Morning Note

As I seem to repeat almost daily, economic and political reality virtually demand that the present dynamics around world oil supply find resolution in the not too distant future.

The key word there being "world."  

While, as it is often expressed by US officials, the US is significantly energy independent -- well, actually, what officials tend to say is that we are "entirely energy independent" -- in reality, believe it or not, we are not a net-exporter of crude oil, we actually import more than we export -- to the tune of 2.2 million barrels a day last year in fact... Put correctly, the US is indeed a net exporter of energy products (nat gas, refined products, etc. combined), but, under present circumstances, the crude oil distinction is worth acknowledging.

Where "world oil supply" is key is that, make no mistake -- while, again, we are anything but immune -- the rest of the world's net-importers (while they may not be facing the immediate political risk the US Admin presently is) have to be fearing the pinch even more so... I.e., we expect to see other nations step in, and step up, their participation in the negotiation process -- a la South Korea this morning:

"South Korea's special envoy Chung Byung-ha met with Iranian FM Araghchi in Tehran this morning (April 23), expressing hope that diplomatic efforts would bring a definitive end to the conflict and lead to regional peace and stability. Chung also raised the importance of developing bilateral Seoul-Tehran relations, and Araghchi expressed Iran's readiness to cooperate on that front." The Korea Times

"The driver is nakedly economic: South Korea sent the envoy as Seoul ramps up efforts to secure safe passage for dozens of ships stranded in the Strait of Hormuz, with traffic still severely constrained despite the ceasefire. Foreign Minister Cho had already spoken to Araghchi twice by phone in three weeks prior to the envoy visit." Bloomberg

Here's your PWAI morning rundown: 

PWA Morning Commentary — April 23, 2026

Markets are holding near flat this morning — S&P up 0.09%, Nasdaq up 0.18% — a remarkably composed session given the backdrop. Wednesday's record close, driven by Trump's indefinite ceasefire extension, is being digested rather than faded, which in itself is a signal worth noting. The market has now fully recouped its Iran-related losses and is sitting at all-time highs with Brent crude above $102 and the Strait of Hormuz still closed. That combination would have seemed implausible six weeks ago. It reflects a market that has made a collective judgment that this conflict resolves before it becomes existential — a view we find defensible but not guaranteed.

The diplomatic picture hasn't improved. Iran's side has called further talks a "waste of time," no second Islamabad round has materialized, and Trump ordered the Navy this morning to engage any vessel laying mines in the strait. The indefinite extension of the ceasefire has effectively transformed the binary event risk into a slow-burn standoff. The next hard gate is May 1, when the War Powers Resolution requires the President to seek congressional authorization or begin winding down military operations. How that plays out — extension, authorization, or de-escalation — is likely to be the next decisive market catalyst.

This morning's Flash PMI data from S&P Global deserves attention. The headline composite came in at 52.0, up from March's near-stall of 50.3, and manufacturing posted a 47-month high at 54.0. Both numbers look constructive on the surface. The detail is less encouraging. The manufacturing surge is largely attributable to defensive stockpiling — survey respondents specifically used the words "panic" and "emergency" buying — as businesses front-run anticipated price hikes and supply shortages. Export orders fell. Services, the part of the economy that actually tells you what consumers and businesses are doing in real time, bounced back above 50 but only just, with new orders rising at the slowest pace in two years. The inflation readings are the story: output prices rose at the fastest pace since July 2022, and input cost inflation hit an 11-month high. S&P Global's chief economist put the Fed's dilemma plainly — it will be increasingly difficult to justify rate cuts if inflation continues on this path, even as underlying growth struggles to exceed 1% annualized. April 29 FOMC now carries more weight than it did a week ago.

Earnings this morning followed the now-familiar pattern: beat the quarter, trim the guide. American Express beat on both lines and held full-year guidance. American Airlines beat but cut its 2026 earnings outlook, citing a $4 billion increase in fuel costs. Honeywell missed on Q2 guidance. Lockheed Martin came in below consensus. The fuel cost pass-through is now showing up systematically across industrials and transports — a leading indicator of where margin pressure spreads next. After the bell tonight, Intel reports. Next week brings Microsoft, Amazon, Alphabet, Meta, and the FOMC decision in the same five-day window.

Gold is off fractionally this morning, which we read the same way we have throughout this period — rate sensitivity and dollar dynamics dominating the safe-haven bid in the near term, not a change in the fundamental thesis. Downside protection on the position remains well in place.

The portfolio is built for the environment the data is describing: energy holdings benefiting from sustained oil above $100, real assets anchoring the inflation hedge, cash providing optionality.