President Trump has said that the ceasefire with Iran is “over.” Kharg Island, which has a deep-water port and controls 90% of Iran’s shipments, was targeted in the latest U.S. strikes. So, speculation has risen that the U.S. may seize Kharg Island, which would put tremendous economic pressure on Iran and the IRGC. In fact, President Trump on Wednesday said that the U.S. actions “don’t touch the oil” because “maybe we’ll take over Kharg Island.” Naturally, this would be a major escalation and indicative that the White House is increasingly in control of world energy markets.
I think it is safe to say that Fed Chairman Warsh is planning to turn the inside out, streamline it and make it operate more efficiently. Specifically, Warsh has assembled a dozen external advisers to lead five task forces that will re-examine how the central bank operates. These advisors consist of academics, former central bankers, and business executives, including a former Nobel laureate and the former CEO of Walmart. The most interesting pick is venture capitalist Marc Andreessen, who will serve on a task force on employment. The task forces will focus on (1) AI, productivity and jobs, (2) Fed communications, (3) the Fed’s balance sheet, (4) inflation and (5) economic data.
We are locked and loaded for another earnings announcement season. Since our fundamentally superior stocks are not appreciating as fast as their underlying earnings, price-to-earnings (PE) ratios are being compressed. The stock market is expected to remain strong because of wave after wave of positive earnings announcements to look forward to in the upcoming weeks as well as the rest of this year.