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Voices are powerful things.
At Vanguard, investors are also owners,
and their voices are heard.
And now with investor choice,
they have an even greater voice when investing.
It's just another reason millions of investors
have turned to Vanguard for 50 years.
50 million investors, 50 million voices.
Vanguard.
Vanguard is owned by its funds,
but are owned by Vanguard's fund shareholder clients
to learn more, visit vanguard.com.
All investing is subject to risk.
Vanguard Market Incorporation Distributor
figure as of January 2025.
Goalfleaders insist on crippling Iran's regime
before ending the war.
Plus, as fighting drags on,
we'll look at why Wall Street isn't freaking out,
at least not yet.
So we see the shortage of this conflict will be
so small as the impact should be on the economy
and the consumer, but as of now,
we're actually having a stack of stationary risk
that is growing by the day without equipped escalation.
And bad news for the struggling U.S. Postal Service
as Amazon plans to take its business elsewhere.
It's Wednesday, March 18th.
I'm Luke Vargas for the Wall Street Journal,
and here is the am edition of What's News,
the top headlines and business stories
moving your world today.
Goalfeficials say they want the U.S.
to keep up the fight against Iran
in order to render it incapable of future attacks.
A major pivot from a region that once courted Tehran.
Speaking to the journal,
Emirati and Katari officials described Iran
as the belligerent party,
citing its attacks on infrastructure
and civilian targets,
while another senior golf officials
said the only acceptable outcome of the war
would be in Iran so infebold
that it could never imperil its neighbors again.
Iranian leaders in recent days have said
they'd only accept a ceasefire with the U.S. in Israel
if the country received reparations
and ironclad guarantees against future attacks.
Meanwhile, Iran struck central Israel
with missiles overnight,
causing heavy damage and killing two people,
raising the death toll in Israel
since the start of the war to at least 14.
And authorities in Iraq report
that the U.S. embassy in Baghdad suffered a fresh attack
without providing more details.
The compound was hit by a missile over the weekend
and targeted by rockets and drones Monday and Tuesday.
Well, with the war dragging on,
the effective closure of the Strait of Hormuz
sending energy prices soaring and inflation warnings
now cropping up around the world,
why are U.S. equity markets
off just a few percentage points
since before the fighting started?
A manual comb is the head of European equity strategy
at Barclays, and he joins me now to discuss why that is
and whether that trend will continue.
A manual Wall Street's reaction as far
has been much less negative compared
to past conflicts in the Middle East
in spite of concerns that this all could become
a protracted situation.
Why is that?
Hey, look, I think the market is pretty comfortable
with the view that President Trump
cannot afford to have a long lasting shock
and stark fashionary heat to the U.S. economy, right?
And I think there is still a lot of trauma
from investors having sold equities
after Liberation a year ago, which was a big mistake.
So I think investors are hopeful
of a Swiss resolution to this conflict.
On the view that Trump will ultimately do
whatever is good for the U.S. economy.
And that includes triggering a swift policy response
pushing in particular the IEA to release all of this oil.
I think this is part of the toolbox,
but I guess what we can conclude
from Trump communication in the last couple of days
is that the all price as church is spent threshold.
So that was already seen a year a week ago
when Trump was starting to talk about this escalation
after all price went above $120.
Obviously, it's not just about him tweeting
about the end of the conflict.
We need to see the other parties,
whether it's Israel or Iran,
willing to support this escalation effort.
So I think this is where we have a bit of question, Mark,
about whether the market is too complacent
about the outcome of this conflict
and whether you could get the situation to worsen
before it gets better.
So I think what we said is that typically
for a 30% move up in oil,
what about 10% to 15% drop in equity market
and so far the global equity market is not only 4%.
So it's not the typical risk of we had
in previous old super shocks.
Yeah, and we've spoken on the show in recent days
about some of the factors that have insulated
the US economy in particular from this crisis,
more so than the rest of the world.
It really helps, for instance, to be a net energy exporter.
What else?
Look, I think the US markets,
whether it's US equity market or the US dollar
have behaviors as safe haven again, right?
