it consumes. That’s an amateurish misread of how global markets work. Since oil is easily transportable, producers can sell wherever they can get the highest price, which basically sets one global oil price everybody has to pay. Renewables, by contrast, are not very transportable, which means they can help lower costs and boost energy security, but only where they are available.

[See what it will take to reopen the Strait of Hormuz]

Trump has killed many incentives for green energy and electric vehicles established during the Biden administration, while redirecting federal support toward fossil fuels. Yet the business case for renewables remains compelling in many industries and regions. The Iran war probably makes it more so. Trump may not notice, but ongoing efficiency gains and more renewables are the best energy policy the nation can have.

You can order this cartoon ^☝️ or others like it, plus merch featuring cartoons, at CartoonStock.com.

Well, that’s the way it used to be. Donald Trump is a different kind of president, so the Iran war he launched on February 28 includes the same dissembling and incoherence that characterize the rest of the Trump presidency. If it wasn’t a war, it would be funny.

Since it is a war, Trump’s lies and dodges affect trillions of dollars’ worth of assets every day, with investors parsing Trump proclamations for clues on whether the war will end soon or drag on. Asset prices soar and plunge on Trump pronouncements that turn out to be feints.

A majority of Americans opposed the war from the outset, probably because Trump did nothing to explain why it was necessary or worth any sacrifice. Opposition seems likely to grow as gas prices pass $4 per gallon, a stock slump persists and the costs of the war seep deeper into everyday life.

As the war enters its second month, it’s obvious Trump didn’t anticipate or plan for the trouble Iran would be able to cause. These six statements capture Trump’s shoddy handling of the war, and hint at the messy outcome that might be coming:

Imminent threat: “Our objective is to defend the American people by eliminating imminent threats from the Iranian regime.”

This was the second sentence of Trump’s February 28 statement announcing that the war had begun. It puzzled analysts at the time because Iran has no weapons that can reach the United States and there was no reason to think a terrorist attack was in the offing.

[$4 gas hurts, but not like it used to]

It’s clear now that this was a bogus justification for attacking Iran. Joe Kent, a top Trump counterterrorism official, resigned in mid-March in opposition to the war, writing in a statement, “Iran posed no immediate threat to our nation, and it is clear that we started this war due to pressure from Israel.”

Read more

The war Trump launched on February 28 has sent pump prices soaring by more than a dollar per gallon in a single month. At the end of February, gas prices averaged $2.98 per gallon, according to AAA. They’ve now hit $4 per gallon and will probably go higher. The spike is entirely due to Iran’s de facto closure of the Strait of Hormuz, transit point for 20% of the world’s oil.

Gas prices have an outsized effect on consumer psyches, probably because filling stations display them in foot-high numbers and drivers pay for 10 or 20 gallons all at once. But $4 gas in 2026 isn’t as painful as it was in 2008, the first time prices passed that eye-popping threshold. And it’s possible that $5 per gallon, not $4, is the real pain point Trump has to worry about.

This chart shows gas prices during the last 20 years, adjusted for inflation and reflected in 2026 dollars. Many people forget, but the most severe gas-price shock in recent times occurred in 2008, when there was a brief speculative bubble in oil markets that sent the nominal price of gasoline to a peak of $4.16 per gallon. That would be more than $6 per gallon today. That spike was very short-lived, however. The financial crash occurred later that year and the Great Recession sent prices plummeting.

By the middle of the 2010s, the shale-fracking revolution was supercharging US oil production. The boost to world supply kept oil and gasoline prices relatively low. When the Covid pandemic hit in 2020 and economic activity collapsed, there was so much oil that storage became a problem. That produced the lowest gas prices in modern times: Nominal prices fell below $2 per gallon, or $2.35 in today’s dollars.

[More: Shaky wartime president sinks stocks]

US and global energy firms tightened production after Covid, and prices gradually rose. Then came Russia’s invasion of Ukraine in 2022, which led to widespread sanctions on Russian energy. Oil prices jumped and gasoline hit $5 per gallon for the first time in June of 2022. That would be about $5.50 in 2026 dollars.

