Trump’s Blockade Is a Crisis for Iran The economic damage is immediate and threatens the regime if it lasts.

By the WSJ Editorial Board, talking its book…

Iran’s regime has tried to make this war all about economics, and now it is getting its wish. Since Monday the U.S. Navy has quarantined Iranian ports, blocking ships from entering or exiting the Strait of Hormuz for the purpose of commerce with Iran. The economic damage to the regime is immediate, and the pain will grow the longer the blockade is sustained.

The best estimates we have are from the Foundation for Defense of Democracies’ Miad Maleki, who led the U.S. Treasury’s sanctions campaign against Iran until last year. He writes that the blockade is expected to wipe out $435 million in Iranian economic activity a day and force oil-field shut-ins within two weeks. (…)

Economic modeling by Mr. Maleki’s FDD colleagues, Elaine Dezenski and Daniel Swift, finds that the war’s current economic damage to Iran already exceeds 40% of its prewar GDP. This relies on an International Monetary Fund estimate of a 6.1% Iranian economic contraction in 2026, which they call conservative.

Mr. Maleki calculates that, without exports, surplus production would fill Iran’s oil storage capacity in about 13 days. Then Iran would have to shut-in wells, which can cause severe damage and cost it billions of dollars in annual revenue.

His conclusion? “Iran’s economic structure, heavily dependent on the Persian Gulf transit routes and energy exports, makes continued resistance economically impossible under the U.S. naval blockade.” That is, if it lasts. Iran’s regime could think President Trump won’t sustain the blockade beyond a week or two. He may have to prove it wrong with patience.

Iran’s entire economy will feel the collapse of oil exports. This includes the Revolutionary Guard, which siphons about half the revenue. Other export routes appear unable to compensate for the loss. How will Iran’s banks hold up?

The loss of imports is expected to deepen supply shortages and exacerbate Iran’s inflation, which exceeded 50% before the war. Food inflation had reached triple digits. The currency, which has lost more than 97% of its value since 2018, would also likely suffer without the foreign exchange coming in. Iran’s regime knows all this is a threat to its survival.

The regime has tried to protect itself from its own people by cutting off the internet, crushing the digital economy with it. The destruction of Iran’s productive capacity, especially in steel and petrochemicals and industries that rely on them, also portends layoffs and a spike in inflation, even without the blockade.

Oh, and the regime’s latest budget calls for tax increases. This is not a pretty picture. The shame is that this pressure didn’t begin weeks ago.

Via The Guardian:

The US military appears to be seeking to establish secure passage for non-Iranian ships in order to restart the flow of oil through the strait – and White House officials have briefed some US media that more than 20 vessels not linked to Iran have transited through the waterway since the blockade began.

But experts and analysts who track shipping movements have questioned the accuracy of those claims.

Maritime data company Kpler said “traffic through the Strait of Hormuz remains well below typical levels” and noted just six vessels crossed through the strait on Monday, when the blockade began.

Salvatore Mercogliano, a maritime historian and an associate professor at Campbell University in North Carolina, said “the Trump Administration talks a lot about ships coming through the Strait but there is no indication yet.”

Kpler has said confidence among shipowners remains weak, with uncertainty weighing on “transit decisions.”

For now, the operating environment remains high risk, limiting any meaningful recovery in flows.”

Experts have said that despite the presence of the US navy, many shipping companies will be wary of entering or leaving the strait out of fear of attacks from Iran. German shipping giant Hapag-Lloyd has said it will not resume transiting the strait for now as the situation remains tense.

From Windward:

Maritime activity in the Strait of Hormuz has entered its first full day under active U.S. enforcement, with vessel behavior indicating a fragmented and uneven response to the blockade.

Initial movements show a combination of continued transit, route deviation, and potential evasion. Sanctioned and falsely flagged vessels remain active, with some proceeding through the Strait while others delay, reverse course, or adjust routing patterns.

At the same time, Iranian oil flows continue through indirect distribution networks, with significant volumes accumulating offshore rather than transiting directly through Hormuz.

The operating environment is shifting from uncertainty to active enforcement dynamics, where compliance, evasion, and selective movement are occurring simultaneously.

Yesterday, Trump et al were talking and talking and talking:

In an interview with Fox News, which is scheduled to air later this morning, the US president said the Iran war was “close to over, yeah, I mean I view it as very close to over”. In a short preview of the interview posted on social media last night, Trump said: “If I pulled up stakes right now, it would take them [Iran] 20 years to rebuild that country. And we’re not finished.

“We’ll see what happens. I think they want to make a deal very badly.”

The clip came hours after he told the New York Post that another round of peace talks “could be happening over the next two days” in Pakistan.

