Hello there.

Happy Monday! In case you thought there wasn’t enough doom and gloom, Jerome’s back with a vengeance!

There’s something about being the proverbial punching bag that kinda makes him lovable, ya know? More on that below.

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Remember when everyone thought the Fed was gonna keep cutting interest rates this year? Yeah, about that 😅

Plot twist: they might actually raise them instead. The odds of a rate hike by summer are now higher than the odds of a cut. That was a short honeymoon.

Quick guide to how rates affect financial markets:

So basically, Israel and the US’s war in Iran sent oil prices absolutely flying (more on that below). When energy gets expensive, everything gets expensive, which means inflation goes up. The Fed's whole job is to keep inflation low, and they do that by raising rates… so higher rates may be on the way. Raising rates usually leads to job losses, too, because when borrowing costs are higher, it’s more expensive to pay people’s salaries.

But here's where it gets messy. The job market is already looking rough. We lost 92,000 jobs in February, and unemployment is ticking up. Normally, when people are struggling to find work, the Fed would cut rates to help the economy grow. But with inflation fears back on the table, they're basically stuck between the two, unable to make a good decision:

1) If they cut rates, then inflation gets worse.
2) Raise rates, and more people lose their jobs.

Reminds us of stagflation back in the 1970s.

Fed Chair Jerome Powell basically admitted this week that they're in "a difficult situation" and nobody really knows what's gonna happen next.

If the war drags on and oil stays expensive, the Fed might have no choice but to raise rates even if it hurts the economy and sends us into a recession. Fun times 🙃

Huge news: Trump announced “productive” peace talks with Iran, and oil prices dropped over 10%. However, Iran has denied that those talks even happened…

Three weeks into this war, and the Strait of Hormuz is still effectively shut down. Iran keeps attacking ships and making it way too dangerous for tankers to pass through, which is why oil prices have gone absolutely bonkers at nearly $110 a barrel last week after Israel struck Iran's biggest gas field.

On Saturday, Trump gave Iran a 48-hour ultimatum: open the Strait of Hormuz or we will blow up your power plants.

Then this morning, Trump said scratch that, we’re giving them 5 days to decide, and also we’re having “VERY GOOD AND PRODUCTIVE CONVERSATIONS” toward peace with Iran (see his post here).

And then Iran refuted those claims, saying that they are not talking with the US at all 🤣 Which is it?!

President Trump has been calling on NATO allies to help reopen the strait, but so far nobody's really stepped up. The EU said no thanks (in various, very European ways). Trump then posted that NATO countries are "cowards" for complaining about high oil prices but not wanting to actually do anything about it… Probably not going to help the situation, but who knows.

And the US finally announced it's tapping the Strategic Petroleum Reserve and releasing millions of barrels to try to bring prices down. So far, it hasn't done much. The IEA also announced the biggest emergency oil release in its history. Still not enough. Some analysts are warning that if this goes on for months, we could be looking at a real global shortage, not just high prices.

Elected officials have had a tremendous amount of success in the market recently.

Trading data from our partners at AltIndex.

We want to keep you updated on what they’re trading and when so you can leverage that intel as you plan out your own portfolio.

Remember to always DYOR.

That’s all for today. Write us and let us know your thoughts on the market, the newsletter, or the weather—we’d just love to hear from you.

Till next time,
— Brandon and Blake with Invested Inc.