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Ray Dalio sees the fight to control the Strait of Hormuz as affecting more than oil-price fluctuations.
Credit: Chris J. Ratcliffe / Bloomberg via Getty Images

Key Takeaways

• A "final battle" to determine who controls of Strait of Hormuz "is likely to be the worst phase" of the conflict, Dalio said, saying the outcome can shake up the world's pecking order.
• The U.S. dollar index, which measures the greenback against six major foreign currencies, has risen more than 2% since the start of the war in Iran while the price of gold has fallen by about that much to just above $5,000 per troy ounce.

The war in Iran represents the "final battle" that stands to change not just oil prices but the world, according to investor Ray Dalio.

Dalio, the founder of hedge fund Bridgewater Associates, has been forecasting the end of American dominance. In a Substack post Monday, he wrote that while it was "always assumed" the U.S. would remain a dominant power in the world order, the "cumulative effect" of post-World War II events—including the wars in Vietnam, Afghanistan, Iraq, and the current one with Iran—jeopardizes the global power dynamic of which the U.S. has been a leader. While some market watchers are focused intently on the outlook for oil prices and the global economy, Dalio sees a possible end of an empire looming.

"While there is talk of ending this war with an agreement, everyone knows that no agreement will resolve this war because agreements are worthless," he wrote. "Whatever happens next—i.e., leaving Hormuz in Iranian hands or taking control away from them—is likely to be the worst phase of the conflict. This 'final battle,' which will make crystal clear which side won and which side lost control, is likely to be a very big one."

WHY THIS MATTERS TO YOU

Market experts have since before the Iran war observed the decline of the U.S. dollar and what that means about the U.S.'s standing in the global power order—though the dollar's rise since the start of the war in Iran would suggest that it still viewed as a haven asset. What many experts and Dalio agree on is the importance of the Strait of Hormuz.

Long essay short, Dalio said the Trump administration must prove America's might by wrestling control of the strait away from Iran, which would reassert the U.S.'s power and "bolster confidence" in it.

"If, on the other hand, the Strait of Hormuz is left in the hands of the Iranians to use as a weapon to threaten American allies in the Gulf and the world economy more broadly, everyone will be hostage to the Iranians, and Donald Trump will be perceived to have picked a fight and lost," he said.

Dalio's latest missive would align with his recent advice to investors: Buy gold and pan the U.S. dollar. That said, since the initial strikes on Iran, the price performance of the precious metal has been less impressive than the greenback's.

Though gold remains above $5,000 per troy ounce, it has fallen a little over 2% since the end of February, whereas the U.S. dollar index (DXY), which measures the dollar against six major foreign currencies, has risen about 2.7%.

Goldman Sachs analysts expect stocks will rebound from a modest pullback fueled by conflict in Iran.
Credit: TIMOTHY A. CLARY / AFP via Getty Images

Key Takeaways

• The stock market will likely weather the fallout from conflict in the Middle East and, after a modest pullback, resume its march higher, according to Goldman Sachs.
• But stocks that Goldman expected to benefit from an acceleration of economic growth this year may not reap those benefits as higher oil prices fuel inflation and drag on consumer spending.

The war in Iran is entering its third week with no end in sight. That, according to Goldman Sachs analysts, warrants some portfolio changes.

Stocks have been on a dramatic ride since the U.S. and Israel launched strikes against Iran late last month. The S&P 500 is down about 2.5%, weighed down by soaring oil prices and the macroeconomic uncertainty they create. The Cboe Volatility Index, Wall Street's fear index, declined sharply Monday amid a stock rebound, but remains above 20, generally considered the dividing line between a calm and jittery market. (Follow Investopedia’s live Monday markets coverage here.)

While trading has been volatile, experts at Goldman Sachs don’t expect the war in Iran to derail the three-year-old bull market. While the conflict has increased downside risks, they wrote Friday “the baseline outlook for US equities remains constructive." Nonetheless, the war has changed Goldman’s outlook for individual sectors and factors.

“Higher oil [prices] and greater uncertainty should cut short the cyclical economic acceleration underpinning many of our investment recommendations heading into 2026,” the analysts wrote. 

Why This Matters

Investors have spent weeks grappling with uncertainty about the duration of the U.S.-Israeli operation in Iran and the long-term consequences of the resultant oil supply disruption. Goldman's updated outlook for stocks suggests experts are leaning toward a relatively balanced positioning that leans defensive.

