US Navy Blockade on Strait of Hormuz: Global Oil Surge and Economic Tensions

Well, good morning. Yes, it's me, Kenny Polcari, your host of the party. And look where I am today, coming to you live from the New York Stock Exchange. And today is Monday, April 13th, 2026, and here are the things that you need to know to get your day started. Well, guess what? There was no deal in Islamabad over the weekend. After 24 hours, absolutely nothing. So Trump, what does he do? He announces a U.S. Navy blockade of the Strait of Hormuz. Oil surged immediately up 8%, taking it above $104 a barrel, but global market reaction? It's not panic, and that tells you something. Earnings season, well, kicks off in earnest today, right? The big banks are all up, uh, yet Goldman Sachs is the one that's going to report first. Now, CPI on Friday came in as expected, hot but not hotter. And what are we having dinner tonight? We're gonna have the chicken soup because, God, it's going to make you feel good. Look, I'm in New York City, uh, Monday, Tuesday, and Wednesday this week. I'm here at Schwab TV at the New York Stock Exchange this morning. I'll be on Mornings with Maria tomorrow morning from 6 to 9, and on Wednesday I'm going to join the Big Money Show from 12 to 1, and then I'll be on my way back to Florida. So make sure to join in. Okay, so good morning, and well, there is so much to talk about, but not so much optimism, at least not at the moment. Look, I told you on Friday, watch what comes out of the Islamabad, uh, meetings over the weekend because that was going to be the next market mover. And here we are. JD Vance, Stevie Witkoff, and Jared Kushner sat right across from the Iranians for 21 hours, right, at what was the highest level face-to-face between the US and Iranians in 47 years, right, since the revolution in 1979. Now, the Iranians sent their parliament speaker and their foreign minister, and Pakistan's prime minister was in the room as well. And after that, still, all there was was a big nothing. No deal, no agreement. Vance walked out and boarded Air Force Two, and he said this to us before he left: The bad news is that we have not reached an agreement. I think that's more bad news for Iran than it is for the United States of America. They chose not to accept the terms. Trump immediately immediately summed it up on Truth Social saying, you know, most points were agreed to other than what really mattered, and that was nuclear. That was not agreed to. And so Trump announces a US Navy blockade of the Strait of Hormuz effective at 10:00 Eastern time today. And that sent tremors through the markets last night, the futures markets, the Asian markets, and they sent futures significantly lower, at least initially. But here's the interesting thing. This morning, the global markets are not in panic mode at all. And that tells you something very important. Yes, oil surged by 8%, taking it above $104 a barrel. European gas futures spiked by 18%. Those moves are real and they matter. But equities, not so much. Asia sold off modestly, right? Japan was down 7/10. Hong Kong was down 7/10. China's, China's 300 was essentially flat. South Korea ended up closing in positive territory. European markets this morning, they're lower, but they're not on fire. Right. And US futures this morning, they tumbled overnight. Dow was down more than 500 points, but they've already pared a lot of those losses fairly significantly. The S&P futures are now down only about 0.5%. We'll get to that in a moment. But this is not a market in panic, right? This is a market that is digesting the headlines. Why the relatively calm reaction? Well, because investors and traders and even some of the algos are viewing this as just another negotiation tactic, right, versus a long-term change in policy, right? We've seen this before. In fact, what markets are now realizing is that the blockade is not a total and complete blockade of the strait. It is aimed squarely at Iran and Iran only. The other Gulf states have the freedom to pass their ships through the strait. And once you understand this, Um, this measured reaction makes complete sense for the markets. Now look, let's be precise about the blockade because the mainstream media was getting it all wrong yesterday, right? The blockade is a blockade of Iranian ports. Specifically, CENTCOM was very crystal clear, and I quote, CENTCOM forces will not impede freedom of navigation for vessels transiting, uh, the Strait of Hormuz to and from other Iranian ports, right? So what does that mean? Well, it sounds like oil can still move. Qatar LNG can still move. Kuwaiti tankers can still move. UAE exports, all free to move through the strait. What is choked off though, completely, is Iran's ability to export oil or import any goods, right? The US Navy is laying a naval siege on the Iranian economy. Cut off their revenues, cut off their reports, starve the regime financially, force them back to the table, right, one more time without the nuclear card. And simultaneously, we're clearing the mines in the strait. CENTCOM says that they're going to publish a safe passageway through the strait for commercial mariners once the clearing is complete. Now, the real strategy is more simple. Open the strait for the world, shut it down for Iran, sweep the mines, restore global energy flows, strangle the regime economically, and then sell American oil to everyone else who needs it in the meantime, right? Is it risky? 