Trump has previously suggested that the war was ending. In his address to the nation on 1 April, Trump said the war was “nearing completion” and could end in “two or three weeks”.

Also:

JD Vance has said Iran will “thrive” if it commits to not having a nuclear weapon. Speaking at a Turning Point USA event in Georgia, the US vice-president said Donald Trump “doesn’t want to make, like, a small deal. He wants to make the grand bargain.”

We’re going to make it economically prosperous, and we’re going to invite the Iranian people into the world economy in a way they haven’t been in my entire life.”

On the same day:

Trump told ABC News that, while an official peace agreement may not be necessary, “I think a deal is preferable because then they can rebuild.”

“They really do have a different regime now. No matter what, we took out the radicals,” he said.

Sounds like they’re preparing something…

Meanwhile:

The US is reportedly sending thousands of additional soldiers to the Middle East in an attempt to pressure Iran into a deal to end the war, according to the Washington Post.

Citing US officials, the newspaper reported that about 6,000 troops aboard the aircraft carrier USS George HW Bush and several other warships could move into the region, while 4,200 others could join them towards the end of the month. The move would coincide with the two-week ceasefire ending on 22 April.

And:

The Iranian president, Masoud Pezeshkian, said his country is not seeking war but dialogue, as he warned any attempt by the US to impose its will or force Tehran to surrender “is doomed to failure”.

In comments carried by the official Islamic Republic News Agency (IRNA), he said:

Iran is not seeking war or instability and has always emphasised dialogue and constructive engagement with various countries. However, any attempt to impose one’s will or force the country to surrender is doomed to failure, and the Iranian nation will never accept such an approach.

IMF Warns of Deep Global Downturn if War Is Prolonged International lender sees modest downgrade if war ends soon, but much weaker growth and higher inflation in worse scenarios

(…) Already, the war has been more disruptive to global energy markets than the 1973 oil crisis, the IMF’s chief economist, Pierre-Olivier Gourinchas, said in an interview. He warned that if the disruptions persist beyond this year, even after the U.S. and Iran reached a tenuous cease-fire last week, world economic growth could fall to about 2% in 2026, a sluggish rate seen only during the deepest recent downturns. (…)

In the reference scenario, the conflict resolves promptly yet still places a drag on the global economy. In that outcome, oil would average about $80 a barrel this year, and global output might grow 3.1% on a year-over-year basis, the IMF projected. That is down from the 3.4% growth recorded last year, and lower than the 3.3% the IMF projected in January.

In their adverse scenario, which assumes that the war persists but ends later this year, oil prices spend much of the year around $100 a barrel, global growth might fall farther yet, to around 2.6%. Global inflation would rise to 5.4%.

And in a severe scenario, in which the war continues into next year and keeps oil prices high, the global economy could slide into an even deeper downturn, the IMF projected. (…)

The pain from an extended war would fall unevenly across the globe. Based on the disruptions felt to date, the IMF lowered projected 2026 growth in the Middle East by 2 percentage points, to 1.9%. It also dropped projected growth in Europe by 0.2 percentage point, to 1.1%, and by 0.1 percentage point in China, to 4.4%.

Emerging-market economies that rely on fuel imports could face some of the biggest challenges, the IMF said.

The U.S., buoyed by its large energy industry and its dominant role in the artificial intelligence build-out, will likely fare better, in the IMF’s view. It cut American growth in the reference scenario by just a 10th of a percentage point, to 2.3%, compared with the January outlook. But if the war goes on, central banks such as the Federal Reserve could quickly face a no-win trade off between keeping inflation in check and cushioning a fragile economy, Gourinchas said. (…)

The longer the war continues, the more likely it will contribute to global food shortages, political instability and pain in financial markets, IMF forecasters wrote. (…)

• Treasury secretary Scott Bessent told Semafor Monday that the Federal Reserve should “wait and see” before undertaking further rate cuts.  That compares to a January speech in Minneapolis in which Bessent deemed monetary easing “the only ingredient missing for even stronger economic growth, which is why the Fed should not delay.” (ADG)
• South Korea has secured supplies of more than 270m barrels of crude oil via routes unaffected by the US blockade of the strait of Hormuz, a senior official has said. “I hereby report to the nation that visits to four countries have secured the import of 273m barrels of crude oil by the end of this year,” Kang Hoon-sik, chief of staff to the president, said. The amount is sufficient for more than three months of South Korea’s oil needs, Kang said after he returned from a trip to Kazakhstan, Oman, Saudi Arabia and Qatar.

