Iran Is Trying to Choke Off Traffic in the Strait of Hormuz

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Education held study in February, but the bigger question is what comes next.

Plus, why the U.S. military isn't helping oil tankers get through the

straight-of-war moves.

What American defense officials are looking at is saying, like, if we send our people in there,

they're going to be in the line of fire themselves. It's not safe for them either.

So that's why they're not currently offering that to the oil-ershipping industries.

And Democrats are pitching tax cuts for millions of Americans to try to win over voters.

It's Wednesday, March 11th. I'm Alex O'Sullet for the Wall Street Journal.

This is the PM edition of What's News, the top headlines and business stories that move the world today.

A new report out today from the Labor Department showed that consumer prices rose 2.4%

in February from a year earlier. That's the same pace as in January and pretty much what

economists expected. But these numbers are from before the U.S. and Israel attacked Iran,

and the war threatens to raise a lot of prices.

WSJ investing columnist Spencer Jacob joins us now to discuss the question on everyone's mind.

Just what can February's numbers tell us?

Spencer, under normal circumstances, these numbers would have been a key reading on what

prices are doing. How does the Middle East war change that?

Well, yes, it changes a lot. It's a bit like saying, you know,

other than that, how did you like the play Mrs. Lincoln? I mean, there's a big, big thing that's

happened since these numbers were compiled for February. This war, if it lasts a long time,

will have an impact, not just on energy prices, but on food prices because it affects a lot of

the world's fertilizer supply, a lot of transport generally in the world. What does the Fed do when

you have a big energy price shock? Well, they're kind of scarred by the memories of the 1970s

when they tried to initially cut the economy back into health, which turned out to be a mistake.

And really, the answer central bankers have for this is to do nothing, you know,

unless there's a very severe recession or whether the war creates other recessionary effects,

they tend not to try to use monetary policy to deal with a commodity price shock.

So as the conflict continues, what are some of the numbers that you're going to be keeping an

eye on just to gauge a bit of the economic impact? One thing to look at is what's happening in

the real world to prices. For example, gasoline prices, those are already up substantially,

and those have a big effect, especially on middle and a working-class households, you know,

spend a lot of money on gasoline in the United States, but also psychologically, it's a price

that everyone knows, it's a price everyone sees, you know, if the price of milk and bread and

things like that start to go up as well, which they could. Those are the ones that people get

angry about and are aware of, and it affects their behavior and other ways it affects their

propensity to spend, for example. That was WSJ Investing columnist, Spencer Jacob,

thanks, Spencer. Thank you.

This morning, we told you the International Energy Agency was proposing a record release

of oil reserves to try to bring down crude prices. The IEA has now agreed to do so,

and its member countries will release 400 million barrels of oil from emergency stockpiles.

This is a major action aiming to elevate the immediate impacts of the disruption

in markets. But to be clear, the most important thing for a return to stable flows of oil

and gas is the resumption of transit through the state of Hormuz. That was the IEA's executive

director Fati B. Roll speaking this morning. Meanwhile, the Strait of Hormuz that critical

shipping lane for the world's oil supply is still effectively closed. Today, three commercial

ships were hit around the strait. This spokesman for Iran's armed forces said the country wouldn't

let quote a single leader of oil pass through the strait for the benefit of the U.S. and its allies.

President Trump said today that oil companies should use the strait. However, they're not likely to

do so until it's safe. I'm joined now by WSJ Middle East correspondent Jared Malson.

Jared, the president suggested that there will be military escorts to help ships cross the strait.

But the journal's reporting that the U.S. military has turned down requests to escort ships

through the strait. Why is that? So the administration wants to call the oil markets down.

They're under a lot of pressure to do that right now because of the surge in oil prices.

So the Trump administration has said it is prepared to offer military escorts for ships

if necessary and when the conditions are right. The conditional phrases on that statement

are very important here because what we understand from our reporting is that

the Department of Defense and the military are not currently planning to escort any ships

until it is safe to do that. The Iranians are attacking ships in the strait and

what we understand from our reporting from U.S. officials is that they do not want to send

the Navy into escort any ships as long as that is still a very real risk. Iran still has the

capability to strike using missiles, drones to mine the strait. It's just very dangerous for

any ships to go through there. What are the conditions in the strait that make this so challenging?

So it's a very narrow strait. It's somewhere in the range of 24 miles wide,

meaning the Iranian coast is very close by and what one former Navy official told me is that

when it comes to the missiles and drones that the Iranians could potentially fire,

the U.S. or Allied Navy personnel that would be there would potentially only have seconds to

respond to those. One of the analysts my colleagues spoke to compared it to a kill box essentially

and so what American defense officials are looking at is saying like if we send our people in

there they're going to be in the line of fire themselves. It's not safe for them either so that's

why they're not currently offering that to the oil or shipping industry. What would it take to

reopen the strait? What analysts have been telling me is that only a cease fire along with some

explicit assurances from the Iranians that they're going to stop shooting at these ships.

