Morning Observers,

Oil has hit a four-year high at $126 after reports that Trump won’t TACO on Iran anymore…

Two anonymous sources cited by Axios said Trump would be briefed today on new military options in Iran, and that a prolonged war is now seriously under consideration.

That changes everything. Since the ceasefire, markets had been clinging to the idea that neither side would risk escalation.

Or at least that Trump would TACO to avoid a major global energy shock that would drive up inflation and hit the stock market back home ahead of the midterms.

Instead, we now have a textbook Catch-22 situation and a new pattern called NACHO, or “Not A Chance Hormuz Opens.” 

Everyone wants peace economically, but both sides still think they’re winning, and neither is willing to back down for fear of losing the upper hand in negotiations.

But while Washington and Tehran play a game of chicken, the oil crisis is getting out of hand, pushing us into a future far more unpredictable than markets may make it out to be.

After the 1973 and 1979 oil shocks, the CIA assumed global energy flows wouldn’t change much, according to a 1982 declassified analysis.

But a near 1,000% increase in oil prices forced the world into a major energy shift. Take Europe, for example.

In the early 1970s, Germany and Russia struck a “pipes-for-gas” arrangement. The deal allowed Germany to tap into Siberian gas fields and laid the groundwork for Europe’s long-term dependence on Russian gas.

In France, record crude prices ushered in a nuclear power revolution, while England transitioned to home boilers powered by North Sea gas.

Nobody at the time could have predicted these second- and third-order effects. Likewise, today’s oil shock is pushing much of the world, especially Asia and Europe, into a corner.

And what they do to scramble out of it could disrupt not just global energy flows but entire industries.

— Sam Bourgi, Interim Editor

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🏦 Fed keeps rates unchanged

The Fed held interest rates steady at 3.75% in what marked Jerome Powell’s final meeting as chairman. Officials are waiting to see how the global energy shock tied to the Iran war affects the economy before making any moves. For now, markets expect the Fed to stay on hold until at least next year, based on data from CME Group’s FedWatch tool.

🇨🇦 Bank of Canada holds the line on rates

The Bank of Canada kept its rate unchanged at 2.25%, signaling a similar wait-and-see approach as the Fed. Policymakers expect inflation to peak at 3% in April due to higher energy costs, then ease to 2.5% by June. If the economy behaves as expected, rates are likely to stay around current levels for now.

🛢️ Oil continues higher amid U.S.-Iran standoff

Oil prices are still climbing as tensions between the U.S. and Iran over the Strait of Hormuz intensify. Brent crude rose for an eighth straight day, jumping to around $124 per barrel, its highest level since the war began. U.S. West Texas Intermediate followed a similar path, rising 8% to about $108.

📦 Durable goods orders show surprising strength

U.S. durable goods orders rose 0.8% in March, beating expectations and reversing a 1.2% drop the month before. The increase points to continued spending on big-ticket items such as cars and equipment, even as higher costs and economic uncertainty mount.

💳 Visa’s “cleanest” quarter in years

The stock jumped after the company reported what it called one of its “cleanest” quarters in years. Revenue rose 17% to $11.23 billion, beating expectations. The results suggest day-to-day consumer spending is still holding up even as more families complain about rising costs and higher debt.

The Iran war has reopened old wounds for Americans… 

Rising costs are hitting close to home again, feeding into financial stress, and in some cases, back to levels not seen since the 2008 financial crisis.

A major shift in how people feel about money

In its latest Economy and Personal Finance survey, Gallup found that a record 55% of Americans say their financial situation is worsening, with many struggling to cover monthly bills and keep up with credit card payments. 

That’s worse than during the peak of Covid. Here's how this anxiety breaks down:

It’s a major detour from 2016–2021, when at least half of Americans consistently said they were doing well financially.

The impact of war is showing up in prices

It’s not hard to see where the anxiety is coming from. 

Since the start of the Iran war, key inputs across the economy have surged:

These costs feed directly into transportation, food, and utilities, meaning households feel the impact quickly.

At the same time, asset prices are still rising, with the S&P 500 near record highs. That’s supporting those at the top, but it’s doing little to offset rising day-to-day costs for most Americans.

📌 Bottom line: Rising energy costs are already showing up in how people feel about their finances. If that continues, history shows it usually leads to pullbacks in travel, dining, and discretionary spending… even if the economy remains stable.

It was a tumultuous first quarter for JetBlue. The airline booked heavy losses tied to the energy shock from the Iran war and told investors it can no longer forecast the year ahead.

Now the cost is shifting to passengers in a big way.

The JetBlue sticker shock

JetBlue’s bottom line swung to a $319 million loss in Q1, widening from a $208 million loss last year. That came even as revenue rose 4.7% to $2.24 billion, a clear signal that demand remains strong.

At the core of this mismatch are fuel costs: 

Buried in the report was the more important detail: fuel recapture could reach 100% by early 2027.

“Fuel recapture” is how airlines pass higher costs through higher base fares, more fees, and fewer inclusions. 

JetBlue is also cutting capacity in the second quarter and the back half of the year, which reduces supply at the same time prices are rising.

The fuel problem is global now

The Iran war and disruption across the Persian Gulf have created a jet fuel supply shock at the worst possible time, right before peak summer travel.

Jet fuel prices have surged about 70% since late February, outpacing nearly every major energy category. 

Europe is feeling it first, but U.S. airlines aren’t insulated. The same supply chain feeds both markets, and the shortages are spreading quickly. 

📌 Bottom line: Airfares are going up into the summer, likely double-digit increases on some routes, while flight options shrink. Travelers can expect to pay more for the same trip, or adjust plans (shorter trips, off-peak travel, or fewer add-ons) to keep costs down.

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