Georgia Gov. Brian Kemp signed a bill on March 20 suspending the state’s gasoline tax for 60 days, the first such move taken by a U.S. state since the U.S.–Israeli war with Iran began in late February.
The legislation, dubbed HB 1199, will temporarily suspend Georgia’s fuel taxes—33.3 cents per gallon on gasoline and 37.3 cents per gallon on diesel—for 60 days, which took effect immediately after Kemp’s approval.
The governor signed a separate bill into law on the same day, authorizing a one-time special income tax rebate of up to $250 for single filers, $375 for heads of households, and $500 for couples, according to a statement.
Eligible taxpayers in Georgia could receive the tax rebate within six to eight weeks, according to the Georgia Department of Revenue.
“Hardworking Georgians know best how to spend their money, not the government,” Kemp said in the statement announcing his approval of the two bills.
“That’s why I’m proud to sign these bills and, along with the General Assembly, deliver meaningful tax relief on top of the other measures we’ve taken in recent years,” the governor added.
Georgia’s lieutenant governor, Burt Jones, said in a separate statement that the legislation would deliver nearly $1.2 billion in state income tax refunds to taxpayers.
“The two bills signed today provide significant and immediate tax relief and further our commitment to be good stewards of taxpayer dollars,” Jones said in the statement.
Georgia has sought to help residents manage rising oil costs as the national average price for a gallon of gas reached $3.91 on March 20, according to the American Automobile Association (AAA).
Shipping through the Strait of Hormuz, a vital maritime chokepoint for global oil and gas shipments, has been disrupted since the United States and Israel began military operations against Iran on Feb. 28 and Tehran retaliated by firing missiles and drones at Israel and U.S. military assets and targets across Gulf nations.
White House press secretary Karoline Leavitt said on March 18 that President Donald Trump had issued a 60-day waiver of the Jones Act, a federal law that requires shipments between U.S. points to be carried on U.S.-built vessels.
Leavitt said the temporary waiver was intended to “mitigate the short-term disruptions” in the oil market as U.S.-Israeli military operations, dubbed Operation Epic Fury, in Iran continue.
“This action will allow vital resources like oil, natural gas, fertilizer, and coal to flow freely to U.S. ports for sixty days, and the Administration remains committed to continuing to strengthen our critical supply chains,” Leavitt wrote on X.
A number of countries have signaled support for keeping the Strait of Hormuz open after Trump called on nations to assist in policing the waterway, where Iranian attacks have essentially halted commercial traffic.
Leaders from multiple countries—including the United Kingdom, France, Germany, Italy, the Netherlands, Japan, Canada, South Korea, New Zealand, Denmark, Latvia, Slovenia, Estonia, Norway, Sweden, Finland, Czechia, Romania, Bahrain, and Lithuania—issued a joint statement on March 20 saying they were prepared to contribute to “appropriate efforts” to ensure safe passage through the strait.
The Strait of Hormuz is one of the world’s most critical energy chokepoints, with about 20 percent of global oil supplies passing through the waterway.
A federal judge on March 20 issued an order blocking the Trump administration’s media access policy at the Pentagon after The New York Times sued over the restrictions.
The Department of War tightened its rules for the media in September 2025 after officials said reporters were roaming the halls of the Pentagon. The department took the position that the restrictions were reasonable and designed to safeguard national security.
The new rules provided that soliciting non-public information from department personnel or encouraging employees to break the law “falls outside the scope of protected newsgathering activities.” They also stated that reporters would be denied press passes if officials determined they posed a safety or security risk.
Most members of the Pentagon press corps declined to sign an acknowledgement of the new policy and lost their press passes.
In December 2025, The New York Times sued, arguing that the policy violated the U.S. Constitution’s First Amendment by restricting “journalists’ ability to do what journalists have always done—ask questions of government employees and gather information to report stories that take the public beyond official pronouncements.”
U.S. District Judge Paul L. Friedman wrote in his new ruling that the drafters of the First Amendment “believed that the nation’s security requires a free press and an informed people and that such security is endangered by governmental suppression of political speech.”
“That principle has preserved the nation’s security for almost 250 years. It must not be abandoned now.”
Friedman held that the Pentagon press policy ran afoul of both the First and Fifth Amendments.
Friedman repeated a comment he made in open court in which he said the federal government has been dishonest in its communications with the public about military matters in the past.
“We’ve been through, in my lifetime, you know, the Vietnam War, where the public, I think it’s fair to say, was lied to about a lot of things. We’ve been through 9/11. We’ve been through the Kuwait situation, Iraq, Guantanamo Bay.”
The judge also wrote that the department could not show that it would be harmed by the cancellation of the policy, which the judge said was vague and “fails to provide fair notice of what routine, lawful journalistic practices will result in the detail, suspension, or revocation” of a press pass.
The policy’s “true purpose and practical effect” was “to weed out disfavored journalists—those who were not, in the Department’s view, ‘on board and willing to serve,’—and replace them with news entities that are,” he wrote.
Washington-based Friedman issued a permanent injunction preventing the department from enforcing the challenged restrictions. The judge also ordered the department to reinstate the credentials of six reporters and to file a status report with the court by March 27 certifying compliance with its order.
The New York Times spokesperson Charlie Stadtlander said the media organization “welcomes today’s ruling, which enforces the constitutionally protected rights for the free press in this country.”
“Americans deserve visibility into how their government is being run, and the actions the military is taking in their name and with their tax dollars. Today’s ruling reaffirms the right of The Times and other independent media to continue to ask questions on the public’s behalf.”
The Epoch Times reached out for comment from the U.S. Department of Justice, which represents federal agencies in court. No reply was received by publication time.
“Our Military Is Prepared”: Havana Communists See Writing On The Wall After Trump’s Iran Bombing
In a new note from Zoltan Pozsar’s advisory firm, Ex Uno Plures, he explained that the Trump administration is “methodically building a portfolio of assets” to pressure China, centered on strategic energy supply nodes and maritime chokepoints that have historically supported Beijing’s cheap crude imports. His note highlights the Panama Canal, Venezuelan oil flows, and the broader significance of Iran and the Strait of Hormuz. Taking it a step further, Cuba could eventually be folded into that same strategic portfolio if the communist regime in Havana falls.
The world is being carved up as unipolarity is dead, and a fracturing world gives way to a reality in which everything is up for grabs. Russian President Vladimir Putin understood this during the invasion of Ukraine in 2022.
Trump’s crusade across the Americas, from securing the Western Hemisphere to influencing political regime shifts in the region from left-wing to right-wing, has been well understood by Havana’s communists amid Washington’s maximum-pressure campaign to starve the island of crude imports. Havana looked on in disbelief in January when Trump’s Delta Force operators captured socialist leader Nicolás Maduro.
Now, with the Trump administration rewriting global energy flows, as Pozsar noted, this is all about pressuring China after its rare-earth trade-restriction stunt last year amid the tit-for-tat trade war. The administration wants to add Iran’s Kharg Island and the Strait of Hormuz chokepoint to that strategic portfolio.
Havana understands its fate, and the communist regime could be in its final weeks or months, as diesel fuel supplies are being depleted and the power blackout crisis spreads island-wide.
Except for far-left US nonprofits that arrived on the communist island earlier this weekend, with some flying first class and staying in lavish hotels with diesel-powered backup generators. Why America’s left wing weirdly gravitates toward communists in Havana is likely a question the State Department and U.S. Treasury have been asking. We have already provided answers (here).
🇨🇺 Code Pink communists are living it up in their fancy Cuba hotel with a private generator keeping the lights on and AC blasting.
Meanwhile, 99.9% of actual Cubans are sitting in total blackout.
