U.S. destroyers transit the Strait of Hormuz.
In a demonstration of military power, two U.S. guided missile destroyers transited the Strait of Hormuz.
https://www.wsj.com/livecoverage/iran-war-latest-news-israel-us-lebanon-2026
China is selling weapons to Iran. China is an existential threat to the United States.
https://www.nytimes.com/2026/04/11/us/politics/china-iran-war-missiles-supplies.html
Negotiations to reach an agreement to end the conflict with Iran are underway in Islamabad, Pakistan. Vice President Vance is leading the United States team. A deal will be reached but any peace will be interrupted by sporadic episodes of renewed hostilities.
https://www.nytimes.com/live/2026/04/11/world/iran-war-trump-talks-pakistan
Iran does not honor agreements. It is a rogue regime bent on eradicating the state and people of Israel and harming U.S. interests wherever possible.
Iran believes it won. The leadership of the regime is emboldened. It will take every opportunity to attack the interests of the United States and Israel. But the Trump administration wants to end the war and to bring most of U.S. forces home. The war is unpopular. The mid terms fast approach.
Still, the Strait will slowly reopen. China is already pressuring the regime on restoring freedom of navigation. China needs a strong global economy to prevent domestic economic stagnation. China’s economy is heavily export dependent. Household consumption in China is moribund because the Chinese residential real estate market remains in a deep recession.
Yesterday, at least three supertankers transited the Strait. Two tankers were carrying oil for China and the other oil tanker’s destination was Malaysia.
Outside the waters of the Middle East, the global oil market is witnessing a large increase in tankers heading to the United States. U.S. exports of oil and oil liquids are surging.
Watch carefully domestic oil production. The rig count is not a good indicator of future production. Technological advances in drilling enable producers to increase production from existing wells. Productivity growth is impressive in the industry.
Economics
The average tax refund for American households is around $300. If oil stays in the range of $90-$100 for WTI, household expenditures for gasoline will be $350-$500 higher than pre war levels. See Jason Furman and CNBC.
The media and many market participants are becoming hysterical about inflation. Yes, inflation will be elevated for the next few months, but core inflation remains remarkably subdued.
The Dallas Fed trimmed mean inflation measure on an annual basis is running at 2.3%, the lowest in several years. The trimmed mean strips out high and low outlier inflation measures.
Politics
Republicans will push for another Reconciliation bill which can pass by majority vote in the Senate. The normal filibuster rules do not apply. But reconciliation measures must have a direct impact on revenues or spending. Social Security is off limits in Reconciliation.
Markets and Stocks
I remain positive on equities. The S&P 500 is trading above its 200 day moving average. It is also trading above the level it reached before the war.
The economy is strong enough to plow through the high oil and gasoline prices without entering a recession. The Fed has clearly signaled that it is in a “wait and see” posture regarding the course of future interest rate policy. No recession, no rate hikes and strong technical support suggest that the market will grind higher now that earnings season is approaching.
Semiconductors continue to lead the market. The semiconductor ETF, the SMH, is up 20% since the beginning of the year.
The KBE bank ETF is rebounding.
The big banks start to report numbers on Monday. GS leads the way. I expect a blow out quarter driven by strong capital markets activity and terrific profits from the GS trading desks.
Tuesday, JP Morgan, Wells Fargo and Citi deliver numbers. All should give the market positive news. Though JPM often provides cautious guidance.
Wednesday, Morgan Stanley and B of A report. The news from both should be the same, the economy is growing, loan growth is solid and credit quality is generally pristine.
With renewed optimism and the end of the war, cyclicals and industrials should do well over the coming weeks. CAT is trading at an all time high. I think CAT should be a core holding. Eaton and GE Vernova also look tremendous.
Nvidia
The company is telling suppliers to increase production. NVDA does not report until the end of May, but its next quarter should show earnings and revenue growth exceeding 70%.
At some point, Nvidia will break out of the doldrums and head toward $300, which would be a 50% pop.
Equity trading by members of Congress
Contrary to media reporting, portfolio performance by members of Congress does not suggest that access to privileged information guides stock selection. The research shows that legislators’ positions track financial professionals recommendations. Timing of trades is guided by prevailing market sentiment. Observable trading patterns is more consistent with public signaling than any systemically profitable use of private information.