Goldman is overweight the healthcare and materials sectors, but “no longer recommend[s] stocks exposed to middle-income consumers or non-residential construction.” Low- and middle-income consumers are expected to be pinched by gas prices, which have risen about 25% in the past two weeks, offsetting some of the tax benefits that were expected to flow from last year’s One Big, Beautiful Bill. Non-residential construction, meanwhile, could be dented by elevated energy and transportation costs, as well as heightened uncertainty about the economic outlook. 

Healthcare, an essential service, offers investors protection from a slowdown in discretionary spending. It's been the best-performing sector during past oil shocks, according to Goldman, beating the broader market by 1.5 percentage points and even topping the energy sector, which benefits directly from higher oil prices. That benefit is a primary reason Bank of America analysts on Monday recommended buying energy stocks.

Outside of defensive sectors like healthcare, Goldman sees potential for the war in Iran to lift sentiment on solar and cybersecurity stocks, both of which have been fighting headwinds lately. The Trump administration’s gutting of federal support for renewable energy has darkened the outlook for solar companies, and fear of AI-driven disruption within the software industry has hammered cybersecurity stocks.

Rising oil and gas prices could push AI data center developers to increase their demand for renewable energy, a source of potential upside that Goldman estimates isn’t currently priced into solar stocks. Cybersecurity stocks, according to Goldman, could benefit from both their relative insensitivity to economic cycles and increased cyber threats out of Iran. 

An economic drag from the war could also set the stage for the hyperscalers—Alphabet (GOOG), Microsoft (MSFT), Amazon (AMZN), and Meta (META)—to reclaim leadership within the AI rally, according to Goldman.

The tech giants have been pressured since late last year by uncertainty about the pay-off of their massive AI investments. While those fears will persist until the group slows its spending or shows AI-linked revenue growth is accelerating, the hyperscalers’ solid balance sheets and healthy businesses could make their stocks attractive during an economic slowdown. 

Stocks rose in early Monday trading.
Credit: Timothy A. Clary / AFP via Getty Images

Key Takeaways

• BofA's equity and quant strategists advise being selective rather than investing in the S&P whole hog. Its commodity research team raised its price target on Brent crude prices.
• Since the initial strikes on Iran, the S&P 500 has fallen about 4% while a fund holding the index's biggest energy stocks is up 5%.

Sometimes the best trade can be the obvious one.

The war in Iran appears to be at an impasse, with the effective closure of a key water passageway driving energy experts to raise the alarm on disruptions to the crude oil supply. Energy executives including those from ExxonMobil (XOM), Chevron (CVX), and ConocoPhillips (COP) reportedly warned White House officials last week that the situation around the Strait of Hormuz would get worse, according to The Wall Street Journal, while the Trump administration is working to address high oil prices.

Those prices are driving outperformance in energy stocks. The State Street Energy Select Sector SPDR ETF (XLE), which holds the dozens of energy stocks in the broad market index, is up more than 25% year-to-date. Bank of America's strategists now advise buying the S&P Energy sector—not the S&P 500 at large—because, they say, the group looks undervalued compared with the index as a whole.

WHY THIS MATTERS TO YOU

The energy sector appears to be the place to be, with the group recently outperforming all other segments of the S&P 500 and market experts increasingly touting the thematic play amid warring in the Middle East.

Meanwhile, the bank's commodity research team recently raised its target on Brent crude prices. The market appears to have priced in a "de-escalation, but not higher for longer oil," BofA's equity team, including Savita Subramanian and Jill Carey Hall said in a research report on Monday.

A back-of-the-envelope analysis comparing the price of West Texas Intermediate, the U.S. oil benchmark, to the S&P 500 shows that the broad market index is still more expensive than crude in spite of the latter's recent runup, according to the bank's research. Through that lens, according to the bank, the S&P 500 looks more expensive than at any other point in time going back to the 1960s, except for during Covid and the Tech Bubble.

The bank's commodity research team on Monday raised its expectations for Brent crude to $77.50 per barrel from $61. The forecast is based on the firm's vision of two "equally likely paths"—that there is a speedy resolution, where oil flows normalize by next month, and a conflict that goes into the second quarter.

The updated outlook on crude drove price targets for exploration and production companies the bank's analysts cover higher by 17%. Brent recently traded at above $100 per barrel, backing off a bit from recent highs.