By the time Trump began his second presidential term in 2025, gasoline prices had retreated to around $3.10. They dropped a bit more during the following year, and right before Trump ordered the attacks on Iran at the end of February, gas prices were at a five-year low. Trump bragged often about cheap gas.

Those days are gone, at least for a while. While the US and Israeli attacks have devastated Iran’s military capabilities, they haven’t eliminated its ability to strike oil tankers with drones or missiles, or mine the Strait of Hormuz. The only oil tankers Iran allows through the strait are its own or those belonging to friendly countries. The hit to oil supply has sent prices up by 50%.

A majority of Americans oppose Trump’s war with Iran, and $4 gas could stiffen the opposition. But the real danger point for Trump may be $5 gas. Henrietta Treyz of Veda Partners has developed a “gas price anxiety index” that characterizes gas between $4 and $4.50 “uncomfortable.” Gas prices closer to $5 would be “painful,” while prices above $5 would be “excruciating.”

[See what it will take to reopen the Strait of Hormuz]

“We continue to view [a] main lever of political pressure to be $5 per gallon gasoline (up from $4 prior to the pandemic),” Treyz explained in a March 30 analysis. “This points to weeks if not months of continued war in Iran.”

However American consumers react, Trump can’t be happy about the surge in gasoline prices, and numerous press reports suggest he’s looking for a way to end the war and lower energy prices. The question is whether he can. Iran’s war strategy is to force energy prices higher and test how much discomfort the American president and his constituents can tolerate. It might be working.

That’s because President Trump, since launching the war with Iran on February 28, has repeatedly sent the message that the conflict will be short, and reopening the strait a snap. Trump himself created the expectation that disruptions will be temporary and relatively small, with everything back to normal before long.

In reality, Trump unleashed a maelstrom that challenges even the world’s most powerful military. Yet US forces are working the problem, and making progress toward reopening the strait. If Trump had set a two- or three-month timeframe for getting the oil flowing again, it might have calmed jittery markets and given everybody a realistic sense of what to expect.

The Strait of Hormuz, which is normally a passageway for 20% of global oil supplies, is just 21 miles wide at its narrowest point. The shipping lanes able to handle huge oil tankers are narrower still. Iran has numerous weapons able to damage or sink ships, including missiles, drones, rockets, attack boats and waterborne mines. It has already struck more than a dozen ships in and around the gulf, and threatened more attacks, effectively stopping most oil shipment out of the region. Oil prices have jumped 40% since the war began.

Navy warships have many defenses against the type of threats Iran poses, but they’re not an impenetrable shield. And it would only take one lucky shot by Iran to hit a tanker and possibly cause more turmoil in energy markets are already under stress.

Read more

Before President Trump started the Iran war on February 28, markets were trying to navigate the artificial-intelligence boom and determine whether it was a bubble about to burst. Trump’s hot and cold trade wars posed another obstacle for investors.

The Iran war will end at some point, so I chatted recently with Sam Ro, founder of the TKer newsletter, about where markets are likely to be headed if—well, let’s be optimistic and say when—things get back to normal.

The full video is near the bottom, with a few snippets below. Takeaways:

Don’t try to trade the war. “What’s particularly unusual and fraught in this current situation is there’s no predicting what the president or the people around him are going to say,” Sam says. “We’ve seen this in recent days and recent weeks, where in the morning, it sounds like this is going to be a prolonged conflict. And then in the afternoon, they try to say it’s over.”

Don’t try to trade the war! 👇

Don’t sell America! “Two areas where the U.S. dominates the world is profit margins and earnings growth,” Sam reminds us. “Earnings have been growing faster in the US than most of the world for years. And that explains why these companies have been outperforming.”

Don’t give up on US stocks. 👇

Big US firms are remarkably adaptive. The “Magnificent 7” US companies—Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla—are not monolithic, plying one trade forever. They’re remarkably adaptive, continually updating their business models. “There’s a pretty good chance, in five or 10 years, data centers won’t be the big market story, but Alphabet is still number one because they are in a completely different industry that we’re not thinking about right now,” Sam says.

The bottom might be in. 👇

“Sell America” can be misleading. “The S&P 500 gets somewhere between 30 and 40% of their revenue outside of the US, which is a lot,” Sam says. So if you own an S&P index fund, you’re already geographically diversified.