BTW:

The producer price index (PPI) rose 0.5% in March, well below expectations. Energy prices (+8.5%) increased sharply in March as a result of higher oil prices from the Iran war, but food prices declined (-0.3%) after a sharp increase in February. The core PPI and PPI excluding food, energy, and trade services increased by 0.1% and 0.2%, respectively, both below expectations. The February growth rates for the PPI (-0.2pp to +0.5%) and core PPI (-0.2pp to +0.3%) were both revised down. Retailer and wholesaler margins declined by 0.3% and 0.2%, respectively. The ‘old methodology’ core PPI—finished goods excluding food and energy—increased by 0.2%. Core intermediate producer prices increased by 0.7%, and the prices of crude materials less food and energy increased by 0.2%.

While the topline PPI numbers were softer than expected, the PPI components relevant for PCE were stronger than our previous assumptions. Using CPI, PPI, and interim PPI data (which we seasonally adjust), we estimate a 0.33% month-over-month increase in the PCE medical care services category for the month of March.

Based on the details in the PPI and CPI reports, we estimate that the core PCE price index rose 0.27% in March (vs. our expectation of 0.22% prior to today’s PPI report), corresponding to a year-over-year rate of +3.15%. Additionally, we expect that the headline PCE price index increased 0.64% in March, or increased 3.45% from a year earlier. We estimate that market-based core PCE rose 0.25% in March. (Goldman Sachs)

Source: Goldman Sachs Global Investment Research, Department of Labor

More PPI charts from WolfStreet:

 

Surcharges Are Suddenly Everywhere—And Grumpy Americans Are Paying Up

(…) New fees or surcharges are popping up everywhere as companies search for ways to recoup their own rising costs while blaming outside pressures.

In recent weeks, package-delivery companies and airlines have announced new or higher fees, citing increasing fuel prices. Economists expect more to follow unless oil prices rapidly fall. (…)

“Consumers tend to pay less attention to surcharges than to base prices,” said Vicki Morwitz, a marketing professor at Columbia University. (…)

Companies sometimes prefer surcharges to straight price increases because they shift blame to an external force. When airlines or shipping companies label a fee a “fuel surcharge” they are pointing at a circumstance outside of their control rather than appearing to pad their margins, said Rebecca Hamilton, a marketing professor at Georgetown University. (…)

In that way, the current wave of fuel surcharges might be easier to swallow because consumers know where the increases are coming from. (…)

• Delta Air Lines CEO Ed Bastian on an earnings call recently: “Lower fuel costs would certainly help us boost our margins this year and clearly into next year as well.”

While economists focus on core inflation data, Americans are dealing with total inflation hits:

Late Payments Rising for Buy Now, Pay Later, Survey Says

Nearly half of Buy Now, Pay Later users say they’ve paid late on at least one of their installment loans in the past year, according to a survey released on Monday. (…)

Not only have 47% of borrowers paid late on a Buy Now, Pay Later loan within the last year — up six percentage points from 2025 and 13 percentage points from two years ago — but 54% also said that they wouldn’t be able to make ends meet without the loans.

Amid rising affordability concerns and expectations for further-inflated prices this year, US consumers are also increasingly using the installment loans for essentials: 29% said they’ve used the loans for groceries, up from 25% a year ago and 14% two years ago. It’s also more common for borrowers to hold multiple loans at a time, according to the survey, up slightly at 24% from 23% last year.

“This is just further proof of how many Americans are struggling with high prices today and looking for ways to make ends meet,” said Matt Schulz, chief consumer finance analyst at LendingTree. “They’re increasingly paying late, taking out multiple loans at a time and using these BNPL loans for essentials like groceries. None of that is a sign of a confident, thriving consumer.” (…)

John Authers adds:

Beyond the US, usage rose by more than 30% last month, while Klarna’s app download climbed by more than 48% year-on-year. But the challenge is to turn this popularity into profit without being dragged down by increasingly fragile consumers. Businesses are slowly tweaking their business models to stay competitive, as Jason Mikula points out in this Substack. Perhaps they’re coming to realize that their services may fulfill a need for people, but there may simply not be enough margin to go around.

‘Power in the hands of people’: union leaders push to revive ailing US labor movement

Leaders of some of the largest unions in the US have unveiled a drive to jumpstart the country’s ailing labor movement and combat growing wealth inequality under Donald Trump.

To make it easier for workers to join a union, and strengthen the hand of new unions negotiating with powerful businesses, a string of prominent organizers joined together to launch Union Now, a non-profit designed to increase labor union density. (…)

Union density in the US was more than 30% in the 1950s, but declined precipitously over the ensuing decades. It stood at just 10% in 2025, despite opinion polls indicating vast public approval and support for labor unions.