"Should the conflict extend into the second half of the year, the team sees Brent averaging an eye-watering $130/bbl," BofA's Kalei Akamine and his team said. "This path however is considered unlikely."

Meta has already made cuts to several teams in recent months, including its AI and metaverse groups
Credit: Joan Cros / NurPhoto / Getty Images

Key Takeaways

• Meta Platforms is considering laying off 20% or more of the company's workers, Reuters reported.
• A number of companies across the tech sector have turned to layoffs as a way to manage costs as they boost spending on AI.

Another massive round of layoffs could be coming for employees at Meta Platforms (META).

The social media giant is considering cutting 20% or more of its workforce as it looks to offset its hefty investments in AI and prepare for improvements in efficiency from advances with the technology, Reuters reported over the weekend. In its latest annual filing, Meta said it had just under 79,000 employees at the end of 2025.

Meta did not respond to an Investopedia request for comment in time for publication.

Why This Is Significant

Meta's moves speak to a broader trend as several tech companies have announced large layoffs in recent months. Analysts have suggested some firms could still be correcting for overhiring during the pandemic. Many firms are also looking for ways to cut costs to support growing investments in AI, and may be anticipating they could need fewer workers thanks to the technology.

Meta said in its January earnings report that it expects to spend $115 billion to $135 billion in capital expenditures this year as it ramps up its AI data center buildout. JPMorgan analysts said they estimate a 20% layoff would save Meta about $5 billion to $6 billion, and that the savings could help boost 2027 earnings in the face of rising costs.

"If Meta is willing to reduce headcount at this scale while ramping AI investment, we think it signals a broader shift," Jefferies analysts said, noting that other tech firms could make similar moves, adding to a spate of layoffs in the industry.

Meta has already made cuts in recent months to several divisions within the company, including its AI team and metaverse group, the virtual reality project CEO Mark Zuckerberg once hailed as the future of the company.

Meta shares were up about 3% in recent trading, as the tech giant also announced a deal to buy between $12 billion and $27 billion in cloud computing capacity from AI infrastructure firm Nebius Group (NBIS). Despite Monday's gains, Meta shares are down about 5% since the start of the year.

News of the day for March 16, 2026

Major stock indexes are coming off their third consecutive losing week amid concerns about the Iran war.
Credit: Michael M. Santiago / Getty Images

Stock futures are pointing higher Monday ahead of a busy week that includes a Federal Reserve decision on interest rates, as investors monitor developments in the Iran war; crude oil futures are slightly lower after hitting their highest level in nearly four years; President Donald Trump is looking to recruit other countries to help escort oil tankers through the Strait of Hormuz; Nvidia's GTC conference, the so-called "Woodstock of AI," kicks off today; and Meta is reportedly set to lay off thousands of employees to offset the costs of massive AI investments. Here's what you need to know today.

Stock Futures Rise After 3rd Straight Losing Week

Stock futures are pointing to a higher open after major indexes lost ground for the third consecutive week amid concerns about the impact of the Iran war. While investor keep close tabs on developments in the Middle East, they're also preparing for the Fed's policy meeting, a major Nvidia event and several important earnings reports. Futures tied to the Dow Jones Industrial Average, S&P 500, and Nasdaq were up 0.7%, 0.9%, and 1.1%, respectively, in recent trading. Crude oil futures were down slightly from their highest levels in nearly four years (more on that below), while gold futures ticked lower to around $5,015 an ounce. Bitcoin was trading at $73,700 after reaching $74,400 earlier this morning, the cryptocurrency's highest point in over a month. The 10-year Treasury yield dropped to 4.24% from 4.29% on Friday.

Oil Futures Slip As Volatile Trading Continues

Oil prices are lower this morning as investors continue to assess the potential impact of the Iran war on global supply. West Texas Intermediate futures, the U.S. crude oil benchmark, were down 2% at around $97 per barrel, after hitting $102 overnight. The market remains under pressure as the Strait of Hormuz, a major shipping route, is closed due to the war, offsetting moves by the international community to boost supply. President Trump pitched over the weekend plans for the U.S. and other countries to escort ships carrying oil through the Strait of Hormuz, but it remains unclear whether other countries have agreed to do so (more on that below).