With that being said, and with Havana on life support, after multiple attempts from Mexico and Russia to deliver fuel via tankers to save the regime from collapse and buy it more time, Cuba’s deputy foreign minister warned Sunday about the very real possibility of US military action.
“Our military is always prepared,” Deputy Foreign Minister Carlos Fernandez de Cossio told NBC’s Meet the Press earlier this morning.
De Cossio continued: “And in fact, it is preparing these days for the possibility of military aggression. We would be naive if, looking at what’s happening around the world, we did not do that. But we truly hope that it doesn’t occur.”
Cuba “is open for business,” De Cossio said, adding that political change dictated by the US is off the table.
“The nature of the Cuban government, the structure of the Cuban government, and the members of the Cuban government are not part of the negotiation,” he told NBC.
Cuba “is not in a state of collapse,” he said. “We’re being as creative as possible.”
Meanwhile…
🚨🇨🇺 BREAKING: WTF is going on in Cuba?
There are reports of explosions being heard in its capital, Havana and images that appear to be 2 or 3 large fires in the distance.
Recently, Cuban President Miguel Díaz-Canel was forced to acknowledge on state television that negotiations with the Trump administration were taking place and were aimed at “finding solutions through dialogue” to longstanding bilateral differences between the two neighboring countries.
Back to Pozsar’s note about Trump building a “portfolio of assets” to squeeze China, we suspect Cuba will be added to that list.
Iran Issues 10 Million Rial Banknote Amid Soaring Inflation
As the Iran war rages, Tehran has rolled out a new 10 million rial banknote, its highest-ever denomination, as authorities seek to “manage” soaring inflation and meet demand for hard cash… but mostly to “manage” soaring inflation, similar to how Venezuela would add a new 0 to its currency every week in the late days of the Maduro ergime before everyone simply gave up.
Banks, which have been targeted on at least one occasion by Western strikes, began distributing the new note this week, which is worth about $7, as Iranians waited in long lines at cashpoints to withdraw currency over fears electronic systems could fail. Many quickly ran out.
The new pink banknote features a vignette of the 9th-century Jameh Mosque of Yazd, while the back displays an image of the 2,500-year-old Bam Citadel. It is now the highest denomination in circulation, overtaking the 5mn-rial note introduced in early February, which at this rate will be equal to roughly $1 USD in a few weeks.
Iran’s central bank said that the bill was introduced “to ensure public access to cash”, adding that electronic systems – including debit cards, mobile and internet banking – would continue to serve as the main platforms for financial transactions, at least until the Mossad cripples all domestic electronic payments.
Yet despite government assurances of a continuous supply of cash after the war broke out, banks are providing limited currency to clients seeking to withdraw funds.
“I waited my turn for an hour and the clerk said he could only give me 10mn rials. But when I made a fuss, telling them I had no money and needed cash, I got 30mn instead,” Maryam, an 80-year-old resident of Tehran, told the FT this week. “It’s not much but it can sustain me for a few days if the debit cards stop working.”
The new bill is the latest indication of how Iran’s economy is collapsing as the war enters its fourth week.
The US and Israel have targeted infrastructure including a major bank, adding to the strain for businesses already impacted by the constant bombardments and indefinite closure of Iran’s airspace. Imported items have become more expensive as trade routes have closed.
A building of Bank Sepah, which serves Iran’s armed forces alongside the wider public, was hit by a missile on March 11, further compounding public worries.
The bank said on Wednesday that access had been restored, allowing clients to use their cards for in-store shopping and at ATMs. Online banking services, it said, would resume soon.
The economy was already under strain from years of US sanctions, declining oil revenues, persistently high inflation and systemic corruption – factors that have resulted in a steep devaluation of the rial. The currency had lost 40% of its value in the months that followed Israel’s 12-day war in June last year, with the economic malaise fuelling mass protests in January that were crushed in a brutal crackdown that killed tens of thousands
It weakened further to a record low of 1.66mn rials per US dollar ahead of the start of the latest war on February 28, but had strengthened to about 1.5mn as of Friday.
Iran’s annual inflation was 47.5% in the month ending February 19, according to Iran’s statistical agency, but the true inflation is said to be orders of magnitude higher.
Food and drink inflation surged to above 105% in the same period, after the government eliminated subsidized foreign currency for essential imports. Instead it started a food voucher program that grants 80mn Iranians monthly credit to purchase staples at designated stores.
In November, Iran introduced a law to slash four zeros from the rial over a five-year period in an effort to simplify transactions and reduce the cost of printing money. On the new 10 million rial note, the final four zeros appear faintly while 1,000 is also printed in bold. This style, used for all new banknotes printed since 2019, is designed to help the transition.
Banknotes printed in Iran in recent years mainly showcase historical monuments. Some of the older, smaller banknotes depict Ayatollah Khomeini, the founder of Iran’s revolution.
Demand for cash is usually already high at this time of year before Nowruz, the Persian new year, when many Iranians gift money to children and family members.
The recent strengthening of the rial comes as foreign trade has reduced, Iranians have cancelled overseas trips and people in need of cash for urgent expenses exchange their foreign currency.
“Only those who have sold property or a car and don’t want to keep their money in rials are buying foreign currency,” one foreign exchange broker in Tehran said. “On the other hand, supply has also decreased a lot. Only those who urgently need money in these conditions are selling their foreign currency.”
Don Lemon has hit rock bottom in his radical spiral, openly claiming the United States treats protesters the exact same way as Iran — the regime that massacred thousands of anti-government demonstrators in just three months.
This jaw-dropping comparison arrives as the Trump DOJ pursues prison time against Lemon and the leftist mob he embedded with during their invasion of a Minneapolis church — the very disruption he hailed as protected “journalism.”
On the “This is Gavin Newsom” podcast, Lemon, via his shitty internet connection, responded to discussion of an FBI raid on a Washington Post reporter by insisting America was forfeiting its moral high ground in the conflict with Iran.
“Reporters have privilege. It’s like an attorney. And so you have to be very careful about those things. And we cannot lose those things,” Lemon said. “Otherwise we are going to lose the First Amendment. We’re going to lose the freedom of the press because part of that is having sources and being able to be trusted by those sources that you’re not going to give any information away that they give you.”
He continued, “So we cannot lose those norms and those traditions because otherwise we’re no better than a country that we’re at war with right now. And we are saying that Iran shoots protesters. Well, so do we. And we’re over there because Iran jails reporters or doesn’t have free speech. And that makes us no better than them — if we are acting and doing the very same things that they’re doing, then what sort of moral authority do we have to be able to be there and in a war and quite frankly killing people?”
This is the same Don Lemon arrested by federal agents on January 29 over the January 18 incident at Cities Church in St. Paul, where he filmed himself inside the sanctuary with anti-ICE rioters from the Racial Justice Network who stormed the service, chanting and forcing families with children into freezing weather.
Lemon has repeatedly defended the stunt. “I didn’t even know they were going to this church until we followed them there. We were there chronicling protests… Once the protest started in the church, we did an act of journalism,” he insisted.
He later added, “The whole point of it is to disrupt and make people uncomfortable.” And, “Watch this guy here, look, he’s hugging his kid, and you know, I imagine it is uncomfortable and traumatic for the people here. It’s uncomfortable and traumatic for the people here, but that’s really… that’s what protesting is about.”
The Trump DOJ is charging Lemon and the mob with conspiring to violate civil rights protections for worship. Deputy AG Todd Blanche made clear the consequences: “They’d face a jury. If they’re convicted, they will go to PRISON!”