The number of union members in the US peaked in 1979 at 21 million members, compared with 14.7 million today. Over the same period, the US population has grown by more than 100 million. (…)

FYI:

The Canadian travel boycott of the U.S. shows no signs of letting up, with visitation from the country down 35% since President Donald Trump returned to office, data released Monday from Statistics Canada show. The boycott has dealt a massive blow to the U.S. economy:

• 35% The decline in Canadians taking road trips into the U.S. compared to March 2024
• 5% The increase in Canadian visitation overseas year-over-year, a sign Canadians are swapping the U.S. for other international destinations (Forbes)

EU Agrees to Double Steel Tariffs

The European Union approved a plan to double tariffs on steel imports above a certain quota in a bid to shield the bloc’s struggling sector from a glut of foreign imports.

The European parliament struck a deal late Monday to cut the amount of tariff-free steel imports by almost half to 18.3 million metric tons a year and raise tariffs on imports above that quota to 50%.

“The shape and global standing of Europe’s steel sector are fundamental to our strategic autonomy and industrial strength,” Maros Sefcovic, the EU’s top trade negotiator, said. “We therefore cannot afford to turn a blind eye to global overcapacity reaching critical levels.” The deal brings much-needed stability for European steel producers, he added. (…)

Global excess capacity increased to 640 million tons in 2025, according to research by the Organization for Economic Cooperation and Development. (…)

Governments worldwide are increasingly turning to tariffs to protect their domestic industries. The U.S. imposed a 50% tariff on almost all imports and products made with steel last year, though it is now adjusting that tariff system.

Grand Bargain?

David and I see this possible scenario:

• On the critical civilian nuclear issue, the US and Iran find a way to close the gap between 20 years (US) and 5 years (Iran) and agree on other stuff nuclear-related. Sounds easier said than done but this is the main issue and both sides know it must be agreed upon before anything else. The nuclear issue is solvable in the sense that questions of levels of enrichment, sunset clauses and what to do with the existing stash of highly enriched uranium can and have been successfully negotiated before. Otherwise, an indefinite war, potentially expanding, and a world recession. Everybody loses with the US and Trump bigger losers, tagged as responsible for the mess. China is surely intervening to avoid the worst.
• The US declares that Hormuz is not its problem. Iran and the GCCs find a mutually acceptable modus operandi including a toll system that can be used to pay for reparations. Iran demonstrated the leverage potential such strategically significant straits carry and the world will need to find ways and means to deal with such potential threats around the world.
• Israel, isolated, concentrates on Lebanon with its own challenges. Maybe this will help diffuse this other developing problem:

Turkish Foreign Minister Hakan Fidan fired a direct warning at Athens and Nicosia on Monday [last week], saying their military cooperation with Israel “does not bring more trust, it brings more mistrust. It brings more problems and war.” He made the remarks in an interview with the state-run Anadolu Agency.

Greece and Cyprus have deepened defense ties with Israel in recent years, including joint military exercises and basing agreements, moves Turkey has consistently opposed.

Fidan claimed Greece is pursuing “extremely dangerous policies” that no other European country follows on its own, and questioned the strategic logic behind Athens seeking military ties with Israel given that Greece is already a NATO member. He said neither Greece nor what he called the “Greek Cypriot Administration” have any need for Israeli military cooperation, adding that neither side could justify the arrangement to him.

The Turkish minister also warned that Israel may attempt to frame Turkey as its next adversary after Iran, saying Israel “cannot survive without an enemy.” He described Israeli operations in Lebanon as similar to Gaza and called Israeli strikes in Syria a “serious threat” to Turkey.

• Other, more secondary, issues are compromised by all parties (guarantee of nonaggression, sanctions, etc.)

Not completely unrelated:

Donald Trump said he had given the UK “a good trade deal, better than I had to, which can always be changed.”

The Art of The Deal…

BTW:

The Defense Department’s Drone Dominance push is designed to arm American troops with expendable drones on a massive scale in a few short years.

A Pentagon competition to build out a killer drone fleet ended with a small British company crushing American contractors on their own turf

Skycutter — the British company with frontline Ukraine experience — entered the Shrike 10-F, a 10-inch drone that can be operated via fiber optic cable to counter electronic jamming and spoofing.

• The drone is the result of collaboration with SkyFall, a Ukrainian outfit.
• “They make one every 23 seconds, 123,000 units per month,” Vincent Gardner, Skycutter’s operations director, told Axios. “We redesigned it with them to exclude any Chinese parts or components.”

Skycutter scored an overall 99.3 at an attack drone fly-off at Fort Benning in Georgia. In second was Neros, a Southern California startup, at 87.5. (Axios)

U.S. Is Negotiating an Iran Deal That Would Buy Time, Again

(…) the United States proposed a 20-year “suspension” of all nuclear activity. That would allow the Iranians to claim they had not permanently given up their right, under the Nuclear Nonproliferation Treaty, to produce their own nuclear fuel.