Full interview with Sam Ro. 👇

Market pressures could help end the war. “The way I think of it is, eventually there are greater forces than the people who are sort of making the decisions on whether or not to escalate or de-escalate the war or any conflict. If it does become the case that oil supply becomes severely constrained, then maybe more parties get involved to de-escalate this thing.”

And the future might look pretty good. “There’s a decent chance that the bottom in the stock market might already be in.”

All of these possibilities and many others seem to be in play as President Donald Trump’s manic war strategy careens from one extreme to another. Investors are desperately trying to trade the Iran war Trump started on February 28, buying when Trump suggests the war might end soon, and selling when hostilities worsen. But these gigantic all-or-nothing trades, all pegged to one megalomaniac’s impulses, have plunged financial markets into a state of temporary insanity.

The latest Trump-driven gyration is a March 23 plunge in oil prices and surge in stock values, based on one de-escalatory social-media post. But that was nothing more than Trump backing down from his own escalatory threat of two days earlier.

[See 7 ways Iran can stop oil shipments]

Let’s examine the timing. On Saturday, March 21 at 7:44 pm, Trump said on social media that the United States would “obliterate” Iran’s power plants if it didn’t allow all ships safe passage through the Strait of Hormuz within 48 hours. So his deadline would have been 7:44 pm on Monday, March 23.

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It’s going on three weeks since President Trump said, “If necessary, the United States Navy will begin escorting tankers through the Strait of Hormuz, as soon as possible.”

It seems necessary! Oil prices have jumped 60% since mid-February and are now firmly above $100 per barrel. US gasoline prices are quickly heading toward $4 per gallon. Stocks are sinking, as traders lose hope the war will end quickly. The pain is even worse in Europe and Asia.

The unhappy reality is that Iran, for all the damage it is sustaining, is fighting back—mainly by blocking cargo shipments through the Strait of Hormuz and snarling the markets for energy and other commodities. The wounded Iranian regime remains in charge, with Trump’s early call for a popular uprising among Iranian citizens looking especially naïve.

This standoff has surprised many investors, who expected a quick end to the war after the US-Israeli bombing campaign began on February 28. But strategists who study the Middle East expected exactly this type of painful impasse in the event of an American war with Iran. And it’s time for everybody else to take a crash course in how Iran can gum up energy markets, perhaps indefinitely.

Read more

The Pentagon keeps listing all the Iranian targets it has destroyed, and President Trump has said there’s very little left to bomb in Iran. Yet the Strait of Hormuz remains effectively closed to oil tankers, which Iran has threatened to attack. That has shut the passageway for 20% of the world’s petroleum and caused jarring price hikes that are now hitting consumers everywhere in the world.

There’s this quaint idea that the US Navy can just battle its way through whatever is left of Iran’s shore defenses and keep tankers safe. The reality is that huge warships, no matter how heavily armed, are uncomfortably vulnerable to a lucky shot, even from a battered enemy like Iran.

“This is the reason the US Navy is pretty hesitant to get in there,” Michael Knights of the Washington Institute for Near East Policy said in a recent Columbia Energy Exchange podcast. “It’s very clear that President Trump seems to have been made to understand, by the Navy, I’m sure, that he stands a high chance of seeing a US warship on fire if he moves one into the Strait of Hormuz. And shippers are not going to go back in until they see the US Navy doing repeated freedom of navigation cruises through the strait.”

[Four ways Trump’s war is costing you]

Read more

Yet stocks markets are down only slightly and there are no signs of the turmoil that rocked the US economy during the Arab oil embargo that began in 1973. That oil shock sent prices soaring not by 30%, but by 300%, and led to outright shortages that caused fuel rationing and long lines at gas stations. That huge spike in oil prices was the main cause of inflation that surged above 12% in 1974, along with a 16-month recession.

The Iranian revolution in 1979 brought another oil shock, as nearly 5 million barrels of daily Iranian production disappeared from the market. That sent inflation to nearly 15% in 1980, triggering another recession. Stocks foundered for nearly a decade, with the S&P 500 index in losing territory all the way from late 1973 until the middle of 1980.