President Trump weighed in directly: “A small group of elderly ladies were protesting at an abortion clinic and were given 40 years in prison for violating the FACE Act. I would like to see the same kind of sentence for Don Lemon and the people that broke into that church and did that during services.”
As we’ve previously highlighted, Lemon once sounded exhausted by race-baiting, telling an interviewer, “Sometimes, I get so tired of talking about it. I wanna just go, ‘This is over. Can we move on?’”
Those days vanished. He now rails against “white Christian-hating” targets, dismissing concerns over South African farmers as “this South African farmer bullshit, which is the most blatantly obvious racist shit ever,” and slamming public displays of faith as “religious nationalism on full display” and “demanding submission.”
The contrast could not be clearer. Iran ranks near the bottom of global freedom indexes. America, even with tough enforcement of immigration laws and leak investigations, remains a constitutional republic protecting speech and worship. Lemon’s rant exposes the left’s desperation.
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Iran Threatens To Destroy Region-Wide Infrastructure As Trump’s 48-Hour Ultimatum Ticks Down, Mass Casualties In Southern Israel
Summary
Iran vows regional and US infrastructure will be “irreversibly destroyed” in response to Trump’s 48-hour timeline to open Hormuz or else Iranian power plants will be obliterated.
Iran announces imposition a $2 million transit fee on ‘non-enemy’ ships wishing to transit strait.
Unprecedented damage and many dozens of casualties in Israel’s south after tit-for-tat strikes on areas with nuclear plants.
Reports of US prepping diplomatic offramp plan but Iran says expanding war has effectively shut the door; Bessent says “50 days” of higher prices for 50 years of no Iran nukes, and “escalate to de-escalate.”
* * *
Bessent on Meet the Press: ‘Escalate to De-Escalate’
Scott Bessent said US-Israeli strikes are focused on weakening Iran’s fortified positions along the Strait of Hormuz as Donald Trump presses a deadline for Tehran to “fully open, without threat” the critical global shipping waterway. He stated the US will “take whatever steps it takes” to eliminate Iran’s military capabilities, including its ability to project power abroad; however, it remains to be seen just how degraded Iran’s missile program is.
“There has been a campaign… to soften up the Iranian fortifications… that’s going to continue until they are completely demolished… Sometimes you have to escalate to de-escalate,” he asserted.
As the conflict enters its fourth week, and amid rising oil and gasoline prices which have intensified economic pressure at home, Bessent framed the surge as a temporary cost tied to a longer-term greater objective, stating: “Let’s just pick 50 days of temporary elevated prices… Prices will come off on the other side for 50 years of not having an Iranian regime with a nuclear weapon.” But then the usual more open-ended caveats: “I don’t know whether it’s going to be 50 days. I don’t know whether it’s going to be a hundred days.” As the US keeps going up the escalation ladder with Iran, will it be able to come down?
As a reminder here’s what President Trump threatened Saturday – so the clock is ticking – assuming he’s ready to make good on the promise: “If Iran doesn’t FULLY OPEN, WITHOUT THREAT, the Strait of Hormuz, within 48 HOURS from this exact point in time, the United States of America will hit and obliterate their various POWER PLANTS, STARTING WITH THE BIGGEST ONE FIRST!” Trump wrote.
Iran has responded with its own vow of escalation in response. In a post on X, Iran’s parliament speaker Mohammad Baqer Qalibaf warned that critical infrastructure and energy facilities across the Middle East will be “irreversibly destroyed” if Iranian power plants are attacked. He wrote:
“Immediately after the power plants and infrastructure in our country are targeted, the critical infrastructure, energy infrastructure, and oil facilities throughout the region will be considered legitimate targets and will be destroyed in an irreversible manner, and the price of oil will remain high for a long time.”
$2 Million Hormuz Transit Fee, Except For ‘Enemy’ Countries
By now it’s clear that Iran’s approach to the Strait of Hormuz has been to only allow select countries while targeting others’ shipping and reportedly mining the waterway. An Iranian official said the strait is open to all vessels except those from “enemy” countries.
Iran state TV has further announced the imposition a $2 million transit fee on ships, with a senior lawmaker stating: “We have established a new regime governing the Strait after 47 years… We have to fund the war.”
Antonio Guterres stated the UN is prepared to help reopen the strait, along with some Gulf countries – but there’s still nothing in the way of any level of a practical military plan in place, given the obvious extreme risks.
The US is still considering plans to seize or blockade Kharg Island, which would be another massive escalation which some analysts have deemed ‘suicidal’ in terms of warships or any Marines sent that deep into Persian Gulf and strait waters.
Tehran has forced ships crossing the Strait of Hormuz to pay a $2 million fee says Boroujerdi of parliament’s national security committee
“We have established a new regime governing the Strait after 47 years,” he said smirking. “We have to fund the war”
Heavy Blows Traded: Damage in Israel is Unprecedented
US and Israeli forces continued strikes across Iran, including in Tehran, Karaj, Isfahan, Natanz, and Ramsar – while as we’ve been reporting, Iran’s Atomic Energy Organization said the Natanz nuclear site was targeted in “criminal attacks.”
This in turn resulted in Iran targeting Dimona and Arad for the first time of the war, causing roughly 100 injuries. The conflict has just entered week four and already they are trading strikes on nuclear plants. Central Israel has continued getting hit hard, with Iranian cluster munitions spreading bomblets across Tel Aviv and nearby areas. Fifteen people were injured there, one seriously. Additional impacts damaged residential areas in Jaffa and Petah Tikva.
İran’ın İsrail’in başkenti Tel Aviv’e gönderdiği füzeler havada işte böyle görüntülendi.
Local reports say there are 88 injuries in Arad alone, including serious and moderate cases. Hospitals, including Soroka Medical Center and Tel Aviv Sourasky Medical Center, treated dozens of wounded, including children. There are reports of growing anger and frustration inside Israel both at the government’s underestimating what Iran’s response would be like, and the apparent major failures of the Iron Dome defense system.
Mass casualties after large Iranian missiles on Arad and Dimona:
Benjamin Netanyahu has newly stated, “We’re responding with great force, but not on civilians. We’re going after the regime. We’re going after the IRGC, this criminal gang, and we’re going after them personally, their leaders, their installations, their economic assets. We’re going after them very strongly.” As for Iran, a state broadcaster reported over 1,500 deaths from US-Israeli strikes, but the true toll may be significantly higher amid ongoing rescue efforts and the fog of war.
Iraq to Lebanon To Yemen: Regional Spillover & Proxy Activity
Drone and rocket attacks targeted a US diplomatic and logistics center near Baghdad International Airport, with multiple overnight strikes reported. Iran-backed Houthis have increased threats, and they are imminently expected to join the war, with the potential ability to close the Bab al-Mandab Strait (Red Sea). Analysts have repeatedly warned their entry into the conflict would expand it significantly, drawing in Red Sea shipping routes and regional actors.
CNN reports Israel is dropping massive bombs directly on residential buildings in eastern Tehran. The blasts are so powerful they are leveling entire apartment blocks and severely damaging surrounding civilian neighborhoods. Absolute war crimes. pic.twitter.com/a8LayADZul
Israel has meanwhile intensified operations in Lebanon, with strikes on southern suburbs of Beirut having killed over 1,000 people and displaced more than a million. Israeli Defense Minister Israel Katz has ordered accelerated demolition of homes in border villages: “Accelerate the demolition of Lebanese houses in the contact villages in order to thwart threats to Israeli communities,” applying tactics used in Gaza areas such as Rafah and Beit Hanoun,” he said.
