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👋 Good morning! Stocks struck back on Monday as encouraging news out of the Iran conflict sent oil prices down around 10%.
The news? That President Trump would be calling off his ultimatum to strike Iranian oil infrastructure came after what he called “productive talks” with Iran, though the Strait of Hormuz will likely remain closed for now.
The stakes are still very high.
By the numbers, the S&P 500 (^GSPC) gained 1.2%, and the Dow (^DJI) and the Nasdaq (^IXIC) both gained 1.4%.
Hamza’s out this week, but we have our Head of News Myles Udland in the copilot’s seat (hold for applause).
On the agenda this morning:
🪑 The massive irony of the Fed chair succession
🤖 Only loser companies fire due to AI. Winners hire.
💸 Tax refunds might get cannibalized by soaring gas prices. But maybe not.
📫 Larry Fink’s letter
🏡 Housing’s under pressure
📆 What we’re watching Tuesday: With Iran and the US now talking, negotiations over the Strait of Hormuz and the next phase of the conflict will cast a long shadow on Tuesday — and probably the rest of the week.
But we’ll also be watching economic activity data from S&P Global and corporate results from GameStop (GME), which is seldom boring.
📈 The relationship between the S&P 500 and Big Tech has completely changed. The “Magnificent Seven,” which powered the stock market’s past three years of gains, has become decoupled from the index. That’s bullish for tech stocks.
🛢️ Goldman Sachs raises oil forecasts once again. The average projected price of Brent crude jumped from $77 to $85.
🪨 BlackRock CEO warns AI will worsen inequality. CEO Larry Fink’s annual letter to investors noted that AI could worsen the already-present trend of most wealth going to asset owners.
🧱 US construction spending unexpectedly falls in January. Census Bureau data said that broad weakness in private projects resulted in the surprise, which came after December’s very strong spending numbers. Yet another casualty, perhaps, of expectations for higher-for-longer rates.
📈 If the Iran war were to send oil prices up 100%, here’s how the stock market might react. History says short-term pain is usually followed by some gain — if you’re patient.
🍪 Elon Musk’s Terafab is here. Here’s what it is, and why it’s important for Tesla and SpaceX.
🔐 Cisco launches security services to guard against rogue AI agents. OpenClaw, a personal AI assistant that can run on your computer, may be useful, but it’s a massive security risk. Cisco is launching a multipronged defense.
🚗 Rivian’s CEO tells us how the Uber deal happened. And why the AI “driver” is the future of mobility.
🤖 JPMorgan offers clients a new way to hedge AI debt risk. Investors can do credit default swaps with Alphabet, Amazon, Meta, Microsoft, and Oracle, and trade in $25 million increments, Bloomberg reported.
See what else is trending on Yahoo Finance.
We’re now inside of two months before Powell’s appointed term as head of the central bank runs out, but the Trump administration’s continued needling of Powell might do the one thing the president would like least — keep Powell around.
President Trump has long voiced his displeasure with Fed Chair Jay Powell, and has, we assume, been counting down the days until May 15, when Powell’s term ends.
But as Jennifer Schonberger reports, Powell made clear last week he would remain on the Fed board until the DOJ’s investigation into Powell’s testimony last year and the Fed’s renovation of its Washington, D.C., headquarters is “well and truly over with transparency and finality.”
Additionally, Powell said that if Trump’s appointee to take his role — Kevin Warsh — weren’t confirmed by the Senate before Powell’s term ends on May 15, he would lead the Fed on a “pro tempore” basis.
A big question mark for the Fed, but a fascinating turn that will keep the Fed succession drama as a primetime narrative this spring. After all, irony makes for good content. “Jagged Little Pill” didn’t sell over 33 million copies by accident.
You can feel the momentum building — the flex in the tech industry is soon going to be how much you’re hiring, not firing. The Financial Times reported over the weekend that OpenAI plans to double its headcount this year. This comes as the company reportedly prepares to go public by the end of 2026.
Mass AI adoption has been closely followed by fears about mass AI unemployment. The challenges with these worries about AI-driven unemployment really sticking are twofold, in our view.
The first is that the threshold for government intervention, should this trend really materialize in the data, is likely lower than the tech industry believes. The second is that white-collar workers aren’t just workers, they’re consumers, too, and ones with relatively higher purchasing power in an economy largely driven by household spending.
When Jack Dorsey’s payments company, Block, announced plans to cut 40% of its workforce overnight due to AI, the zeitgeist was set: AI is a job-killing technology.
Headlines about other tech companies cutting staff or planning to will, in turn, continue to make the news. In the background, however, we suspect that more companies will begin asking themselves the question that all leadership teams inevitably ask when their competitors start adopting a uniform strategy.
Namely, isn’t the opportunity really found in doing the opposite? Jensen Huang certainly thinks so.
Tax refunds are up 11% from a year ago at last check. But the surge in oil prices has some concerned that this consumer “windfall” will be spent on gas rather than something that might hit GDP with more oomph, like a new fridge, a sofa, or a family vacation.
How consumers have behaved when gas prices fell, however, has us thinking the case for consumer spending holding up during this tax season isn’t a stretch.