If you’re worried about another prolonged wipeout happening in 2026, relax. The surge in oil prices is stressing markets, but the economy is far less vulnerable to a Middle East energy shock, or to any energy shock, than it was in the past. Part of the reason is the explosion in US energy production during the last 15 years, mostly due to the shale fracking revolution.

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• The Pentagon has war-gamed the closing of the Strait of Hormuz as part of an Iran war scenario for decades. Yet it clearly caught Trump by surprise. That’s shaping up as Trump’s biggest failure in two presidential terms.

• Trump is running the war shoddily, with shifting war aims and poor messaging to the American public. He did nothing to prepare Americans for a spike in energy prices.

• But there are still ways the war might succeed.

• The oil price tells you how long markets expect the war to last. Higher = longer; lower = shorter.

• Why America’s “energy independence” can’t protect against rising oil prices.

Less than 15 minutes. Have a look!

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There’s a better way to look at it: Market reaction to the biggest Middle East war in more than 20 years is extremely restrained, with investors likely confident it will cause no lasting damage to corporate profits or the world economy.

Oil prices tell the story. Brent crude, the global benchmark, has jumped from $71 per barrel to $79 in the aftermath of the US attack. That’s an 11% increase practically overnight, which is why you see headlines such as “Oil prices surge….”

But this is a tame scenario compared with what many traders expected in a shooting war with Iran, which is oil prices well above $100 per barrel. The current elevated prices are actually well within the normal range of the last four years.

Higher oil prices are a negative for stocks, since they mean higher energy costs for companies. Yet the stock selloff on the first trading day after the war started turned into a slight gain. That suggests investors think higher oil prices will be very short-lived.

Simply put, $80 oil is no big deal. Crude went higher than current levels at the beginning of 2025, not because of any crisis, but simply because supplies were tight. Oil prices were also above current levels for much of 2023 and 2024. And they spiked to $133 per barrel in 2022, after Russia’s invasion of Ukraine.

In the worst wartime scenario, Iran would mine the Strait of Hormuz at the mouth of the Persian Gulf, where much of the oil from Kuwait, Saudi Arabia and other petrostates must pass to enter global markets. Iran was also expected to attack other nations’ energy infrastructure in the event of a war, possibly knocking out supply at the source.

Now that the war is here, this is what actually happened: A lot of tanker traffic through the Strait of Hormuz is stalled, but not because of mines. Insurers have been instructing ships not to pass until the situation is safer, else they forfeit their coverage. So a lot of oil on the water is temporarily stuck in place.

Iran has attacked some regional oil infrastructure, including a huge refinery in Saudi Arabia. But energy infrastructure is pretty robust, and the Saudis said the damage was “limited.”

“Once the Strait of Hormuz starts fully flowing with tankers again, and it will, the geopolitical premium will quickly reverse,” economist Peter Boockvar wrote in a March 2 analysis. “The strait has not been shut, it’s just been voluntarily stunted with shipments because of the lack of insurance and obvious safety concerns.”

Other non-happenings are also important. One reason Iran probably hasn’t tried to block the Strait of Hormuz is that it would lock in its own oil exports, throttling a crucial source of cash for what remains of the theocratic regime. Blocking the strait would also irritate China, which buys most of Iran’s exported oil and is a key patron Iran can’t afford to ignore.

Nor has the United States attacked Iranian oil infrastructure. It would be counterproductive to do so. Though most of Iran’s oil exports go to China, it still provides around 4% of the world’s oil supply, and if that oil disappeared, China would have to get oil from somewhere else. The lost supply would put much stronger upward pressure on oil prices than we’ve seen so far.

US and Israeli attacks are rapidly dissipating Iran’s military power and its ability to disrupt oil flows. Wars are unpredictable and there’s always a risk of catastrophe. But there’s a good chance oil prices won’t go much higher than they already are, and will return to pre-war levels.

With crude around $80, US gasoline prices should jump by about 25 cents, which would put them at around $3.25 on average. President Trump cites low gas prices as one of his main achievements, and he’ll want to get those back to $3 or lower. More than anybody, Trump controls what happens next in this war, and his passion for cheap energy may be the ultimate green flag for markets.

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