100%. The RIGC said that any military vessel approaching the strait is going to be dealt with harshly and decisively. But look, if this works, Trump walks away having reopened global shipping, crippled Iran's economy and positioned the US as the world's independent energy supplier. That's not nothing, right? That is something. Now the question is, does Iran have the nerve to fire just one missile or one drone? Well, we're about to find out. Now, here's the one thing that you should know, right? Um, at least something to consider this morning. I think what's helping the markets as of right now, Iran has not attacked one single ship overnight since this blockade was announced. Now, the IRGC is issuing threats, but no one has attacked anyone yet. Now let's do the math. The US is the world's largest oil and gas producer, right? Petroleum exports hit a record 7.9 million barrels a day for the week of March 27th. Trade flows are already shifting, but here is the cold hard truth. The US does not have enough oil to replace the 20 million barrels per day that normally float through the strait. Not even close. But here's a number nobody is talking about. How much of that 20 million barrels is actually Iranian oil? Because that's key in this conversation. It's about 1.5 to 1.8 million barrels per day, less than 10% of the, the, the oil that flows through the straits, right? The other 90%, well, Saudi Arabia's 5.5 million barrels per day. 3.3 million is Kuwait, UAE, and Qatar, another 6 or 7 million combined. None of this is being touched. All of it would be allowed to go through the strait. So Trump is not blocking the world's oil. He is blocking Iran's oil, and that distinction matters enormously, both for the markets and for the negotiating table. Because every day that, that Iran cannot export oil is another day that their economy bleeds out. And a bleeding economy has a way of changing negotiating positions. Okay, so now back to the US because what's up with inflation? Friday gave us the March CPI report. While it matters, it was not unexpected, right? Headline came in as expected, up 0.9% for the month, uh, and up 3.3% year over year. Energy drove it off, right? Up 10.9% for the month. Gasoline was up 21%. But here's a silver lining. Uh, core CPI, ex-food and energy, came in at just 0.2% monthly and up 2.6% year over year, below the estimates on both counts. And that's a positive. Goldman said it simply, that the Fed can look through the energy-driven noise so long as the other factors hold, right? And the economy doesn't get slaughtered. The market agrees, and there was hardly a reaction at all on Friday morning at 8:30. But with the oil now back above $104 and Iranian barrels getting taken off the market, April and May CPI could and most likely will be something different entirely. As you would expect, WTI surged 8% last night, taking it back up above $104 a barrel. Brent went to $102 a barrel. Wholesale gasoline spiked by 6%. Jet fuel was up 10%. Analysts leaders, um, analysts, traders, and academics are now all deciding to chime in, saying— of course they'll create hysteria— saying that could be a long time before oil prices come down, with nearly all of them pointing to the fact that gasoline prices are up 38% since this conflict began. Bonds— the 10-year closed Friday yielding 4.31%, up 2.5 bps. This morning it's up another 1.7 bps at 4.33%. The 30-year closed Friday yielding 4.91%. and this morning it's yielding 4.93. It's up also 2 bps. Recall, 4.5 on the 10-year and 5% in the 30-year are levels or lines in the sand, right? If we get close to those levels, it's going to cause a bit more unrest for stocks. Gold closed at $4,750 on Friday, down $25 as traders trim positions ahead of the weekend. This morning, gold is down another $30 at $4,715 because the The idea that energy is going to remain elevated longer than expected raises the possibility that global central banks may be forced to raise rates rather than hold them steady, never mind cut them. Um, and that will be a headwind for gold. The VIX closed on Friday at 19.28 in the, in the complacent zone, but it's surging higher this morning, and that makes perfect sense, right? The VIX up 10.5%, now trading at 21.25. Putting us back into that cautious zone, but leaving us well below the panic zone of 30. Trendline resistance is at 2253. Now, if we breach that on the way up, then I expect the tone's gonna get a little bit more anxious. I would not expect that to happen unless, of course, Iran starts attacking the US Navy fleet, blocking the ports. But even if it happens, expect the US response to be swift and painful. US futures got hit hard initially last night, like I said, but have recovered a bit. At 6 o'clock this morning, Dow futures were only down 255. The S&P's down 42. NASDAQ's down 160. The Russell's down 31 points. Not ideal for sure, but certainly not the disaster that people thought it was going to be last night. Now, we're getting existing home sales today, um, and they're expected to be down by 0.8%, but my gut says the market's not going to pay any attention. Tomorrow though brings us the March PPI report, and that too is expected expected to be up substantially. Top line is expected to be up 1.1% month over month and 4.6% year over year. Core PPI is expected to be up 0.4% month over month and up 3.8% year over year. Both readings higher than last month. But I think the market will certainly focus on that. That will be a topic of conversation. And it is earnings season. Look, I know the geopolitical headlines are dominating everything that we're talking about, but earnings season kicks off this week. In fact, it kicks off today with the big banks. Now, what's going to be important is what the C-suite says on their calls is going to tell us everything about the health of the US economy heading into what is shaping up to be maybe a more turbulent second quarter. So here's the schedule. Today we got Goldman Sachs, right? That's interesting. Uh, David Solomon apparently jumped in front of Jamie Dimon. He couldn't stand being in second place, so he