In response, Iran renewed a proposal that it suspend nuclear activity for up to five years, according to two senior Iranian officials and one U.S. official. The Iranians had made a very similar proposal in February during a failed set of negotiations in Geneva that convinced President Trump it was time to go to war. Days later, he ordered the attack on Iran. (…)

So the revelation that the two sides are now arguing over the time period for suspending nuclear activity suggests that there may well be room for a deal, and there were indications on Monday that negotiators may meet again in the coming days. White House officials said no meetings had been finalized, but another round of in-person negotiations was being discussed.

But for Mr. Trump and his aides there is also the risk that any agreement that emerges may resemble the 2015 nuclear accord, which the president exited three years later and called a “horrible, one-sided deal that should have never, ever been made.”

At the core of Mr. Trump’s complaint about the Obama accord, formally called the Joint Comprehensive Plan of Action, was that it contained “sunsets.” And it did: The Iranians were allowed gradually more enrichment activity until 2030, when all restrictions would evaporate. (Iran’s commitments under the nonproliferation treaty would still ban it from building a bomb.)

But the Obama deal did not involve a full suspension of nuclear activity, which would buy at least a few years of zero nuclear activity — past Mr. Trump’s term in office.

“If they could get Iran to suspend for even a few years, that is superior to what we got in the J.C.P.O.A.,” said Rob Malley, who was on the negotiating team in 2015 for the Obama administration and then led an ultimately fruitless effort during President Joseph R. Biden Jr.’s administration to restore some kind of agreement.

In fact, the history of America’s interactions with Iran is littered with efforts to buy more time. Sometimes that has come by sabotaging the program, as the United States and Israel did by using cyberweapons to make nuclear centrifuges self-destruct. Sometimes it involved sanctions, and at other times diplomatic agreements. (…)

Like the Obama administration, the Trump White House is trying to preserve the secrecy of the negotiating room, so that it has maximum room to cut a deal. And like the Obama administration, it is discovering that both sides engage in strategic leaking. (…)

Mr. Vance said Iran showed some flexibility but “didn’t move far enough.” (…)

Another sticking point centers on the U.S. demand that Iran remove 970 pounds of near-bomb-grade uranium from the country, to ensure it could never be diverted to a bomb project. (…)

The Iranians have insisted the fuel must stay inside Iran. But they have offered, as they did in Geneva, to dilute it significantly so that it could not be used to produce a nuclear weapon.

That, too, would extend the timeline to a bomb. The risk, of course, is that the Iranians would still have possession of the fuel and in the future might be able to re-enrich it to its current state of about 60 percent purity, just below the 90 percent needed to make a weapon. (…)

Axios:

• “There is continued engagement between the U.S. and Iran and forward motion on trying to get to an agreement,” a U.S. official said.
• Trump told reporters at the White House on Monday afternoon that the White House has “been called this morning by the right people in Iran… and they want to make a deal.”
• While no agreement has been reached, the Iranians thought they were close to an initial agreement by Sunday morning and were caught off guard by Vice President Vance’s press conference. The VP gave no indication a deal was close, blamed the Iranians, and announced the U.S. delegation was leaving Islamabad.
• “The Iranians were pissed off about that press conference,” a source with knowledge said.
• [Turkish Foreign Minister Haqan] Fidan told Anadolu news agency that “initial positions are always somewhat maximalist. Later, the parties try to find common ground with the support of mediators. As long as they have the intention to reach, maintain, and permanently achieve a ceasefire. What I see is that both sides are sincere about the ceasefire.”
• Fidan said he thinks the Iranians will evaluate the U.S. proposal and give their response in the coming days. He said an extension of 45-60 days of ceasefire could be considered to allow negotiations to continue.

“They want to make a deal”.

• March 13: “Iran wants to make a deal, and I don’t want to make it because the terms aren’t good enough yet.”
• March 14: Trump posts that Iran “is totally defeated and wants a deal, but not a deal that I would accept.”
• March 22: In coverage of his decision to delay strikes on Iranian energy infrastructure, Trump is quoted saying Iran “wants a deal” or “wants to make a deal badly.”
• March 23: Trump announced a 5-day pause on planned strikes against Iranian energy infrastructure, claiming Tehran had initiated contact to “seek a deal”.
• March 24: Associated Press reports that Trump said U.S. envoys had been talking to a “respected” Iranian leader and that Iran wants “to make a deal.”
• March 25: A social post quoting Trump says he is confident Iran “wants to make a deal” because they’ve been “beat to s–t.”
• March 28: He signaled that negotiations were underway, asserting that Iran was “being decimated” and was actively seeking an agreement.
• April 1: Trump claimed that Iran’s president “wants a ceasefire,”
• April 13: Trump told reporters at the White House that “the other side” had called him that morning and “would like to make a deal very badly”.

