GOOD MORNING. | | THE LEAD | You already feel it at the gas pump. Now the question is how far it spreads into everything else you buy. | The U.S.-Israeli war against Iran entered its sixth week this weekend, and the Strait of Hormuz, one of the most important waterways on earth, remains effectively shut. More than 40 countries attended meetings this week to discuss reopening the waterway, and the UN Security Council is set to vote Saturday on a Bahraini proposal that would authorize countries to use defensive means to secure transit passage. But the outcome is far from certain. China and Russia both oppose authorizing any use of force, and the resolution faces steep odds of clearing a Security Council where either country holds a veto. | The economic stakes could hardly be higher. The International Energy Agency's executive director said the war has created the worst global energy crisis in history, describing a supply disruption larger than the 1973 and 1979 oil shocks combined. The IEA estimates the world has lost 12 million barrels per day of oil supply, and warned that April will be significantly worse than March as pre-war cargo shipments already in transit finish arriving at their destinations. | | | $1 quadrillion would be enough to send a check for $2.8 million to every man, woman, and child in America. | That's how big this opportunity is. | This is set to be the biggest AI IPO in history… | And you could claim a stake today… | Before the company goes public… | Starting with just $500. | That is not an abstract market number. It has a direct translation into your daily life. The national average for regular gasoline has crossed $4 per gallon for the first time since 2022, with diesel sitting at $5.45. Diesel is what powers the trucks that move groceries, lumber, appliances, and nearly everything else sold in a store. When diesel costs more, those prices follow. | The deeper worry for retirees living on fixed or near-fixed income is inflation. Bloomberg Economics' real-time price tracker put the U.S. CPI for March at 3.4% year over year, up sharply from 2.4% in February. If that reading holds when the official CPI is published next week, it will represent the fastest single-month jump in inflation in years and will almost certainly change the conversation around Federal Reserve rate policy. | Oil industry executives and analysts say the Strait of Hormuz needs to be reopened by mid-April or supply disruptions will grow significantly worse. Even if it reopens soon, enough damage may already have been done to leave energy and many other prices higher for longer. | Right now the Federal Reserve is in a difficult position. Inflation is rising because of an energy supply shock, not because the economy is running hot. Raising rates to fight this kind of inflation would slow growth and risk jobs without solving the underlying problem, which is oil supply. Keeping rates where they are lets inflation run. Neither choice is comfortable, and the Fed has signaled it intends to wait and watch. |
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| The practical takeaway: this is the moment to review your monthly budget with an eye toward energy-sensitive expenses. Heating and cooling, gas for the car, travel plans for the summer, and the general cost of groceries all carry more risk heading into spring than they did three months ago. Holding some short-term inflation-protected bonds or cash equivalents as a buffer is worth a conversation with your advisor. | | | THE NUMBER THAT MATTERS | 12 Million | Oil Supply Shock | That is the IEA's estimate of how much global oil supply has been lost as a result of the Strait of Hormuz closure: 12 million barrels per day. For context, the 1973 oil crisis and the 1979 Iranian Revolution crisis each removed roughly 5 million barrels per day from global supply. Those two shocks each caused widespread recessions and years of elevated inflation. The current disruption is more than twice as large as either of those events. The world is not in a 1970s-style crisis yet because strategic petroleum reserves, emergency releases from 30-plus countries, and rerouted supplies have buffered the impact. But those buffers are finite, and analysts warn mid-April is when several of them run dry. |
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| | | WHAT WE'RE WATCHING THIS WEEK | | INFLATION DATA | ENERGY POLICY: The UN Vote That Could Move Oil Prices Saturday | The UN Security Council is voting Saturday morning on a Bahraini-led resolution to authorize defensive measures to protect commercial shipping through the Strait of Hormuz. To pass, it needs nine votes and no vetoes from the five permanent members. Russia and China have both objected to any language that could be read as authorizing military action, and analysts say the resolution faces significant obstacles even in its watered-down form. If the resolution fails or gets vetoed, oil markets could push higher Monday. If it passes, even in limited form, expect a relief rally at the open. This vote is happening while U.S. markets are closed for Easter weekend. Monday's open will be the first chance for traders to fully react. | | SMART MONEY SIGNAL | INFLATION: Rising Prices Are a Particular Problem for Retirees on Fixed Income | Energy price shocks are uniquely painful for people on fixed incomes because they cannot raise their income to offset the rising costs. Social Security does include an annual cost-of-living adjustment, but it is calculated once a year based on prior-year inflation and pays out the following January. Oxford Economics' lead U.S. economist noted that the economic impact of the Iran war may not fully show up in the data for some time, as changes in businesses' plans to hire and invest take months to ripple through the numbers. That means the inflation hit you see today at the pump could be followed by a slower wave of price increases through summer and fall. Reviewing your withdrawal rate and your exposure to inflation-sensitive expenses is a sensible precaution right now. | | WORTH KNOWING | DIVIDENDS AND INCOME STOCKS: Energy Sector Is a Bright Spot, But Not for Everyone | There is a flip side to high oil prices for investors who hold energy stocks or energy-focused dividend funds. U.S. oil producers, pipelines, and refiners tend to benefit when crude prices rise. Analysts note that U.S. oil exports to Asia are poised to surge in April as refineries worldwide hunt for alternative suppliers to replace Middle Eastern barrels that can no longer pass through the strait. If you hold diversified dividend funds, you may have some natural offset already built in through your energy holdings. If your income portfolio is entirely in non-energy sectors, this is worth reviewing with an advisor. It is not a reason to chase oil stocks now at elevated prices, but it is a reason to understand what you already own. | | | | | The Strait of Hormuz is a narrow strip of water that most Americans had never heard of a month ago, and it is now at the center of the biggest energy crisis in modern history. Even if the waterway reopens soon, analysts expect energy and many other prices to stay elevated for some time, as new demand for stockpiling, higher insurance and freight costs, and a broad geopolitical risk premium in the market will not simply disappear overnight. For retirees, the most important thing to do right now is resist panic, stay diversified, and have a concrete conversation with your advisor about inflation protection in your income plan. |
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