War or Peace? Here's How the Market Is Leaning
Back to the negotiating table... Which way the market is leaning… This inflation indicator just hit a three-year high… Scott Bessent speaks and Kevin Warsh discloses… Last call for the 'Shadow Data Indicator'…
On it goes...
After hitting a stalemate this weekend, the U.S. and Iran are reportedly gearing up for another round of talks before the initial two-week "double-sided ceasefire" expires on April 21.
As the New York Post reports...
Additional US-Iran peace talks "could be happening over next two days" in Pakistan's capital, President [Donald] Trump told The Post on Tuesday.
In an initial phone interview, Trump had claimed that discussions were "happening, but, you know, a little bit slow" before indicating that a second round of direct negotiations to end the seven-week war would likely happen somewhere in Europe.
About half an hour later, Trump called back with an update.
"You should stay there, really, because something could be happening over the next two days, and we're more inclined to go there," he said of Islamabad.
It sure looks like Trump wants a deal. But as we explained yesterday, he also doesn't want Iran to have any nuclear-weapons capability, which seems to be a nonnegotiable point for the current Iranian regime.
So now we have a U.S. "blockade" of Iranian ports in the Persian Gulf. The U.S. military has 10 warships, a submarine, and an aircraft carrier in the Persian Gulf and Gulf of Oman.
As we discussed yesterday, war-driven oil and gas supply disruptions are set to hit various countries this week as the last Middle Eastern shipments arrive. Meanwhile, OPEC's oil production is down about 30% from prewar levels, and regional energy infrastructure has been caught in the crossfire.
The fork in the road ‒ or gulf, as it were...
The longer the current situation goes on, the higher oil prices can go... though the opposite is also true. The sooner the war ends, the quicker oil prices could go back to normal, meaning typical supply and demand trends. As Stansberry's Investment Advisory lead editor Whitney Tilson wrote in his free daily e-letter yesterday...
My view is more optimistic. The U.S. Navy will only be prohibiting ships traveling to and from Iranian ports, not all traffic. Most importantly, it doesn't appear that Trump is eager to renew the aggressive bombing campaign, much less order a ground troop deployment.
So my advice to long-term-oriented investors remains the same: Ignore the headlines related to Iran (and other geopolitical conflicts), and focus on the fundamentals of the U.S. stock market.
Mr. Market was also optimistic today, with enough investors banking on the war ending soon and oil and gas flowing at prewar levels.
Oil futures were down today on the reports of more U.S.-Iran talks. Brent crude was down 4% to $95 per barrel, and West Texas Intermediate was down roughly 7% to around $92 per barrel.
And the major U.S. stock indexes were higher across the board, with the benchmark S&P 500 up about 1%, back near an all-time high. Many foreign markets also moved higher, though they haven't broken their prewar levels yet.
Turning to inflation...
This morning, the Bureau of Labor Statistics ("BLS") released its producer price index ("PPI") inflation data for March. Last month, the PPI rose 0.5% month over month and 4% year over year.
Both of those figures came in lower than Wall Street expected, indicating that wholesale inflation didn't spike as much as feared during the first month of the conflict with Iran. Still, PPI has been in a worrying uptrend...
Over the past two years, the rate of producer inflation has doubled from a 2% annual increase to 4% in March. That's also the highest reading in three years. So while today's release wasn't as bad as feared, the strong uptrend in the rate of inflation continues.
Today's report follows Friday's consumer price index ("CPI") report, which showed that prices rose 0.9% month over month and 3.3% year over year. That year-over-year increase was the fastest for the CPI since June 2024.
Energy prices are mainly to blame...
In March, the energy component of the PPI rose 8.5% month over month. In fact, most of the PPI increase can be attributed to higher energy prices. From the BLS's report...
More than three-quarters of the broad-based March advance can be traced to an 11.3-percent jump in prices for processed energy goods.