Iranian officials, including Parliament Speaker Mohammad Bagher Ghalibaf, have repeatedly denied that such direct negotiations or calls have taken place.

Saudi Arabia Is Pressing U.S. to Drop Its Hormuz Blockade

Saudi Arabia is pressing the U.S. to drop its blockade of the Strait of Hormuz and return to the negotiating table, fearing President Trump’s move to close it off could lead Iran to escalate and disrupt other important shipping routes, Arab officials said.

The blockade is aimed at raising the pressure on Iran’s already crippled economy. But the officials said Saudi Arabia has warned Iran might retaliate by closing the Bab al-Mandeb—a Red Sea chokepoint crucial for the kingdom’s remaining oil exports. (…)

Iran’s Houthi allies in Yemen control a long stretch of coastline near the Bab al-Mandeb and severely disrupted the waterway for much of the war in the Gaza Strip. Iran is putting pressure on the group to close the chokepoint again, Arab officials said. (…)

Iran’s semiofficial Tasnim news agency, which is close to the Islamic Revolutionary Guard Corps, the Iranian paramilitary group that now controls the Strait of Hormuz, said a blockade could lead the country to close the Red Sea gateway. (…)

Yemen’s Iranian-allied Houthi rebels have proved their ability to severely disrupt shipping through the gateway with attacks on vessels in the waterway. While those missile, drone and small-arms attacks tailed off after the October cease-fire in Gaza, traffic still isn’t fully back to normal.

The Houthis have largely stayed out of the current conflict between the U.S. and Iran after being pounded during a 53-day American campaign that ended in a cease-fire a year ago. But they remain an important part of Iran’s wider network of militia groups in the region and a deterrent held in reserve in case Iran needs to raise the pressure on the U.S.

The Houthis have said that closing Bab al-Mandeb is also one of their options. (…)

Ali Akbar Velayati, a foreign-policy adviser to Iran’s supreme leader, said April 5 on social media that Iran looks at Bab al-Mandeb “just as it looks at Hormuz. And if the White House thinks of repeating its stupid mistakes, it will quickly realize that the flow of global energy and trade can be disrupted with a single signal.”

Saudi energy officials told The Wall Street Journal the kingdom had secured commitments from the Houthis that the group wouldn’t attack the kingdom or its ships passing through Bab al-Mandeb.

But the kingdom has told the U.S. the situation remains fluid, and the Houthis could enter the conflict more aggressively if pushed further by Iran, Arab officials said. Houthis could also start imposing fees on ships to transit, they said. (…)

Xi Says World Order ‘Crumbling Into Disarray’ as War Takes Toll

Chinese President Xi Jinping lamented a world in “disarray,” using some of his strongest language yet to describe a collapse of the Western-led international order as he vowed to play a constructive role in the Middle East.

“The international order is crumbling into disarray,” Xi told Spanish Prime Minister Pedro Sánchez on Tuesday in Beijing, using a Chinese phrase indicating not only chaos but also moral decay.

The comments, part of Xi’s first public statements on the Iran war since the conflict began more than a month ago, followed a flurry of visits by world leaders to Beijing and fresh economic data on Tuesday showing the war took a sharp toll on Chinese exports in March. Xi has framed his country as a stabilizing force in a world thrown into turmoil by Donald Trump’s erratic approach to trade and foreign policy. (…)

China has criticized the military action against Iran and warned it risks plunging the Middle East into deeper instability. Foreign Minister Wang Yi has urged the international community to step up efforts to promote peace talks between Iran and the US, warning that the current truce remains fragile and must be preserved. (…)

China’s Foreign Ministry on Tuesday called the blockade “dangerous and irresponsible” and vowed to take countermeasures if the US raises tariffs on Chinese exports over the Iran conflict. (…)

Ahead of the meeting, Sánchez urged China to leverage its global influence to help bring the conflicts in Iran and Ukraine to an end.

“Both China and Spain are nations of principle and integrity,” Xi said, adding that the two sides should “enhance communication, consolidate mutual trust, and cooperate closely to resist any regression toward the law of the jungle.” (…)

In his [earlier] meeting with Abu Dhabi’s crown prince, Xi put forward a four-point proposal for maintaining peace in the Middle East, including upholding the principles of peaceful coexistence, sovereignty, rule of international law and the pursuit of development and security, according to the readout. (…)

• “We can’t let a country blackmail or extort the world,” Trump said, warning Iran against charging fees for vessels to transit the strait.

Trends driving real-time inflation in April 2026

The US inflation today, April 13, is 1.84%, up from 1.26% at the beginning of the month.