Trump Seeks Help to Escort Oil Tankers Through Strait of Hormuz

The Trump administration is planning to announce a coalition to escort ships through the Strait of Hormuz, reopening the key oil shipping passage, sometime this week, The Wall Street Journal reported over the weekend. Trump told reporters Sunday that the U.S. has asked at least seven countries to assist with the plans, but didn't say whether any were on board with the plan. A key factor in finalizing the plans is deciding whether the escorts would happen soon, or after the war is over, as several countries have been hesitant to join an effort with the risk of being shot at by Iranian forces or navigating through mines in the Strait, the Journal reported. Trump said Sunday that the U.S. "will remember" which countries agree and don't agree to help escort the tankers.

Nvidia's Annual GTC Event Kicks Off Today

Investors are likely to get a bevy of updates in the world of AI this week, as Nvidia's (NVDA) annual GPU Technology Conference kicks off on Monday. Nvidia CEO Jensen Huang is scheduled to give a keynote address at 2 p.m. ET today, in which he could announce new Nvidia products or partnerships. Huang announced a number of product updates at last year's event, and investors will be on the lookout this year for details on the company's new chips, a platform for AI agents and developments related to robotics and physical-world applications of AI. Shares of Nvidia, the world's most valuable company by market capitalization, have lost more than 3% so far this year amid concerns about the AI trade. The stock was up 1.5% in recent premarket trading.

Meta Is Reportedly Considering Big Layoffs

Meta Platforms (META) is considering another round of substantial layoffs, which could result in 20% or more of the social media giant's workforce leaving the company, Reuters reported over the weekend. The report said Meta is looking to offset the cost of its massive investments into AI data centers and also prepare the company for improvements in efficiency it could see as a result of developing AI technology. In its latest annual filing, Meta said it had 78,865 employees at the end of 2025, which means the reported layoffs could exceed 15,000 workers. Meta has recently made cuts to individual divisions within the company including its metaverse efforts, the virtual reality project CEO Mark Zuckerberg once hailed as the future of the company. Several tech giants have laid off thousands of employees in recent years as the industry corrects from a pandemic hiring spree and looks to cut costs as it pours hundreds of billions into AI infrastructure. Meta shares were up 3% ahead of the opening bell.

Micron shares have surged nearly 50% since the start of the year
Credit: David Paul Morris / Bloomberg / Getty Images

Key Takeaways

• Micron is slated to post earnings after the closing bell Wednesday, with traders expecting its stock could reach new highs following the report.
• Then memory chipmaker is projected to report sales more than doubled year-over-year, driven by AI demand.

Micron Technology is set to report earnings after the market closes Wednesday, with traders anticipating the memory chipmaker's stock could reach new highs following the report.

Options pricing suggests Micron (MU) stock is seen swinging up to 9% in either direction by the end of the week. A move of that size from Friday's close could lift the shares to $466, topping last month's record high, or pull them back down to about $364.

Shares of Micron have soared nearly 50% this year so far, and more than quadrupled in value over the past 12 months, as booming AI demand drove up sales and the company raised prices.

Why This Matters to Investors

Micron's stock has been one of the biggest gainers in the S&P 500 this year, after a strong 2025, amid surging demand for the company's memory chips to support AI.

UBS analysts earlier this month lifted their price target to $475 from $450, citing robust demand for Micron's products and strengthening profitability on the back of higher prices. The analysts said they see a shortage of memory components lasting well into 2027 and potentially 2028, supporting strong pricing for Micron even as the company and its peers boost production.

Micron's revenue is projected to have more than doubled year-over-year to $19.27 billion in its fiscal second quarter. Adjusted earnings per share are forecast at $8.75, up from $1.56 a year ago, according to estimates compiled by Visible Alpha.

Wall Street analysts are overwhelmingly bullish on Micron's stock. All but one of the 11 analysts with current ratings tracked by Visible Alpha consider it a "buy," compared to just one "hold" rating. With its recent gains, however, the stock is less than 2% from reaching their mean target around $433.

Federal Reserve Chairman Jerome Powell at a news conference in Washington, D.C., March 2024
Credit: Chip Somodevilla / Getty Images

A Federal Reserve announcement on interest rates, comments from Fed Chair Jerome Powell, and earnings from AI darling Micron are on the way this week. 

While the Fed isn’t expected to change rates when it makes its next interest rate decision on Wednesday, investors will closely follow Powell’s remarks after the meeting, which could shed light on how policymakers expect the Middle East conflict to affect the U.S. economy.

