War Note: What Should we Believe? Energy, PPI, War Update and More

In this War Note - we discuss the massive bombardments of false and fake headlines in the last 3-4 days (as well as why you should ignore these), highlight the latest energy developments, & More.

Don Johnson (@DonMiami3), Chief Economist

Good Tuesday evening MacroEdge Readers and Community,

As promised, I am back with another Macro Note in the ‘War Note’ series to discuss the latest developments in the Israel-Iran war, which has seen so much noise over the last 72-96 hours that it’s hard to discern what is real and what is not. After the gap up in oil prices on Sunday evening in the futures session - that quickly reversed - and the past two days, we again entered a ‘melt-up’ mode, and we’re now 13.5% off of the lows on the Nasdaq:

The 200dma wasn’t just a magnet - it became the springboard for the move higher over the past few days, and the ‘TACO’ turned out to be the ceasefire, which enabled both oil prices and yields to dip. The interventions and talking up the market are now very unlikely to stop for some time, and we’ve reverted back to a similar regime to what we saw in April and May of 2025, when there were headline bombardments (made-up deals), and consistent press runs from Administration officials to keep market flows going. The only thing to break this situation (though it may accelerate these same interventions) is another move higher in WTI prices, which still looks quite possible given the physical market realities that we’ve discussed many times since late February.

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Latest War Updates -> What We Know is Real

The current 14-day ceasefire (agreed April 8) is set to expire on Wednesday, April 22. While there was hope for a 45-day extension, the collapse of the Islamabad talks (April 11-12) has delayed any timeline for a long-term deal. President Trump has signaled that talks could resume in Islamabad in the next 48 hours, but for now, the conflict is operating on a one-week “truce fuse.”

As of today, there are no confirmed direct talks between Washington and Tehran. Following the walkout of the U.S. delegation on Sunday, communication has shifted to intermediaries. VP JD Vance noted the primary sticking point remains Iran’s refusal to dismantle its nuclear program entirely. However, Pakistani mediators (Field Marshal Asim Munir) are aggressively pushing for a restart before the April 22 deadline.

In a significant diplomatic pivot, Secretary of State Marco Rubio hosted the first direct talks in decades between Israeli and Lebanese delegations in Washington, DC today. The two countries agreed to “launch direct negotiations” aimed at stabilizing the northern front. However, a full ceasefire in Lebanon was not achieved; Israel continues military operations in southern Lebanon (specifically Bint Jbeil) to disarm Hezbollah, while Lebanon prioritizes an immediate cessation of strikes.

The U.S. Navy’s blockade of Iranian ports is in its second day (enforcement began Monday, April 13 at 10 a.m. EDT). It specifically targets vessels entering or exiting Iranian ports, while allowing non-sanctioned tankers (e.g., from Saudi, UAE) to transit under U.S. escort. While Trump claimed 34 ships passed through yesterday, overall traffic remains at roughly 10% of pre-war levels. Iran has threatened retaliation against all Gulf ports in response to this “maritime piracy.” Thus far, there have been between 8 to 10 ships intercepted after they passed through the Strait and were en route out to sea.

Our current Global Oil Supply Impairment estimate stands at 13.5 mbpd (stabilized for the time being). This represents a structural deficit of ~13.5% of total global supply, a baseline that we expect to remain fixed as long as the U.S. Navy and the IRGC maintain competing “selective passage” protocols in the Strait. The IEA today mentioned as high as 20%, though our figure is more accurate based on mapped flows.

Energy Update: Holding The Range or TACO Triumph

Our portfolio strategy has dipped lower with the latest price action in WTI since Monday, taking performance since basket inception to about 9% (more in-depth update) - this pricing environment remains extremely positive for our basket, and I expect that we may concentrate things further for our 12+ month target hold period for this basket. On Thursday evening, I will have a more extensive update regarding our basket. Right now, excess volatility and headlines are impairing individual equity performance, but a lot of these names are FCF machines as the cycle gets going. Keep an eye on frac spreads over the course of the spring and summer, which will be a tailwind for ACDC.

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Continued below: Energy Update, Breaking Down the PPI Report, Previewing the Midweek Macro Note