Multiple categories experienced a re-acceleration in inflation:

• Gasoline and fuel costs
• Clothing
• Recreation (event tickets, subscriptions, and services)
• Household goods
• Other lodgings (short stays)
• Education
• and Communication

The main groups that have been showing disinflationary trends (lowering inflation) in the past weeks:

• Natural Gas
• Vehicle purchases
• Food

• Microsoft Raises Surface Prices Sharply in Face of Memory Crunch

Microsoft Corp. raised prices sharply across its Surface-branded device lineup, becoming the latest personal computer maker to pass along costs fueled by a historic memory chip shortage.

The 12-inch Surface Pro, touted as an affordable, lightweight computer-tablet hybrid when it debuted last year for $800, now starts at $1,050. Older products have also undergone hikes: At $1,500, the 13-inch Surface Pro 11th Edition is several hundred dollars more expensive than its $1,000 launch price in 2024. The latest-generation 13.8-inch Surface Laptop has gone up by as much as $500. (…)

An industrywide memory chip crunch — fueled in part by the AI computing build-out — has led PC manufacturers such as Dell Technologies Inc., Lenovo Group Ltd. and HP Inc. to raise the cost of their machines and limit how extensively they can be configured. (…)

At Apple Inc., the latest MacBook Air and MacBook Pro also cost more than past models. But the company bumped up the included storage to help offset a higher cost of entry. (…)

• Higher energy prices might eat your tax refund, economists say

The Stanford economists modeled the hit the average U.S. household will face if the most recent Goldman Sachs crude oil forecast — which assumes a three-week closure of the Strait of Hormuz with prices mostly retreating to pre-war levels by June — comes true.

• They find that in this scenario, retail gasoline prices peak at $4.36 a gallon in May before declining slowly. That would mean the average household spending $740 more in gas costs this year compared with pre-war forecasts.
• That is similar to the $748 in additional refund money that the Tax Foundation projects the average household will receive due to the One Big, Beautiful Bill Act.
• Other estimates of the extra refund cash flowing into Americans’ bank accounts this tax season are smaller. In IRS data so far this filing season, the average refund is up only $360. (…)
• Higher energy prices also raise airfares and shipping prices, which exerts upward pressure on the prices of virtually all goods.

Tech Valuations Back to Pre-AI Boom Levels

The chart below compares the forward P/E ratios for the S&P 500 and the S&P 500 Information Technology sector.
Tech valuations have compressed from 40x to 20x, and we are back at levels last seen before the AI boom began.

Goldman Sachs:

Despite the recent market rebound, the share prices of secular growth stocks remain more than 20% below their October highs.

We define secular growth stocks as S&P 500 firms, excluding Financials, Real Estate, and Utilities, that meet our “Rule of 10” sales growth criteria: Companies that grew sales by at least 10% during each of the prior two years and where consensus estimates indicate sales growth of at least 10% in the current year and each of the next two years.

This evolving screen of secular growth stocks has underperformed the equal-weight S&P 500 by 27 pp during the past six months, one of the worst stretches of underperformance during the past 15 years.

The recent weakness in secular growth stocks has reflected a sharp contraction in valuation multiples. Since the peak in broad US equity market valuation multiples in October 2025, valuations for companies with high expected sales growth have de-rated sharply.

The forward P/E for median Rule of 10 secular growth stock has declined from 36x in October 2025 to 27x, which ranks in just the 35th percentile since 2010.

 

(…) uncertainty regarding AI disruption risk has been a key contributor the recent underperformance and is likely to remain a persistent headwind, arguing for a selective investment approach within the universe of secular growth stocks.

Software has been at the epicenter of the AI disruption debate and currently represents roughly 30% of the “secular growth” companies in our screen. The share of Rule of 10 stocks from Software has grown steadily during the last few years, while the share from Biotech has diminished from roughly 20% in 2017 to 0% today. In total, a record number of stocks currently meet our Rule of 10 sales growth criteria.

The underperformance of secular growth stocks began in late 2025, as expectations for strong economic growth in 2026 led investors to rotate out of secular growth stocks towards cyclical stocks with more exposure to the economy.

Today, however, the diminished outlook for economic growth against a backdrop of elevated oil prices and uncertainty should drive increased focused on companies with strong idiosyncratic growth profiles.

We expect investor uncertainty around AI disruption and long-term growth estimates will persist for quarters if not years, requiring investors to be selective within the universe of secular growth stocks. For secular growth stocks facing AI disruption risk, resolving this uncertainty will likely require evidence that AI is not displacing existing business models. Even after removing Software, many AI-exposed companies populate the screen, including both companies at the center of recent AI disruption risk discussions and beneficiaries of AI investment spending.