In the Gulf, Saudi Arabia has expeled Iran’s military attache and four embassy staff, giving them 24 hours to leave the country, over “repeated Iranian attacks” on the kingdom’s territory. Riyadh and the UAE are inching closer to possibly joining the US-Israeli war against Iran, also as Trump and Netanyahu have called on other countries to enter a coalition.
Diplomatic Efforts and Conditions for Talks?
There’s been a lot of chatter about setting up conditions for a potential offramp, even as Tehran has appeared to shut the door on any future talks, and while thousands of Marines transported on several warships are en route to the region.
The US is exploring a diplomatic track while continuing military operations, Axios has reported. There’s obvious pressure on the US domestic front, where rising gas prices could spell serious trouble for Republicans ahead of next fall’s midterm elections. Axios reviews of preparations:
Any deal to end the war would need to include the reopening of the Strait of Hormuz, address Iran’s stockpile of highly enriched uranium, and also establish a long-term agreement on Iran’s nuclear program, ballistic missiles and support for proxies in the region.
There has been no direct contact between the U.S. and Iran in recent days, though Egypt, Qatar and the U.K. have all passed messages between the two, a U.S. official and two additional sources with knowledge said. Egypt and Qatar have informed the U.S. and Israel that Iran is interested in negotiating, but with very tough terms.
The Iranian demands include a ceasefire, guarantees that the war will not resume in the future, and compensation.
One big problem is that after a spate of top level assassinations of Iranian leaders, Washington doesn’t know who in Tehran it would be negotiating with.
And given that on the US side Jared Kushner and Steve Witkoff are reportedly shaping potential negotiations, the Iranians are unlikely to want to have anything more to do with them. There are reports of indirect talk efforts via intermediaries including Egypt, Qatar, and the United Kingdom, but the reality is that Iran may have been pushed too far – into existential survival mode – and is ready to essentially ‘fight to the death’.
Earlier this month, Elbridge Colby, a senior official in the US Department of War, held a call with Saudi Arabian Defense Minister Khalid bin Salman, who is also the brother and top adviser to Crown Prince Mohammed bin Salman. Iran’s attacks on US bases in the Gulf were heating up, and the US needed expanded access and overflight permissions. Saudi Arabia agreed to open King Fahd Air Base in Taif, in Western Saudi Arabia, to the Americans, multiple US and western officials familiar with the matter told Middle East Eye.
The base is important because it is farther from Iranian Shahed drones than Prince Sultan Air Base, which has come under repeated Iranian attacks. Taif is also close to Jeddah, the Red Sea port that has become a critical logistics hub since Iran effectively took control of the Strait of Hormuz. Current and former US officials tell MEE that if the Trump administration is preparing for a longer war on Iran, Jeddah may be critical for sustaining US armed forces. Thousands of US ground troops are en route to the region from East Asia.
Saudi Arabia’s decision to expand base access, current and former officials say, underscores a shift in how the kingdom and some other Gulf states are responding to the US-Israeli war on Iran. “The attitude in Riyadh has shifted towards supporting the US war as a way to punish Iran for strikes,” a western official in the Gulf told MEE.
Trump and the Saudi crown prince have been holding regular phone calls for the last three weeks, the US and western officials told MEE. The UAE has also told the US that it is geared up for a long war, putting no pressure on Washington to wrap up the conflict soon.
In a phone call earlier this month, UAE Foreign Minister Sheikh Abdullah bin Zayed told his counterpart, US Secretary of State Marco Rubio, that the UAE is prepared for the war to last up to nine months, the US official told MEE.
Differing Gulf perspectives
Saudi Arabia, the UAE and Qatar lobbied US President Donald Trump against attacking Iran. While they host US military bases, the states insisted that they not be used as launchpads when the US joined Israel on 28 February to attack Iran. Despite this, the Gulf states have paid the heaviest price for the US’s decision to go to war.
The UAE alone has intercepted 338 ballistic missiles and 1,740 drones since the start of the war. Qatar suffered the worst attack of any Gulf state despite being a critical mediator that has consistently focused on de-escalation.
Iran responded to an Israeli attack on its South Pars gas field this week by launching missiles at Qatar’s Ras Laffan refinery. The damage will take three to five years to repair and affects 17 percent of Qatar’s gas production, according to Qatari energy minister Saad al-Kaabi.
Some states, like Oman, have said that Israel hoodwinked the US into launching an unlawful attack on Iran. There is also anger at the US over its value as a security guarantor.
The US has been unable to replenish the Gulf states’ Patriot and Terminal High Altitude Area Defenceinterceptors. The US bases in the Gulf, meant to protect the Arab monarchies, have been targeted. Meanwhile, oil and gas exports have ground to a halt.
Omani Foreign Minister Badr al-Busaidi wrote in The Economist this week that this is “not America’s war” and that Washington’s allies needed to make clear to the US that it was dragged into a conflict with little to gain.
Busaidi’s remarks contrasted with those of Saudi Arabian Foreign Minister Prince Faisal bin Farhan. After Riyadh and the port of Yanbu were attacked by Iran, he delivered a blistering message to the Islamic Republic. One former US intelligence official described it as “fighting words”. Farhan said Iran had committed “heinous attacks” which “are an extension of [Iran’s] behavior that is based on extortion and sponsoring militias, threatening the security and stability of neighbouring countries”.
“Saudi Arabia has repeatedly tried to extend its hand to the Iranian brothers…but the Iranians did not reciprocate,” he said, adding that the kingdom reserved the right to take “military action”.
While no one in the Gulf wanted a war with Iran, the Gulf states are approaching the conflict from varied, evolving perspectives as it drags into its fourth week, experts say. Saudi Arabia is the largest country in the region, and like the UAE, it has ambitions to project hard power abroad. In fact, Saudi Arabia attacked the UAE’s allies in Yemen just before the war on Iran erupted.
Oman has carved out a niche for itself as a mediator. As one of the countries least hit by Iran in the region, the relative security of its capital, Muscat, is also being noticed by expatriates leaving Dubai. “There is a divide emerging in the Gulf,” Bernard Haykel, a professor of Near Eastern studies at Princeton University, who speaks with the Saudi Arabian crown prince, told MEE.
“Saudi Arabia and the UAE were neutral before this war. But as they have been attacked, they have come to the realization that they cannot live with this hardline Iranian regime next door, which can, at a moment’s notice, extort the region by closing the Strait of Hormuz,” he added.
The Saudi capital, Riyadh, and the kingdom’s energy infrastructure have been targeted by Iran. But the conflict is widely seen in the region, and increasingly inside the US, as an Israeli power grab. Crown Prince Mohammed bin Salman has said that Israel is guilty of committing genocide in Gaza. The Israeli war on the enclave has killed over 72,000 Palestinians since it started in October 2023.
Prime Minister Benjamin Netanyahu gloated about the war in a press conference on Thursday. He said that the solution to the Strait of Hormuz’s closure was for Arab Gulf monarchs to build new pipelines through the desert to Israel, which would effectively give Israel veto power over their energy exports.
“What’s happened in the last 24 hours is taking us to a different phase in the war. It has been testing our patience and restraint for the last three weeks,” Bader al-Saif, an expert at Kuwait University, told MEE. “With that said, we can’t lose sight of Israel’s role. They want to bring the Gulf into this war,” he added. “And let’s be clear, there is no clear exit strategy from the US.”
Ibrahim Jalal, an expert on the Gulf and Arabian Sea security, told MEE that Gulf monarchs face a torturous balance as they try to draw their red lines against Iranian attacks and respond to US demands while pushing for de-escalation. “The Gulf states do not want to be counted in the history books of siding in a US-Israeli war against a so-called Islamic neighbor,” he said.