That's the only thing that would really restore shipping through the strait.

That was WSJ reporter Jared Nelson. Thanks Jared. Thank you.

U.S. stocks were mixed today. Financial shares fell putting pressure on the Dow which dropped

0.6%. The S&P 500 ended slightly lower while the NASDAQ ticked higher. Oil prices kept rising

with Brent crude the global benchmark closing up nearly 5%. We want to know how volatile energy

prices are affecting you or your business. Let us know by sending a voice note to WNPOD at WSJ.com

or leave us a voicemail at 212416-4328. Make sure to include your full name and location so we

can use your comments on the show. Coming up everyone from Democratic law makers to McDonald's is

trying to win over people watching their wallets. We'll get into how they're doing it after the break.

At CLA we're in your corner and on it. We coach tax strategies and little league first base.

We help you adopt AI data tools and we adopt rescues named buddy. We walked your factory floor

and jog the local 5K. Though sometimes we walk that too. Wherever you're coming from,

we're right there with you. Wherever you're going. We'll get you there. CLA, CPAs, consultants and

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Democrats are out of power and they're looking for ways to get the attention of voters who are

worried about their finances. So senators are coming up with plans that would get rid of federal

income taxes for millions of people. Maryland Senator Chris Van Holland is preparing a proposal

to end income taxes for people making under $46,000 and married couples making under $92,000.

And New Jersey Senator Cory Booker's pitch would more than double the standard deduction while

increasing the child and earned income tax credits. WSJ Tax Policy reporter Richard Rubin says the

plans are an effort to win over voters. What Senator Booker and Senator Van Holland are doing is

trying to address the concern that lots of voters have about the cost of living and they see a

tax cut as a quick, easy to understand way to do it. We shouldn't sort of underestimate the power

of simplicity. We saw in the 2024 campaign how President Trump talked about no tax on this,

no tax on that. The bumper singer kind of thing. And that's really kind of what they're aiming to do

is like this sort of mass big tax cut idea that's a little different from what we expect from

Democrats. Rich says that the senators are trying not to increase the budget deficit,

which is expected to grow in the coming years. So both the Booker and Van Holland plans

they're designed so that there are tax increases that go along with the tax cuts. Booker is

talked about higher corporate taxes and raising the top tax rates. Van Holland's got a surtax on

very high income people. Their idea is to pay for the things that they're doing. The challenge is

this. Any dollar that Democrats are able to raise a new revenue to pay for this is a dollar that

they can't use for other initiatives. So these frills have generated some pushback from others

in the party who are like, well, wait a minute. Like what should be first on our list? When Democrats

get to 2029, their first chance to really be in control of everything again, what comes first for

the party? Speaking of affordability, we're exclusively reporting that starting next month. McDonald's

is planning to offer a new value menu of items costing three dollars and less. It'll also have

new four dollar breakfast deals. The fast food chain has been pushing for nearly two years to cement

its affordability image. And a shopper boycott against target that has hurt its sales may be ending.

Last year, a group of activists encouraged shoppers to boycott target after it back

away from some of its DEI policies. Now their official work on the boycott will end. The activists

say that's because target privately acknowledged a breakdown in trust with the black community.

Target has reported 13 straight quarters of week or falling quarterly sales. An executive

said shoppers upset over DEI policy changes have played a role. A target spokesman today

said that the company is pleased to be moving forward. Last year, we reported a series about

the boycott and its impact on targets bottom line. We'll leave a link to that series in the show

notes. The journal has learned that the Trump administration is preparing to announce new

tariff investigations over what it considers unfair trade practices. They could result in higher

tariffs on a number of other countries. These tariffs are designed to replace the temporary

10% tariff imposed last month after the Supreme Court ruled that many of Trump's previous tariffs

were illegal. And we're exclusively reporting that President Trump ordered the Justice Department

to reverse course on defending the White House's sanctions against law firms. The Wall Street

Journal reported earlier this month that the department was dropping its defense of executive

orders that outlined punishments against specific law firms. People familiar with the matter say

that Trump said he didn't sign off on that and expressed displeasure with Justice Department

leadership. White House press secretary Caroline Levitt said the president had confidence in

attorney general Pam Bondi and deputy attorney general Todd Blanche. And that's what's news for

this Wednesday afternoon. Today's show is produced by Pierre Biennay with supervising producer Tally

Arbell. I'm Alex O'Soleff for the Wall Street Journal. We'll be back with a new show tomorrow

morning. Thanks for listening.

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