Memory chip maker Micron’s shares have surged amid the AI frenzy, and investors will look to the tech firm's report for signals about the resilience of AI demand. Reports from FedEx and Dollar Tree could also offer indications about the strength of the economy.

Read to the bottom for our calendar of key events—and one more thing.

Fed Meeting Comes as Market Watchers Eye Interest Rate Path

The Federal Open Market Committee (FOMC) will discuss adjusting the federal funds rate from its current range of 3.5% to 3.75% when it meets this week. Central bankers got two key inflation reports last week, but the data isn’t expected to sway the committee. Investors are pricing in a near certainty that the Federal Reserve will keep interest rates at their current levels.

Chair Powell’s remarks after the decision on Wednesday will also be in the spotlight. Powell could speak to divisions in the FOMC, as some members want to see steeper rate cuts in light of weakness in the labor market while others are more worried about persistent inflationary pressures. The press conference could be Powell's second to last, with his chairmanship scheduled to end in May. 

Also Wednesday, the Producer Price Index will provide a look at wholesale inflation in February. January's report showed wholesale prices rose more than expected to start the year. Reports on both new and pending home sales are set for this week as economists look for signs of improvement in a housing market that has stalled.

Micron Reports Amid Surge in Stock Price

Micron Technology reports earnings as its stock has surged on the AI boom, with its value more than quadrupling over the past year. The memory chip maker posted a 60% year-over-year sales jump in the prior quarter as its earnings shot by analyst estimates. But AI stocks have stumbled recently amid increasing investor worry over the technology’s economic impacts.

Global shipper FedEx will report its quarterly earnings on Thursday. Its stock has surged this year, rising by nearly 25%. Investors follow FedEx’s earnings for indications on what its global shipping business means for the overall economy. 

Dollar Tree’s earnings will give investors a look at the strength of the U.S. consumer after its prior report showed that its shoppers were “stretched.” Other retailer and food industry reports could flesh out the consumer picture, including Five Below, General Mills, Lululemon, Macy’s and Darden Restaurants. 

Nuclear power plant operator Oklo, which signed a deal earlier this year with Facebook-parent Meta to provide power for the firm’s energy-hungry data centers, plans to report earnings this week. 

Earnings are due from Alibaba, China’s top tech firm, which plans to boost AI spending. Chinese EV maker Xpeng, a competitor to Tesla in foreign markets, is also set to report. 

This Week’s Calendar

Monday, March 16

• Industrial production/capacity utilization (February)
• More Data to Watch: Empire State manufacturing survey (March), Homebuilder confidence index (March)
• Key Earnings: Dollar Tree (DLTR), Science Applications International (SAIC)

Tuesday, March 17

• Pending home sales (February)
• Key Earnings: Tencent Music Entertainment (TME), Lululemon athletica (LULU), Oklo (OKLO), DocuSign (DOCU)

Wednesday, March 18

• FOMC interest rate decision
• Fed Chair Jerome Powell press conference
• More Data to Watch: Producer Price Index (February), Factory orders (January)
• Key Earnings: Micron Technology (MU), Jabil (JBL), General Mills (GIS), Williams-Sonoma (WSM), Five Below (FIVE), Macy’s (M)
  

Thursday, March 19

• New home sales (January)
• More Data to Watch: Initial jobless claims (Week of March 14), Philadelphia Fed manufacturing survey (March), Wholesale inventories (January)
• Key Earnings: Alibaba Group (BABA), Accenture (ACN), FedEx (FDX), Darden Restaurants (DRI), PlanetLabs (PL)

Friday, March 20

• Key Earnings: Xpeng (XPEV)

One More Thing

The prices of eggs and smartphones are on the way down, but if you’re buying coffee or steaks, you’re likely seeing a price hike. Investopedia’s Sabrina Karl has more on what the latest inflation report says about prices consumers are seeing at the store.

The event could be an opportunity for Nvidia to inspire investors, after a weak start to the year for the stock
Credit: PATRICK T. FALLON / Contributor / Getty Images

Key Takeaways

• Nvidia is set to kick off its weeklong GPU Technology Conference on Monday, where the AI chipmaker is expected to offer more details on its latest products.
• CEO Jensen Huang is set to give a keynote address on Monday at 2 p.m. ET.

The week ahead could be a big one for AI chip leader Nvidia—and the AI trade.