Taboos broken
At the same time, Jalal said that Iran’s attacks are a flagrant violation of Gulf sovereignty and put the region into uncharted territory. “The Islamic Revolutionary Guard Corps has broken all taboos now,” he said. “The Gulf needs to act within defensive doctrine,” he said.
Iran has accused some Gulf states of allowing their territories to serve as launchpads for US strikes. That is why even providing additional logistical support to the US is sensitive for Saudi Arabia. However, the kingdom is being pressed by the US to join the war on Iran by launching offensive strikes, US and Arab officials tell MEE.
The New York Times has verified video that shows ballistic missiles being launched from Bahrain in the direction of Iran. It’s not clear who was firing the missiles. The small Gulf state is a close partner of Saudi Arabia’s.
Hesham Alghannam, a Saudi defence analyst, told MEE that Riyadh is working to “thread the needle” between getting sucked into the conflict and establishing deterrence. “Saudi Arabia asserts deterrence by warning Tehran of retaliation as we have seen…[by] reserving military options, while prioritising diplomacy [and] ongoing backchannel contacts with Iran,” he told MEE.
He added that Riyadh is “pushing de-escalation to restore pre-war rapprochement gains without full war entanglement”. Saudi Arabia reestablished diplomatic ties with Iran in March 2023, after years of adversarial relations, in a deal brokered by China.
Saudi Arabia has endured Iranian attacks, but has not suffered on the same scale as the UAE. The Houthis, Iran’s allies in Yemen, have also refrained from attacking the kingdom.
Abdulaziz Alghashian, a Saudi security expert and senior nonresident fellow at the Gulf International Forum, told MEE that the kingdom and other Gulf states faced “a dilemma”. “Ending the war is generally the preferred option,” he said, but even if the conflict stopped tomorrow, Iran’s escalation dominance over the Gulf would linger. “Not only do we really need to create deterrence, we need to create a precedent for post-war,” he said.
The Saudis appear to be allowing US and Israeli fighters and bombers to refuel in their airspace before striking Iran, despite Saudi Arabia repeatedly claiming their airspace is “closed.”pic.twitter.com/jU3Ml0ZgNo
“Iran has proved that it can create a lot of havoc. Gulf Cooperation Council [GCC] states don’t want to be seen to be too restrained, so there needs to be some kind of precedent,” he said. Alghasian said Saudi Arabia is aware that launching offensive operations against Iran could “open up a can of worms”.
Despite US claims that Iran’s military is severely degraded, the Islamic Republic has been able to conduct pinpoint strikes on US bases. It is far from isolated. Media reports say it is receiving targeting intelligence from Russia. MEE revealed that it has received air defence systems and offensive weapons from China.
Iran’s speedy retaliation on Gulf energy assets after Israel’s strike on South Pars this week showed its command and control is intact, the former US intelligence official told MEE.
Gulf monarchs are also aware that their militaries are unable to inflict any more damage on Iran than the US and Israel are currently, and that a “symbolic” action in the name of deterrence would just invite more reprisals, Jalal said. “Action by Gulf states is not going to tip the military balance in favor of the US and its allies at this stage,” he added.
But better access to Saudi Arabian bases is key, Haykel, at Princeton University, told MEE. “It’s true that Saudi Arabia’s air force and missiles are unlikely to change the equation, but what can change the equation is if the US Air Force flies out of Dhahran instead of an aircraft carrier,” he added. The coastal city is just 130 miles from Iran’s coast.
Watching the Strait of Hormuz
For starters, analysts say, the Gulf states can better arrange their defenses together. This is important, as the Gulf questions the value of US security guarantees. The Trump administration has issued a waiver for Gulf states to transfer Patriot interceptors among themselves without the normal US approval.
“What the GCC now needs is to act as one bloc on the defensive line, to mobilize procurement collectively,” Jalal said.
Beyond allowing the US greater access to bases, Saudi Arabia and the UAE could look to play a role in the Strait of Hormuz, experts say. “How do you define offensive and defensive? I think that has been the debate in the last twenty-four hours,” al-Saif, at Kuwait University, said. “The Gulf could play the Iranian game and restrict them from moving oil out of Hormuz. But that is not part of our worldview,” he said. “We are reliable.”
The Trump administration has been rebuffed by Nato and Asian allies to participate in an operation to open the waterway, through which roughly 20 percent of global energy passes. Their involvement would allow Trump to demonstrate regional buy-in as US warplanes and attack helicopters bombard Iran’s coast.
Anwar Gargash, a diplomatic adviser to the Emirati president, told the US Council on Foreign Relations this week that the UAE could join a US operation to wrest control of the waterway back from Iran.
Alghashian, the Saudi analyst, told MEE that taking “lethal defensive measures” could be next. “For me, the precedent could be made in the Strait of Hormuz.”
“On Our Way To Cuba”: Left-Wing Nonprofit Boss Flies First Class For Virtue Signaling Tour
The head of a left-wing nonprofit, reportedly linked to a Marxist propaganda network connected to a China-based billionaire, flew first class while her supporters traveled in coach to Cuba. This appears to be an effort aimed at disrupting U.S. foreign policy operations in the Caribbean.
“NOW we’re on our way to Cuba!” Code Pink wrote on X on Friday.
NOW 🇨🇺 We’re on our way to Cuba!
Our CODEPINK delegation to the Nuestra América convoy is carrying thousands of pounds of urgently needed humanitarian aid.
Code Pink’s Medea Benjamin, of course, flies first class.
🇨🇺 💗 We’re flying to Cuba with a plane full of medical aid & delegates to support the Cuban people in the face of the heinous US blockade. pic.twitter.com/CaVmRaTJ6Y
Their mission is simple: to fly medical supplies to the financially collapsed island, which the left-wing nonprofit claims is being “suffocated by the U.S. blockade.” Yet judging by the small volume of supplies, the mission appears to be little more than an information operations campaign against President Trump’s foreign policy in the Caribbean that could very well end with Cuba ditching communism, which has been nothing but a disastrous experiment.
🇨🇺✌️ We’re in Havana!
Our delegation is starting to land with medical donations for the Cuban people as they are suffocated by the U.S. blockade. pic.twitter.com/9wK4mLn3fS
BREAKING – It’s now been revealed the Cuban regime was forced to deploy armed security to protect the five-star hotel where champagne socialists like Hasan were staying, fearing locals might attempt to storm it in protest of the country’s electricity being diverted to the hotel. pic.twitter.com/fzm96NiNyQ
— Right Angle News Network (@Rightanglenews) March 22, 2026
In late December, Code Pink’s Medea Benjamin and Vijay Prashad of the Marxist-aligned Tricontinental Institute for Social Research tried to organize a “flotilla to Cuba” modeled on the Gaza flotillas. It appears Code Pink is furious that President Trump is set to play a major role in Cuban politics, as opposed to the current communist regime in Havana and the Chinese government.
Funding and infrastructure for these operations appear to come from the Neville Roy Singham Network, a web of organizations tied to Chinese Communist Party-aligned capital that provides money, logistics, and professionalized organizing capacity. Public narratives are amplified by legacy anti-war organizations such as Code Pink and the ANSWER Coalition, which are now also under the Singham umbrella.
Singham, who is married to activist Jodie Evans, co-founder of Code Pink, has been alleged by House Republicans to be a major financial backer of the Party for Socialism and Liberation, which has organized nationwide protests, including unrest in Los Angeles. According to recent reporting by The New York Times, Singham resides in China while maintaining a long record of supporting far-left nonprofits, including Code Pink, that oppose U.S. interests and align with U.S. adversaries.