And think about this in the context of the past six months
was the only gaming town was South America
and rotation towards international market.
What we saw in the last couple of weeks
is the safety of the US market prevailing again.
And yes, I think the most hit market
are those which are the most energy sensitive.
So we've seen Asian equities, Europe equities coming down
quite a lot more than the US equity market,
which is again less directly impacted
by this kind of stack-facenery fields.
And even if you look at the right market,
we had a pretty hawkish reprising in Europe and race
because now the market is looking for the ECB to high-grade
as a consequence of this inflationary shock
while seeing the market instead looking
for one cut from the Fed this year.
So the market is really seeing that this stack-facenary shock
would be much more acute in Europe than it would be for the US.
The consumer outlook worsening in your view.
I would say today compared to two weeks ago,
yes, the consumer outlook is worsening
because we have lower growth and higher inflation
as the consequence of this oil shock.
And again, if you get gasoline prices going through the roof
in the US and some other sentiment surveys
are starting to be hit, right?
So this is a short term, this conflict will be
the smaller the impact should be on the economy
and the consumer.
But as of now, we're actually having a stack-facenery
risk that is growing by the day
without a quick destination.
And man, I want to talk about central banks.
The Fed is making a rate announcement today.
Could central banks here inadvertently dial up
stagflation fears if it looks like their focus
is returning back to fighting inflation
instead of supporting growth?
Yeah, absolutely as things are,
the key will be how central banks around the world
respond to this development.
And you know, we have a busy week with the Fed,
we have the ECB, the Bank of England as well,
meeting on Thursday ends the Bank of Japan as well.
So all the main central banks around the world
are going to have to tell us what they make of this oil shock
and whether there's something to shift away
from what has been a pretty dovish communication so far.
And whether they start to embrace what the market seems
to be facing, which is basically a higher rate
in the case of Europe or less right cut
in the case of the US.
Emmanuel Coe is the head of European equity strategy
at Barclays.
Emmanuel, thank you so much for being with us on What's News.
Thank you.
Well, as we mentioned there, the Fed's latest interest rate
decision is due this afternoon in announcement
that journal chief economics correspondent Nick Timoros says
comes as officials are contending yet again
with a familiar foe inflation.
It has a feeling of deja vu for the Fed.
First it was the aftershocks of the pandemic.
Then it was Russia's war in Ukraine.
Last year you had sweeping tear of policy changes
and now it's the war in the Middle East.
What the war does is that it freezes up your ability
to make big judgments.
So if you thought the bigger problem
before all of this was still in the labor market,
you may look at the possible destruction of demand
that comes from higher oil prices and say, well,
now the labor market is going to be in an even more
fragile position and we should focus on that.
If on the other hand, before this conflict,
you were worried that inflation wasn't getting better.
You also can look at that and say, geez,
inflation was not getting better.
It was actually getting a little bit worse
and now we're going to have a new round
of potential supply problems.
Well, the war is likely to reinforce the consensus
around holding rates steady.
Nick says there's less clarity
about where policy makers should head after that.
Policy makers around the table this week face a question
that would have seemed unlikely a few months ago
when they were cutting interest rates.
And that question is no longer,
when will they next cut interest rates?
But rather, can they credibly suggest
that the next move in interest rates
is still more likely to be a move down than a move up?
And there were some officials even before this
who wanted to get rid of that guidance that suggested
that the next move was more likely to be a cut.
They wanted to go to a more neutral bias
and so that debate I think will continue.
Today's rate announcement is due at 2 p.m. Eastern
followed by a press conference by Chair Jerome Powell.
Coming up, the U.S. Postal Service
risks losing business from its largest customer, Amazon
and Illinois governor, J.B. Pritzker,
dodges political embarrassment in a Senate primary,
those stories, and more after the break.
Voices are powerful things.
At Vanguard, investors are also owners
and their voices are heard.
And now with investor choice,
they have an even greater voice when investing.
It's just another reason millions of investors
have turned to Vanguard for 50 years,
50 million investors, 50 million voices, Vanguard.