In last week's CPI report, energy prices spiked more than 10% from February to March, with gasoline prices surging more than 20%. As in the PPI report, energy prices accounted for nearly 75% of CPI's increase in March.
You can see how big of a problem the Iran war will be the longer it goes on.
The Federal Reserve's 'wait and see' approach has a new, important backer...
While speaking at the Semafor World Economy conference today, Treasury Secretary Scott Bessent said the Fed is "doing the right thing" by holding interest rates steady with the uncertainty surrounding oil prices and Iran.
He added that "eventually" he'd like to see lower interest rates, but for now "we have to wait and see."
Bessent reports to Trump, so unless he went rogue with these comments (which seems unlikely), it appears the White House has changed its tone on interest rates – adopting, dare we say, a modicum of patience.
Over his two presidential terms, Trump has railed against current Fed Chair Jerome Powell, urging him to lower rates.
But now that Powell's term as central bank head is ending next month, Bessent's comments offer a supportive backdrop for Trump's Fed chair nominee, Kevin Warsh.
As the new Fed head, Warsh would find it hard to justify immediate rate cuts with the pace of inflation rising.
Bessent's comments also give Warsh the appearance of the ability to be "independent" ahead of his upcoming nomination hearings in front of Congress, which could help get votes from skeptics.
Assuming Warsh gets the job, we'll see how long the "wait and see" support lasts – especially if overall Fed sentiment turns to "higher for longer"...
At the same conference, Chicago Federal Reserve President Austan Goolsbee said that rate cuts may need to be pushed out to 2027 because the drop in inflation that he expected hasn't materialized.
The market is on the same page.
According to the CME Group's FedWatch Tool, traders are pricing in a near certainty that the Fed holds interest rates steady over the next three meetings. And a rate cut isn't seen as likely until July 2027.
Speaking of Kevin Warsh...
In the March 17 Digest, we asked (half-jokingly) if anyone had seen Kevin Warsh. Since his nomination at the end of January, we've heard very little – if anything – from the Fed chair-to-be.
But now we've had (a little) movement...
This week, Warsh filed his financial disclosures, which he was required to do before his Senate nomination hearing. (Between Warsh and his wife, Jane Lauder – who is the granddaughter of the founder of Estée Lauder – they have financial holdings of almost $200 million, at least).
According to CNBC, Warsh will now have to answer a questionnaire from the Senate Banking Committee. It's the last hurdle before the hearing is scheduled.
So the wheels are starting to turn. But it's possible Warsh's appointment – set for May 15 – could be delayed.
Republican Senator Thom Tillis of North Carolina has threatened to block Warsh's confirmation while the Justice Department is still investigating Powell over the Fed building renovations kerfuffle.
If, for any reason, Warsh isn't approved by May 15, Powell will remain in his position. Such a scenario would add more uncertainty into the market.
However, if March's upward inflation trend continues into the summer, the Fed's "wait and see" approach should remain, no matter who's head of the Fed.
Finally, last call...
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New 52-week highs (as of 4/13/26): BWX Technologies (BWXT), Deluxe (DLX), Ecovyst (ECVT), EnerSys (ENS), FirstCash (FCFS), Cambria Foreign Shareholder Yield Fund (FYLD), Hilton Worldwide (HLT), Hubbell (HUBB), iShares Convertible Bond Fund (ICVT), KraneShares Bosera MSCI China A 50 Connect Index Fund (KBA), Lynas Rare Earths (LYSDY), Invesco Oil & Gas Services Fund (PXJ), Tenaris (TS), and State Street SPDR S&P Semiconductor Fund (XSD).
In today's mailbag, some feedback on oil prices, stemming from our discussion in yesterday's Digest... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
"If the U.S. has abundant supplies of oil, why are we paying higher prices for gas here just because of global conditions?! We should be able to control our own pricing." – Subscriber Gregory A.
All the best,
Corey McLaughlin and Nick Koziol
Baltimore, Maryland
April 14, 2026