had to come out there and report first, which is of them, which is not usually how it happens. Now, the Street's expecting revenues of $16.9 billion, up 12% year over year, earnings per share of $16.35, up 16%. Trading revenue should be strong. Mid-quarter updates, uh, potential point to, uh, uh, plus 10 to 15% growth, right? Solomon said in March that he expects M&A to accelerate in 2026 despite, um, the conflict. Now let's see if he feels that way once once they report. Tuesday, tomorrow, is going to bring us JP Morgan, Citigroup, and Wells Fargo, right? So it is a big day. Jamie is expected to earn $5.41 a share, revenues of $48.2 billion, up 6.7% and 6.4% year over year. Remember, he already warned in a shareholder letter that this war risks oil and commodity prices shocks, and that could keep inflation sticky and rates higher than the market expects or expected coming into the year. He sees a stagflation risk. Now, he's not going to sugarcoat this. Watch the language that he uses about loan loss reserves. If Jamie starts building them aggressively, that tells you everything you need to know about what he's really thinking about what's coming for the economy. Citigroup is an interesting one. Jane Frazier's turnaround story, expecting earnings per share growth of a whopping 34% year over year and revenues of $23.6 billion, up about 9%. The investment banking division has been on a tear. Uh, an 84% surge in M&A advisory revenues in late 2025 is expected to continue, or have continued in the first quarter. Wells Fargo earnings per share growth of over 22% a year, revenues of $21.79 billion, up about 8%. Wells still operates under the Fed's asset cap though, right? So watch for any commentary on when that gets filled. That is the single biggest catalyst for this stock, and it still has not happened. Wednesday brings us Bank of America and Morgan Stanley, uh, because that rounds out the week. Bank of America expects roughly 10% earnings growth. It's also one of my favorites. Morgan Stanley, which has beaten expectations every single quarter since 2023, is looking at revenues of about $19.7 billion, up 11%, and earnings per share of, uh, of, uh, $8— uh, $3.01. Sense up 16%. Now, here's the thing that matters most of all about these calls, and it's not about the numbers. Those are history. What the market wants to hear is the guidance. What are these CEOs saying about the second quarter? How much money are they putting into reserves? Because that is going to be very important. What about mergers and acquisitions? What about the energy sector loan exposure, right? With oil at $104, a blockade of the strait, and a ceasefire expiring in 10 days, what's what does that all mean? I want to hear what Jamie Dimon thinks about what's coming, because Jamie doesn't miss a mark. And remember, the whole sector, the financial services sector, is down 7.6% year to date. So I'm just saying, maybe there's an opportunity there. Now, the S&P closed at 6816, down 8 points, right? Short-term trend line supports down at 6761, a level that I believe we're gonna probably test. Um, but look, no one really expected the weekend to produce a full resolution. So none of this should be a surprise to anyone. If we fail to hold at that trendline, 6761, then I expect that we would test the long-term trendline once again at 6660. I, I don't think so, but we could. In the end, we need to get this resolved fairly quickly. Otherwise, then you're gonna have to start to recognize that, uh, the Dems could sweep in November, and that's only gonna cause more angst, uh, in the markets. And don't think that Iran doesn't realize that. A Democratic sweep will immediately launch impeachment proceedings on Trump, and if they control both houses, we can be sure that that's what they'll try to do. But they're still going to need two-thirds of all senators to vote yes to impeach, something that I don't think in the end happens. Look, the ceasefire expires in 10 days. We'll see. The US Navy's in the strait. Iran is not backing down on nuclear Oil is back above $104, and the big banks are about to tell us that they think the second half of 2026 looks like— they're going to tell us what they think it looks like, right? So there is a lot to focus on. So just strap in because it is going to be an interesting week. Now look, you can always call me at 561-931-0190, and let's talk about Slatestone Wealth and how, uh, we can help you navigate all of this noise to help you reach your goals. Okay, so what do we have for dinner tonight? Well, when I feel anxious, I just want chicken soup. And in fact, it helps everyone feel better when they're feeling unsettled. Now, I made this yesterday, right? I use skin-on, bone-in thighs, right? I use a big— a big onion, carrot, celery, all chopped, right? Salt and pepper, a cube of chicken bouillon, and of course a full pot of water. I'm gonna add everything to the pot. Bring it to a boil, then turn the heat down to medium and just let it cook for 2 hours. Now, halfway through, you're going to have to add some water to the pot because a lot of it's going to, going to steam away. So just make sure you add some water to the pot. After the 2 hours, turn the heat off, take the chicken and all the skin that's floating around in there off, put it in a side bowl, let everything cool down. As the soup cools, then the fat's going to rise to the top. You could just skim it off and toss it away. Then you're gonna go back to the chicken, throw all the skins away, shred the chicken meat, put the chicken meat back into the soup. You want to serve this with white rice or even ditalini pasta. Make sure, of course, that you always have plenty of fresh grated parmigiano cheese on the table for your guests. Look, until tomorrow, take good care.