Nvidia (NVDA), the world's most valuable company, is set to kick off its weeklong GPU Technology Conference Monday. The company is widely expected to unveil new products and give more details on its roadmap at the event, and CEO Jensen Huang is due to give a keynote address on Monday at 2 p.m. ET. (You can watch the event here.)

That could mean more details about Nvidia's Rubin Ultra line of chips, anticipated next year, or the Feynman GPU expected for 2028. Nvidia is also seen unveiling a platform for AI agents called “NemoClaw," according to a Wired report. And analysts have said they’ll be on the lookout for developments in Nvidia’s software related to robotics and physical-world applications of AI.

Why This Is Significant

The event could be an opportunity for Nvidia to inspire investors after a weak start to the year for a stock that has lingered in negative territory despite blockbuster results.

Last year, Nvidia announced its Blackwell Ultra chip and Vera Rubin AI computing platform at the event, which has grown in popularity in recent years along with Nvidia's rise to prominence, winning it the monikers the “Woodstock of AI” and “Super Bowl of the Tech Industry.”

However, some analysts are warning the chipmaker could face a particularly high bar to impress investors this year given weak sentiment around many previously high-flying AI stocks and uncertainty around the trajectory of the technology.

"It is hard to see NVDA being able to provide thesis-altering commentary that creates a breakout for the stock," UBS analysts said in a note to clients earlier this week.

Wall Street analysts remain overwhelmingly bullish on Nvidia stock. Of the 13 analysts with current ratings tracked by Visible Alpha, 12 have said they consider it a "buy" compared to just one neutral rating. Their mean target around $264 implies 45% upside from Friday's close.

Shares of Nvidia were little changed Friday, leaving them down about 3% for 2026 so far. They've added about half their value from the same time a year ago.

Federal Reserve Chair Jerome Powell and his colleagues will likely consider the impact of the war.
Credit: Kevin Dietsch / Getty Images

Key Takeaways

• The Federal Reserve is widely expected to keep its key interest rate in a range of 3.5% to 3.75% at the conclusion of its two-day meeting on Wednesday.
• Policymakers will release their quarterly economic projections, revealing how they expect inflation, economic growth, and other economic metrics to play out in the wake of the Iran war.
• The Fed is caught between the need to keep rates higher for longer to stamp out inflation and lowering them to encourage spending and help the job market.

The Federal Reserve policymakers are nearly certain to keep their key interest rate unchanged when they decide on monetary policy this week, with the real question being how officials are thinking about the Iran war and its effects on inflation.

The Federal Open Market Committee is widely expected to keep the federal funds rate at its current range of 3.5% to 3.75% when it concludes its two-day policy meeting on Wednesday. That would be the second meeting in a row the central bank has kept the rate flat, after cutting it by a quarter-point at each of its last three meetings of 2025 to lower borrowing costs on all kinds of loans and boost the faltering job market.

Financial markets are pricing in more than a 99% chance the Fed will keep policy flat, according to the CME Group's FedWatch tool, which forecasts rate movements based on fed funds futures trading data.

What This Means For The Economy

The Fed has become less likely to cut interest rates later this year, as the Iran war has pushed up gas prices and raised concerns about a broader wave of inflation.

Less predictable is the set of economic projections policymakers will release alongside the decision, showing their forecasts for inflation, unemployment, and how they expect to change the Fed funds rate at future meetings. Those projections, along with Fed Chair Jerome Powell's post-meeting press conference, could shed light on whether the central bank will cut interest rates at all this year,

Markets have pushed back their expectations for rate cuts this year, and now consider a rate cut in October the most likely scenario, versus last month, when the first cut was projected for June. Traders fear the war in Iran will drive up inflation and drag down the job market, threatening both sides of the Fed's dual mandate from Congress: to keep inflation low and employment high.

Economists said the Fed would be reluctant to make any moves in response to the conflict, given the vast uncertainties about how long it will last and how high energy prices will ultimately rise as a result of the war's disruption of oil supplies. Fed officials' projections will most likely acknowledge the fact that the war is likely to push up inflation, at least in the short run, economists at Deutsche Bank led by chief economist Matthew Luzzetti, wrote in a commentary.

"The Summary of Economic Projections (SEP) should be little changed, except for upward revisions to headline and core PCE inflation for this year," they wrote.