These far-left nonprofits frame U.S. foreign policy as illegitimate while defending authoritarian regimes. The Democratic Socialists of America (DSA) function as the political activation channel, translating activist energy into electoral and legislative influence on behalf of the Cuban regime.
Government Accountability Institute President Peter Schweizer told us earlier this year, “Singham’s anti-American villainy became clear with his financing of the violent Black Lives Matter uprisings — to Communist China’s delight. He is absolutely in bed with the CCP.”
If you want to understand why the radical left appears to hate America and seeks to implode the nation from within, it is not difficult to see that these ideas are rarely developed organically. More often, they are shaped and reinforced by outside influences. This chart helps explain why the radical left has become so radical.
To understand Code Pink’s actual mission in Cuba, it’s important to recognize that it is an optics campaign. Trump’s foreign policy crusade – from regime change operations in Venezuela to shifting the Americas from far-left control to right-wing, as well as pressuring China – has infuriated America’s left, but more importantly, China. Soon, communism in Cuba may fall as a result.
Under the previous regime, China was able to tap into Venezuela’s cheap oil reserves. Not anymore with Trump cleaning up the West.
“Venezuela has been a vassal of China and is endowed with the largest proven oil reserves in the world. Venezuela is now a U.S. vassal, and her oil is not going to China anymore since Trump’s coup. Bravo,” ex-Credit Suisse star Zoltan Pozsar, now runs an advisory firm called Ex Uno Plures, wrote in a note.
The broader issue is the extent to which foreign influence may have hijacked America’s nonprofit ecosystem (on the left and the right), underscoring the urgent need for reforms across the entire nonprofit universe. The pattern on the left is the most alarming…
… seen in riots and the burning down of city blocks, which does not appear entirely organic; rather, it bears all the signs of asymmetric warfare.
I expect that we will see a lot of “green dots” on the Bloomberg Terminal Sunday night, as there was almost no asset (other than energy) up on Friday. I do know that my Monday will start bright and early, at 5am on CNBC. Away from that everything is a bit up in the air.
There are headlines that can push us in either direction. Some developments that seem good, some that seem bad, some that seem weird, and some that are just downright confusing and/or contradictory.
Transiting the Strait
There seem to be three possibilities to transiting the Strait:
Please see Thursday’s SITREP U.S. Expected to Conduct Strait Transit This Month. On Saturday morning Admiral Cooper, in a video on X, said “Iran’s ability to threaten freedom of navigation in and around the Strait of Hormuz is degraded.” The report went on to list other actions being taken to knock out the capability of Iran to target ships in the Strait. This fits Academy’s view that the U.S. is actively taking steps to prepare for safe transit.
More countries have signed the Joint Statement expressing a “readiness to contribute to appropriate efforts to ensure safe passage through the Strait.” A bit “wishy-washy” at best, and went to great pains to reference the United Nations and International Energy Agency, and avoid referencing America. Not sure if this does much, but it is a step in the right direction. If we are going to stick to the “Manic Monday” theme, this reminds me of the line, “blame it on the train, but the boss is already there.”
Mounting “chatter” that Iran is “selling safe passage” for about $2 million per ship. I did get some secondhand confirmation from a trusted source that these discussions are in fact occurring. Unclear how effective they will be.
All of these things are “encouraging” in terms of shipping. A U.S.-led (or even solely U.S.) effort to encourage ships to transit the Strait is the most promising in terms of being a “real” solution. The Iranian “insurance” plan seems dubious at best, and not great for the world.
Unfortunately, it is being widely reported that Iranian leadership is steadfast on trying to keep the Strait from being transited by global shipping and is unwilling to even negotiate on the topic.
Polymarket has several opportunities to “predict” things:
Strait of Hormuz traffic returns to normal by the end of April. Only 27% down from 50% as recently as March 12th.
Lots of opportunity for stocks to do very well if that is really reflective of what is being priced into the market. I think it is too small of a market to be particularly useful, but lately it does seem that some “obscure” prediction markets get volume and pricing that indicates someone “knows” something – so worth at least keeping an eye on.
Boots on the Ground, or Mission Accomplished?
Marine expeditionary forces are on the way. There has been a lot of discussion about the potential to “seize” Kharg Island (now that Iran’s military facilities have been hit hard). Or to possibly clear Iranian forces close to the Strait. There is a lot of debate on what taking Kharg Island would mean. One school of thought is that controlling the ports would rapidly force Iran to the table as their primary source of income and leverage would be in U.S. hands. Others see a lot of risks to the plan, from hardening resolve, to still requiring the Strait to be open, to how much money/currency does Iran have and how long could they hold out, even if they were not able to sell another barrel of oil? I’m more in the latter camp, but we can debate this option later this week as the Marines arrive.
Also, why spend much time thinking about boots on the ground, when the President has been posting on Truth Social “We are getting very close to meeting our objectives as we consider winding down our great Military efforts in the Middle East with respect to the Terrorist Regime of Iran.”
This statement could be a negotiating tactic. Maybe it is just to lull Iran into a false sense of security (the initial attack on Iran occurred during ongoing negotiations). Maybe it is just a “trial balloon” to see how people (voters) and possibly markets respond?
Literally, both extremes – “boots on the ground” and “we won, time to go home” – are on the table. It really could be a Manic Monday.
Un-Sanctioning, De-Jonesing, and Releasing
In the past week or so, the administration has:
Taken off sanctions on Russian oil. This certainly helps keep the price of oil lower than it would be otherwise, though I suspect most of the oil still winds up going to China and India, at less of a discount. At the same time, I would be very concerned about what this means for Russia if I’m either Ukraine or the EU. Secretary of War Hegseth has been pointing out how any lack of inventory in the U.S. military is a direct result of giving weapons to Ukraine. If Europe isn’t already thinking about the need to potentially “go it alone” against a wealthier Russia, they should be. It might not get to that point, but that is certainly one message that can be taken from this very “transactional” administration.
Removed sanctions on Iranian Oil “on the sea.” The Treasury Secretary made this announcement and referenced 140 million barrels that will now be without sanctions. That is a big “release” of oil, but I’m told by oil experts that while the amount at sea is around that, as much of 100 million barrels is already spoken for (largely by China) and is in transit. So, it might be “only” 40 million barrels. If one goal of seizing Kharg Island is to apply maximum economic leverage, this move seems to give Iran more wiggle room. In the aftermath of this, it will be interesting to see how Iran has funded itself? Presumably not in dollars, so in yuan? Bitcoin? Barter?
A 60-day suspension of the Jones Act. This basically allows any ship to transit goods between two U.S. ports. It is viewed by many, including me, as a potential first step towards export controls. The U.S. is not designed (currently) to use all of the oil, gas, LNG, diesel, etc. that it produces domestically. Pipelines aren’t developed for that. The Jones Act has made it unprofitable to do that. This allows some of that to occur, helping keep oil prices low. There is a limit to how effective it can be without export controls (and I’m not a big fan of export controls, but it is something we should watch).
The U.S. price for any energy product, with no export controls, is basically the Global Price minus Freight Costs minus some “Inertia” (where “Inertia” is existing relationships, agreements, etc.). So, as “global” prices rise, U.S. prices will rise, because the drillers, refiners, etc., will make more money selling it overseas if prices don’t rise domestically. It is economics 101, so we will see what else gets implemented to keep domestic prices lower if they continue to rise across the rest of the world.