Vanguard is owned by its funds,
but are owned by Vanguard's fund shareholder clients
to learn more visit Vanguard.com.
All investing is subject to risk
Vanguard Market Incorporation Distributor figure
as of January, 2025.
Illinois's lieutenant governor, Juliana Stratton,
has won the state's Democratic Senate primary,
putting her in pole position to replace
retiring Senator Dick Durbin, who's held a seat since 1997.
Tonight, we showed what's possible
when you listen to the people and give the people
what they want.
You got it.
General National Political Reporter, John McCormick,
says the win is a boost to the economy
and John McCormick says the win is a boost
for Stratton's boss, Governor JD Pritzker,
as he eyes a potential White House run in 2028.
The primary race tested Pritzker's political cloud
in a state where he has leveraged his wealth
to dominate the Democratic Party.
Stratton's victory comes as he's working
to raise his national profile with the party's base nationally,
helping elect Stratton could prove useful to Pritzker,
should he run for the party's nomination
after a likely securing a third gubernatorial term
for himself in November's election.
The victory by Stratton could also help
soothe some of the bad feelings about Pritzker
among members of the Congressional Black Caucus,
which had backed another candidate in the race
and was critical of the governor's financial involvement
backing Stratton.
If elected Stratton would become only the sixth Black woman
to serve in the US Senate.
Voice of America could soon be back on the air.
A federal judge yesterday
ordered that the Trump administration
restart the government run outlet
after effectively shutting it down last year,
putting hundreds of employees back to work.
The ruling comes after the same judge last week,
ruled that Trump's pick to lead the US agency
for global media, Carrie Lake,
lacked the authority to slim down V.O.A.'s operations.
We are exclusively reporting that Amazon plans
to slash the number of packages it sends
through the U.S. Postal Service by at least two thirds
as early as this fall.
That's after Postmaster General David Steiner
solicited bids from Amazon and others
for its last mile delivery service for the first time.
But with Amazon's existing contract ending in October
and the results of the bidding not released
until the second quarter,
we report that Amazon grew concerned
it would have little time to adjust operations
if its bid wasn't accepted.
And Amazon spokesman said that the e-commerce retailer
initially wanted to increase volumes
with the Postal Service,
where it's long been the largest customer
and was surprised by the new bidding process.
The USPS delivered more than a billion Amazon packages
last year and the pullback comes
as its finances are in dire straits.
Here was Steiner testifying yesterday on Capitol Hill.
At our current rate, we'll be out of cash
in less than 12 months.
So in about a year from now,
the Postal Service would be unable to deliver the mail.
If we continue the status quo,
Steiner is asking Congress to raise the Postal Service's
debt limit and lift regulations on its ability
to raise prices for stamps and other services.
And finally, celebrations in Caracas.
Venezuela, last night, beat out the heavily favored US
in the World Baseball Classic in Miami,
sparking celebrations in cities with large Venezuelan
populations from Santiago to Madrid.
Following the win, Venezuela's interim president,
Delcy Rodriguez, declared today a national holiday,
while Donald Trump took to truth social
to suggest making the oil rich nation the 51st state.
And that's it for what's news for this Wednesday morning.
Today's show was produced by Hadi Moyer,
our supervising producer, his Daniel Bach,
and I'm Luke Vargas for the Wall Street Journal.
We will be back tonight with a new show.
And until then, thanks for listening.
And I'm Luke Vargas for the Wall Street Journal.
I'm Luke Vargas for the Wall Street Journal.
And I'm Luke Vargas for the Wall Street Journal.
And I'm Luke Vargas for the Wall Street Journal.
Voices are powerful things.
At Vanguard, investors are also owners,
and their voices are heard.
And now with investor choice,
they have an even greater voice when investing.
It's just another reason millions of investors
have turned Vanguard for 50 years.
50 million investors, 50 million voices.
Vanguard.
Vanguard is owned by its funds,
but are owned by Vanguard's fund shareholder clients
to learn more, visit vanguard.com.
All investing is subject to risk,
Vanguard Market Incorporation Distributor,
figure as of January 2025.
WSJ What’s News