Even before the outbreak of war, the Fed faced a dilemma of whether to keep interest rates higher for longer to discourage borrowing and spending and quell inflation still stubbornly above its target of a 2% annual rate, or lower rates to encourage spending and hiring after the job market slowed down significantly in 2025, raising concerns about a severe increase in unemployment.

The Fed also faces intensifying political pressure. President Donald Trump renewed his repeated demands this week for the Fed to sharply cut interest rates, a stance the Fed has resisted amid concern that lower rates could stoke inflation.

"Where is the Federal Reserve Chairman, Jerome 'Too Late' Powell, today?" Trump posted on his Truth Social platform this week. "He should be dropping Interest Rates, IMMEDIATELY, not waiting for the next meeting!"

Trump's point of view may have more leverage after May, when Powell's term as Fed chair expires and Trump's selection, Kevin Warsh, takes over as the central bank's board leader. Warsh has recently called for rate cuts, but it is not guaranteed to prevail, since he must convince the majority of the 12-person FOMC to vote for any rate movements.

Furthermore, Warsh's taking his appointed spot is still subject to Senate approval, where at least one powerful Republican lawmaker has vowed to block his nomination in protest of the Justice Department's investigation of the Fed and Powell.

The Trump administration is considering a waiver of the Jones Act.
Credit: Alex Wong / Getty Images

Key Takeaways

• The 1920 statute known as the Jones Act requires goods moved between U.S. ports to be carried on ships that are U.S.-built, U.S.-owned and dominantly crewed by U.S. citizens.
• Jones Act waivers have been used during times of crises, including during President Trump's first term.

War in the Middle East has sent oil prices aloft. That's focused the world's attention on a vital shipping route—and to a U.S. rule that governs ship movements.

The Trump administration this week said it could waive a more-than-100-year-old maritime statute called the Jones Act to help smooth disruption in the movement of goods to U.S. ports. The act, also known as the Merchant Marine Act of 1920, requires shipping between U.S. ports to be done by U.S. ships, a law put in place to spur the shipping industry after World War I. Now it's coming into play on the heels of the Trump administration's attempts to address the consequences of the war in Iran.

The de facto closure of the Strait of Hormuz has contributed to what's considered the largest disruption in global oil supply in history; Brent crude oil prices have backed off $100 as of Friday, but they remain substantially higher than before the initial strikes on Iran. The administration is considering a 30-day waiver to the Jones Act, which would let foreign ships move things like fuel between U.S. ports. Some experts, however, think it would do little to help lower oil prices.

WHY THIS MATTERS

A temporary waiver of the Jones Act might be invoked to address the supply chain disruptions caused by ongoing fighting in the Middle East, but it may not entirely address rising fuel costs for U.S. consumers seeing higher prices at the pump.

"In the interest of national defense, the White House is considering waiving the Jones Act for a limited period of time to ensure vital energy products and agricultural necessities are flowing freely to U.S. ports. This action has not been finalized," White House press secretary Karoline Leavitt said in a statement.

The U.S. is not as impacted by the effective closure of the Strait of Hormuz as are countries in Asia. The U.S. is an exporter of oil, but moving it and other goods to the places that need them, under the Jones Act means using one of a few U.S.-built (which are more expensive to make) and U.S.-coded (which are costlier to operate) vessels. Other requirements call for at least 75% of the crew to be U.S. citizens, which means higher labor costs. That makes moving oil within the country relatively expensive, whether it's from the Gulf Coast to the East Coast, or from Alaska to the West Coast and Hawaii—both in times of peace and war.

Estimates of how much lower distribution costs would be without the Jones Act vary, but the concept has been substantiated by a 2025 working paper by the MIT Center for Energy and Environmental Policy Research, libertarian think tanks including the Cato Institute, and the The Economist.

American shipbuilding is not supposed to be impacted by a waiver. Still, maritime labor unions are opposed. A group including the Marine Engineers’ Beneficial Association and the Sailors' Union of the Pacific sent a letter to Trump on Thursday saying a waiver would hurt U.S. maritime jobs and "do nothing to reduce gasoline prices" because the primary driver of higher crude prices aren't domestic shipping costs.

Others are cheering on the prospect, suggesting the Jones Act be repealed altogether, because it could reduce oil shipping costs and to some extent, fuel costs.

Various administrations over the years have instituted temporary or specific waivers. Trump in his first term used them to support disaster relief efforts to aid Puerto Rico following Hurricane Maria.