Strategic Petroleum Reserve releases. I have not done the work, but it sounds like the U.S. released almost 90 million barrels of oil. Since there is only excess capacity to load about 25 million barrels a month, the release gives us some breathing room, until June or so (3 to 4 months). There is more to be released, though there is some limit, as apparently some amount of oil needs to stay in the reserves to keep the facilities’ structural integrity intact. Europe has supposedly been slower on releasing their supplies, but that is possibly because they are worried it will get bought elsewhere, so they will bleed out their reserves more “judiciously.” Europe’s lack of energy independence is once again being highlighted! The President did admonish the leader of Scotland for buying North Sea oil from Norway, and wind turbines from China, while curtailing their own drilling in the North Sea. How long before Europe gets the ProSec™ message?
No relief on tariffs. I would have put this in play, at least for some things (energy, fertilizer, etc.) but I was never a huge fan of the broad application of tariffs in any case.
Airbus for Drones
According to Wikipedia, Airbus was created in 1970 as a consortium of European aerospace companies to produce wide-body aircraft to compete with American built airliners. If I was in the EU, I’d be pounding the table for a drone equivalent of Airbus:
It is quite clear that drones are effective. They have their limitations (both on the hardware and software sides), but they can certainly play a meaningful role in deterrence and defense (as well as provide offensive capabilities).
They are cheap and relatively easy to make. Making a 5th generation jet is extremely difficult. Ditto for aircraft carriers and capital ships. Even modern missile systems are expensive and require highly specialized machinery. Take a bunch of factories that used to make cars (or other things) and ramp up drone production. A drone factory for the Ukrainian Army was recently opened in the U.K. I see great difficulty (and that is being kind) in the EU developing a fighting force with the equipment they have any time soon (like in the next 5 years). A fleet of drones and unmanned surface vessels that is enough to give Putin some pause seems far more plausible.
The “consortium” construct is important as it would hopefully remove some of the national interests that already impair Europe’s efforts to rearm themselves quickly and with some degree of compatibility.
Possibly a non sequitur but I want to invest in companies that might fit this sort of model as it seems to be an obvious choice, and eventually, usually after a lot of whining and moaning, and a couple of near-catastrophic failures, Europe does the obvious thing. (The European Debt Crisis from the beginning to “whatever it takes” seems to fit this path well).
The U.S. is Neither an Oasis Nor a Mirage
As brent crude soared higher than WTI (and grades of crude most of us have rarely heard of skyrocketed even more), the U.S. equity markets seemed to treat the U.S. as an “oasis.” We already mentioned that even with energy independence, we will see higher prices along with the rest of the world (unless we go to some form of export control). So, we are not immune. But we do have advantages – hence we are neither an oasis (really good), nor a mirage (all fake).
The links to the U.S. are real and will hurt:
Somewhere around 40% of the revenue generated by Fortune 500 companies comes from overseas. If Europe and Asia are struggling, it will impact companies here.
While the products might be American, many are manufactured elsewhere and are subject to supply disruptions, which would further impact profits for U.S. companies.
Those countries went out of their way not to mention the U.S. in their “letter,” which makes me wonder, again, do U.S. brands still have the same “cache” for non-American consumers?
Interest rates have spiked across the globe. The cost of everything, everywhere has gone up with this pretty dramatic move in yields. The U.S. 2-year yield went from 3.38% to 3.9% in 3 weeks. U.K. yields are incredibly jealous of that “strong” performance – as they rose 100 bps in the same period!
Ironically, and somewhat par for the course in this “stop-loss” driven market, Private Credit outperformed even as markets probably should have started adding global recession risks to the reasons to be concerned about private credit. But it seems that everyone was so underweight that even a realistic issue didn’t cause much/any new pain.
Urea and Limp Mode
In the long list of “knock-on” effects from the slowdown in goods from the Middle East, we can add another “risk” – DEF. Diesel exhaust fluid is used in diesel engines to reduce harmful emissions. Since 2010 (or so), if a diesel engine doesn’t have enough DEF, the vehicle is restricted to going 5 to 15 mph (limp mode). Supposedly the vehicle can be reprogrammed, but this is yet another thing to highlight regarding the quirkiness and complexity of supply chains and products. Oh, I almost forget, urea is about 33% of DEF. Gulf urea costs have almost doubled since the start of the year.
Not trying to make a big deal about this (unlike helium for semiconductors), but thought it would provide a nice break, and I always enjoy learning something new.
NI CHEM Majeure
I need to find some better hobbies than checking out Bloomberg for stories containing “Force Majeure” but it is getting more worrisome by the day.
If you go to Google Trends it is pretty clear that others are starting to be fascinated with this as well.
Already Too Late?
It is already precarious for Asia (ex-China), the Middle East itself, and Europe. The costs, potential supply chain disruptions, AND higher rates (when many mortgages are floating rate) seem to be a recipe for recession.
A resolution this week, or maybe even next, and maybe we scrape by. Maybe the U.S. is still out of range for a recession, but a recession was barely a gleam in the eye of any “doomer” a month ago, and that risk now has to enter the conversation.
Risks to the global economy are rising. While the U.S. is in much better shape (we were in better shape before the conflict and have more robust protection against the new problems created by the conflict), that doesn’t mean we don’t have risk (we are not a mirage, but we are not an oasis either).
Yields scare me right now.
The moves don’t seem to make sense in the context of higher oil prices. Yes, higher oil prices should impact yields, but by this much?
We saw 2s vs 10s flatten (which makes some sense, if higher prices will slow demand over time), but on Friday, 10s underperformed.
I am not sure the consumer is in a position to do well in this rising rate environment. Again, private credit didn’t seem to care on Thursday and Friday (and I had recommended being long those sectors recently, because too much pessimism was being priced in). I think they should care as the risk of a slowing economy with potential supply chain hiccups is a real risk here.
Bottom Line
I wish it was Sunday, ’cause that’s my fun day.
Okay, it is Sunday, but it is certainly not my fun day. Nor has it been for the past few weekends (though to be honest, deep down, I enjoy these stressful times).
Manic can be good.
By the time this makes it to our website, and you see it distributed, we might have some clarity one way or the other. We are likely to continue to be affected by dueling headlines.
There are still plenty of paths to a really strong week for markets, especially if the “winding down” messaging comes to fruition with a resolution in the Strait.
There are other ways we can see progress that might not give us a “manic” rebound, but a rebound nonetheless.
Unfortunately, there are plenty of paths that lead to more problems and some that could lead to a manic week, and not in a good way.
I do believe that as we move down the road, in a week or two, markets won’t react to positive headlines, as the “fear” that it is already “too late” gets priced into markets.
I’d love to say “buy Treasuries” but we seem to have broken some resistance and it is difficult to justify the size of the move solely on the economics of what is occurring in the Middle East.
I guess my “bottom line” is cautious for now, but be prepared to be very bullish, though any thought of being bullish will diminish as the days go by if we don’t see progress in getting us off the current path. The current path, as it goes on, will make it “too late” for some economies, and even if the U.S. can avoid the worst of it, it won’t be great for earnings (and hence the stock market). Rates seem to be telling such a different story that bonds seem like a “screaming” buy here, but that too seems dangerous.
Most investors spend their time watching the S&P 500. That’s a mistake, because the credit market is the real “tell.” The bond market has been whispering a warning for weeks now, and credit spreads are now shouting it. As of this writing, the CDX Index, a benchmark measure of credit default swap spreads, has climbed to a nine-month high while the S&P 500 sits within 5% of its all-time peak. Over the past 20 years, every time that combination appeared, a bear market followed. Every single time.
That’s a track record worth taking seriously, and credit spreads are critical to understanding market sentiment and predicting potential stock market downturns. A credit spread refers to the difference in yield between two bonds of similar maturity but different credit quality. This comparison often involves Treasury bonds (considered risk-free) and corporate bonds (which carry default risk). By observing these spreads, investors can gauge risk appetite in financial markets. Such helps investors identify stress points that often precede stock market corrections.
