April 2nd Pre-Market

Good morning.

Yesterday's optimism aged like milk. Trump's speech gave no real exit plan on Iran, oil ripped back above $110, and futures are giving it our bounce back. Markets close tonight for Easter and the ceasefire pause expires Sunday.

I think today is a positioning day. Expect a defensive tape into the close unless a optimistic tweet comes out.

Let's dig in…

Today's Big Picture

1. Washington Steps Back From The Strait

Trump told other nations to "take the lead" on reopening the Strait of Hormuz and said it could "open up naturally." Oxford Analytica's Giles Alston put it bluntly: Washington has "largely washed its hands" of getting oil through the Strait.

Until it reopens, energy prices have no ceiling and every sector downstream from oil stays under pressure.

2. Energy Rationing Is No Longer Hypothetical

Germany capped gas station price hikes to once daily, Australia activated fuel security protocols, and Japan is restarting coal plants. The IEA released a record 400 million barrels from emergency stockpiles and its chief said rationing "may be coming soon." Governments are acting like this is a supply crisis, not a price spike.

3. Labor Market Holds Up, But The Fed's Hands Are Tied

Weekly unemployment claims printed 202K this morning against a 212K forecast. The labor market is still holding firm, which normally gives the Fed room to stay patient. But with oil above $11

0 and the 10-year back at 4.37%, it means no rate cuts and no relief for an economy that's already slowing under the weight of energy costs.

Market Overview

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Stock Spotlight (pre-market)

Globalstar $GSAT ( ▲ 3.18% )  
is the big mover in premarket after the Financial Times reported Amazon is in talks to acquire the satellite services company. Amazon declined to comment.

General Motors $GM ( ▲ 0.73% )  
slipped after Q1 sales came in nearly ten points below last year. Rising oil adds to the problem. When gas prices climb, consumers pull back on trucks and SUVs, which is where GM makes its money.

Exxon Mobil $XOM ( ▼ 5.23% )  
is leading energy higher as WTI trades above $110. Diamondback, ConocoPhillips, Devon Energy, and Chevron are all following as energy is the only green sector this morning.

Carnival $CCL ( ▲ 2.71% )  
is down in premarket alongside Royal Caribbean and Norwegian Cruise Line. Higher fuel costs and demand fears are squeezing the group from both sides.

Delta Air Lines $DAL ( ▲ 1.69% )  
is down on higher jet fuel costs. United, Southwest, and Alaska Air are all down in that same range.

CF Industries $CF ( ▼ 1.43% )  
is up on Persian Gulf fertilizer supply concerns. Gulf chemical exports remain disrupted and CF is one of the largest U.S. fertilizer producers, making it a direct beneficiary.

What to Watch

FOMC's Logan Speaks (10:15 AM ET) 

First Fed voice since oil broke $110. Hawkish on inflation and June cut pricing is dead. Any nod to growth risks and stagflation becomes the consensus trade.

April 6 Ceasefire Pause Expiration 

Trump paused strikes on Iranian energy facilities until Sunday. If fighting resumes with no deal, SocGen's $125 Brent target becomes the floor, not the ceiling. This is the only date on the calendar that matters right now.

Trump Budget (Friday) 

The $1.5 trillion defense ask drops alongside 10 year deficit projections currently estimated at $16 trillion. If the growth assumptions predate the war, bond investors will price that in immediately. Long end yields have room to run.

Thanks for reading 🙂

- John

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