Economists at Brown and Chicago’s Booth School found that during the financial crisis, consumer spending on higher-octane gas rose as their overall household budgets came under pressure. Data from JPMorgan published in 2015 showed spending from gas-related savings does show up elsewhere in the economy, but it’s not like-for-like.
Or as an economist would say, these shifts in household budgeting show people don’t view their money as perfectly fungible: Many things in the budget simply have their place.
At the same time, research has also shown that tax refunds do often lead to a surge in consumer spending.
Part of this is simply about cash flow — households are always having to flex between recurring, largely non-negotiable costs like food, energy, and shelter. Meanwhile, big-ticket items that require a down payment or must be purchased all at once often can’t be afforded without the one-time influx a tax refund might provide.
The reason politicians are so focused on affordability is because they don’t call it the cost of living for nothing: It costs everyone something to exist. The less, the better. And as these costs rise — and labor prospects dim — consumer confidence falls.
But one-time buys financed by one-time cash injections are just that. So the cost of living might be taking refund tax checks down a peg as a percent of the overall budget, but $3,623 is $3,623. And that only comes once too.
“The vast majority of wealth has flowed to people who owned assets, not to people who earned most of their money by working … Now AI threatens to repeat that pattern at an even larger scale — concentrating wealth among the companies and investors positioned to capture it. This is where much of today’s economic anxiety comes from: a deeper feeling that capitalism is working — just not for enough people.”
— BlackRock CEO Larry Fink, in his annual letter.
An important reminder that oil prices are merely one piece of the current geopolitical puzzle.
“Geopolitical risk also weighs on hiring and investment in ways that extend beyond the effects of higher oil prices and tighter financial conditions.”
— Goldman Sachs’ US economics team, in a note to clients
For years now, Fink’s annual letter has joined the pantheon of “must-read” annual letters from financial big cheeses, following the iconic example set by Berkshire Hathaway’s Warren Buffett.
This year’s edition featured many of Fink’s hallmarks, including a recognition of the deep moral problems facing the country, talk about stakeholders and not just shareholders, and a general statesmanlike tone.
It’s an interesting read (Our coverage is here, and the letter in full is here). And, of course, it had us wondering about the other must-read letters. Buffett and now Abel. Jamie Dimon. Who are we missing? And is Fink pulling off this statesmanlike mantle?
Let us know what you think: emann+morningbrief@yahooinc.com.
The housing market is under pressure.
A surge in rates following the outbreak of war in the Middle East has put homebuilder stocks under pressure and created another challenge for buying conditions ahead of the spring selling season.
Neil Dutta, head of economics at Renaissance Macro, flagged the chart above and called out the dark red line, which shows the stock of completed new homes for sale sitting at the highest level since June 2009.
And this comes as builder activity slows, concessions to get deals done rise, and the average rate on a 30-year fixed mortgage in the US stands near 6.3%.
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Economic data: ADP weekly employment change, week ended Mar. 7 (9,000 previously); Nonfarm productivity, fourth quarter final reading (+2.4% expected, +2.8% previously); S&P Global US manufacturing PMI, March preliminary reading (51.6 previously); S&P Global US services PMI, March preliminary reading (51.7 previously); S&P Global US composite PMI, March preliminary reading (51.9 previously); Richmond Fed manufacturing index, March (-10 previously); Richmond Fed business conditions, March (-10 previously)
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Earnings calendar: GameStop (GME), Core & Main (CNM), Smithfield Foods (SFD), Centessa Pharmaceuticals (CNTA), AAR Corp. (AIR), Braze (BRZE), Concentrix (CNXC)
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Economic data: MBA mortgage applications, week ended Mar. 20 (-10.9% previously); Import price index, month-on-month, February (+0.2% previously); Import price index, year-on-year, February (-0.1% previously); Export price index, month-on-month, February (+0.6% previously); Export price index, year-on-year, February (+2.6% previously)
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Earnings calendar: PDD Holdings (PDD), Cintas Corporation (CTAS), Paychex (PAYX), JBS N.V. (JBS), Chewy (CHWY), Jefferies Financial Group (JEF)
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Economic data: Initial jobless claims, week ended Mar. 21 (205,000 previously); Continuing claims, week ended Mar. 14 (1.857 million previously); Kansas City Fed manufacturing activity, March (5 previously)
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Earnings calendar: Commercial Metals Company (CMC), Argan, Inc. (AGX), BRP (DOO), Pony AI (PONY), Seabridge Gold (SA), Braskem (BAK), Kodiak Sciences (KOD), Newsmax (NMAX)
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Economic data: University of Michigan sentiment, March final reading (55.5 previously); U. Mich. current conditions, March final reading (57.8 previously); U. Mich. expectations, March final reading (541. previously); U. Mich. 1-year inflation, March final reading (+3.4% expected previously); U. Mich. 5-10 year inflation, March final reading (+3.2% expected previously); Kansas City Fed services activity, March (6 previously)
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Earnings calendar: Carnival Corporation (CCL), Legence Corp. (LGN), Perpetua Resources Corp. (PPTA), TMC the metals company (TMC), Standard Lithium (SLI), Nano Labs (NA)
Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on X @hshaban.
Ethan Wolff-Mann is a Senior Editor at Yahoo Finance, running newsletters. Follow him on X @ewolffmann.
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