The chart shows the annual rate of change in the S&P 500 market index versus the yield spread between Moody’s Baa corporate bond index (investment grade) and the 10-year US Treasury Bond yield. Rising yield spreads consistently coincide with lower annual returns in the financial markets.
The reason is that credit is the lifeblood of the economy. Businesses borrow to operate, and consumers borrow to spend. As such, when the cost of that borrowing rises, particularly the premium lenders demand to extend credit to riskier borrowers, it signals that the economy is under stress. That “stress” directly affects forward earnings estimates and increases the likelihood of a valuation repricing.
The “Junk to Treasury” spread is the clearest expression of this dynamic. Investors who buy high-yield bonds, the ones with a meaningful chance of default, should demand a premium above the risk-free rate offered by U.S. Treasury bonds. When that premium compresses, it signals that investors are comfortable speculating, willing to reach for yield without demanding adequate compensation for the risk they’re accepting. When the premium expands, the mood has shifted. Lenders are getting nervous. Credit conditions are tightening. And historically, tighter credit conditions have preceded more challenging environments for stocks.
This isn’t a theoretical relationship; it has repeatedly appeared in the data for decades. The bond market (CDX) prices risk continuously across thousands of issuers and maturities. It’s harder to talk up than equities, and it’s not susceptible to the same retail-driven momentum that can keep stock prices elevated long after the fundamental picture has deteriorated.
When credit spreads widen, investors should pay attention.
What The CDX Is Telling Us Now.
The chart from Sentiment Trader below tells the story as clearly as any amount of prose could. The top panel tracks the S&P 500 since 2007. The middle panel shows the CDX Index of credit default swaps. The bottom panel shows where those spreads stand relative to their 189-bar range, essentially a percentile reading of how elevated they are relative to recent history. (Red markers indicate instances where CDX spreads hit 9-month highs while the S&P 500 is within 5% of its high.)
Notice that each red arrow marks a moment when CDX spreads reached a nine-month high while stocks remained near their all-time highs. The 2007 signal preceded the worst financial crisis since the Great Depression. The 2015 signal preceded a sharp correction and an extended period of volatility. The 2022 signal arrived just before the Federal Reserve’s aggressive rate-hiking campaign drove the S&P 500 down 25%. And now, in early 2026, the signal has triggered again.
“This has been one of the more important divergences we’ve been tracking recently. CDS is pushing to a 9-month high even with equities near highs, effectively tightening financial conditions. Historically, this setup has been unstable: about half the time it led to sharp drawdowns, while the rest saw either mild pullbacks or continued gains.” – Sentiment Trader
The range-rank reading in the bottom panel is particularly instructive. It shows that current CDX spread levels are not a minor blip, but are registering near the upper end of their recent historical range. That’s not statistical noise, but a market pricing in genuine credit stress. The table below summarizes the four instances over the past two decades where CDX spreads hit nine-month highs while the S&P 500 traded within 5% of its peak. The subsequent market outcomes speak for themselves.
Does this mean the current situation will devolve into a bear market? Not necessarily, but history suggests the risk is elevated enough to warrant investors’ attention. It is also worth noting that the magnitude of the subsequent declines varied considerably, from the catastrophic 2008 to 2009 bear market to the more contained 2015 correction. That is due to the severity of the credit impact on the underlying economy. However, they all shared a period of elevated credit spreads that the equity market initially chose to ignore.
So far, this “time is not different.”
The Counterargument Is Not Convincing
The bulls will argue that CDX spreads are widening from historically tight levels and that the absolute level of stress remains modest by historical standards. That’s technically accurate, as shown, Treasury-to-Junk Bond spreads in early 2026 are not at the panic levels seen in 2008 or 2020. So why worry?
It isn’t the absolute level of the CDX that matters, but the direction of travel and the rate of change. If investors wait for the “spike,” it will likely be too late to act. Sentiment Trader’s nine-month high threshold isn’t about measuring the peak of a crisis; it is a warning of a potential turn. Credit stress doesn’t arrive fully formed. It builds. Each of the prior signals triggered before the real damage was done, precisely because spreads were starting to move, not because they had already maxed out.
There’s also the macro backdrop to consider. The S&P 500 enters this period with valuations near the upper end of its historical range, forward earnings estimates elevated, and sentiment still bullish. As investors, we monitor the high-yield spread closely because it is often one of the earliest signals of a fundamental shift in corporate and economic conditions. In other words, watching spreads provides insights into the health of the corporate sector, which is a major driver of equity performance. When CDX spreads widen, they often lead to lower corporate earnings, economic contraction, and stock market downturns. The reason is that a significant widening of the CDX spreads signal:
Liquidity Drain: As investors become more risk-averse, they shift capital from corporate bonds to safer assets, such as Treasuries. The flight to safety reduces liquidity in the corporate bond market. Lower liquidity can lead to tighter credit conditions, affecting businesses’ ability to invest and grow and weighing on stock prices.
Corporate Financial Health: Credit spreads reflect investor views on corporate solvency. A rising spread suggests a growing concern over companies’ ability to service their debt. Particularly if the economy slows or interest rates rise.
Risk Sentiment Shift: Credit markets are more sensitive to economic shocks than equity markets. When CDX spreads widen, it typically indicates that the fixed-income market is pricing in higher risks. This is often a leading indicator of equity market stress.
Corporate earnings may decline: Companies with lower credit ratings may struggle to refinance debt at favorable rates, thereby reducing profitability.
Economic growth is slowing: A widening CDX spread often reflects concerns that the economy is heading for a slowdown, which can lead to reduced consumer spending, lower business investment, and weaker job growth.
Stock market volatility may rise: As credit conditions tighten, investor risk appetite tends to decline, leading to higher volatility in equity markets.
Listening to credit spreads, particularly the high-yield spread versus Treasuries, is a critical indicator of stock market downturns. Historically, they have been a reliable early warning signal of recessions and bear markets.
Key Catalysts Next Week
The calendar downshifts after two consecutive weeks of high-impact data. No marquee releases are scheduled, but don’t mistake a thin calendar for a quiet tape. The dominant forces will be the market’s ongoing digestion of the March 18 FOMC decision, the updated dot plot, and Powell’s characterization of the stagflation dilemma—all compounded by quarter-end institutional flows that historically amplify moves in both directions.
By Monday, traders will have had a full weekend to digest whether the dots shifted to zero cuts (risk-off repricing in housing, small caps, and high-duration tech) or held at one with dovish language acknowledging labor deterioration (relief bid). A parade of Fed speakers throughout the week will provide color, walking back or reinforcing whatever Powell signaled. Those headlines will move markets more than any scheduled data.
Tuesday’s Q4 Productivity final revision matters more than usual. The prior quarter showed output rising 5.4% while hours worked grew just 0.5%. The unit labor cost component is the inflation signal: falling costs give the Fed room, rising costs tighten the stagflation case. Richmond Fed Manufacturing rounds out the regional factory picture alongside the Empire State and Philly Fed surveys.
Friday’s final UMich Consumer Sentiment is the week’s marquee event. The preliminary reading dropped to 55.5—near post-pandemic lows. The one-year and five-year inflation expectations are what the Fed watches most closely; a spike above 3% would validate the hawkish hold and kill remaining hopes for near-term easing.
Underneath the data, the real story is mechanical: Q1 ends March 31. Pension funds and institutional allocators begin quarter-end rebalancing and window dressing. After the sharp rotation out of tech and into value that defined the first quarter, the question is whether those flows reverse or accelerate. In a thin-catalyst week, flow-driven moves can be outsized.