Even excluding Software, secular growth stocks have recently underperformed and trade at discounted valuation multiples versus the past decade. The secular growth de-rating has been most pronounced within Software. However, the median non-Software stock in our Rule of 10 secular growth screen trades 15% below its November highs and carries a forward P/E of 29x, slightly below its historical average of 30x and close to the bottom of its range during the past decade. Relative to the median S&P 500 stock, the group commands a 53% premium, which is also close to the lowest level in a decade.

The median stock meeting our Rule of 10 criteria, excluding Software, trades at a PEG ratio of 1.8x. This measure is also close to the bottom of the range of the past decade, albeit above typical levels in the prior decade. We define the PEG ratio as the forward P/E relative to consensus 3-year ahead sales growth.

FYI:

Profit Margins — Tech vs Non-tech: (…) this next chart is only looking at listed companies and it shows non-tech respectable but basically static. It’s tech that is doing all the heavy lifting on margin expansion (and you might even argue that the uptrend in the black line over the longer-run was helped along by tech-driven productivity gains). (Callum Thomas)

• S&P 500 Tech Stocks $XLK are seeing their largest insider buys in 15 years. (@Barchart)

• April 8, 2026 – American insider sentiment remained steady last week, with the INK US sentiment indicator holding steady at 33%. At 33%, there is one stock with key insider buying for every three stocks with key insider selling.

• INK’s US Tech Indicator has not really changed:

In Gut We Trust?

By Peggy Noonan.

(…) We’re in a fluid, dangerous story that isn’t going away any time soon. But I want to speak of something that made it worse, those social-media posts in the middle of the night. (…)

You know them well. On Tuesday, Donald Trump on Truth Social: “A whole civilization will die tonight, never to be brought back again. I don’t want that to happen but it probably will.” On Good Friday, “Our Military, the greatest and most powerful (by far!) in the World, hasn’t even started destroying what’s left in Iran. Bridges next, then Electric Power Plants!” On Easter Sunday, “Open the f— Strait, you crazy bastards, or you’ll be living in Hell—JUST WATCH.” He ended that post “Praise be to Allah.”

The posts left his friends and foes slackjawed. I want to talk about why they were so horrifying. (…)

The posts weren’t showbiz, they were sinister. You destabilize the world when, as the American president, you say such things. (…)

You rob your own nation of a claim to moral seriousness in the military action in which it’s engaged: You are saying we’re not trying to protect life but plan to attack, and in the attacking kill noncombatants who are members of the targeted civilization. The moral high ground is relinquished. You lower the bar for all potential response. You encourage violent action by trumpeting your readiness for it.

It bolsters the position of your enemies—their animus is justified, their commitment deepened. It allows them to pretend they’re fighting for the continuation of their people and not only the continuation of their regime. (…)

Donald Trump plays the part of the madman every day. His head fake would be sanity. (…)

Why do we recoil when a leader is vulgar and violent in his language and thinking? Coarse language obviously implies coarse thinking, and no one wants that in a leader entrusted to bring peace and prosperity. Beyond that, throughout history political authority has come wrapped in a certain formality and ceremony. Dignity enhanced power. A British king even 500 years ago didn’t think himself free to speak in public like a fishmonger or a street whore. He had to present himself at a certain height so people would look up to him.

As for threats, when you resort to them, you’re revealing you are uncertain of the sufficiency of your power. Real menace shuts its mouth. (…)

I think Mr. Trump shocked his followers. What he used this week was not the diction of the common man but the language of sociopathy. That isn’t how his supporters want the world to see him. It’s not what they want him to be. (…)

He operates as if he honestly believes we don’t need allies, as if the concept is antique. He’s threatening again to leave the North Atlantic Treaty Organization. But having and holding allies is simple prudence. They steady your position in moments of danger—they help you make the case, and share the intelligence burden—and broaden your influence in peace. More than that, allies add legitimacy and moral authority. You’re acting with others, not only for yourself, and you’re going forward with shared values that imply historical meaning, which has its own force. Having allies means that when something bad happens you don’t stand alone.

It is not sentimental to care about this, it is babyish to think it means nothing. (…)

Mr. Trump’s trust in his gut seems to have grown overwhelming—not in his reasoning power, not his analysis of intelligence data, but gut. (…)

Sometimes gut is mere emotion dressed up as instinct. Sometimes it’s wishful thinking that feels like conviction. Sometimes it conveniently pre-empts hard reasoning. You can trust your gut straight into catastrophe.

Also gut never does a full audit—you need your brain for that, for reflection and self-examination on how or where you went wrong, to help you next time.

And gut doesn’t necessarily travel. A good gut in one domain can be a bad one in another. You can confuse domains.