Worst is yet to come
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Following a dramatic weekend of failed peace talks—tied to a ceasefire one of the parties says isn’t yet in place—the US raised the stakes again in the Iran war, this time with a blockade of Iranian shipping. Oil rose on Monday, with Brent and West Texas Intermediate at a little under $100. Questions remained around confused messaging from the White House, what exactly will be blocked, whether Iran will exact a threatened toll for what it calls “piracy,” and now the possibility of a second round of talks. But one thing does seem more likely than not: as far as energy prices are concerned, the worst is yet to come. This according to the International Energy Agency, which warned oil prices don’t yet reflect the severity of the unprecedented supply crisis. About 13 million barrels a day of oil supply have been shuttered by the war, with more than 80 energy facilities damaged, IEA Executive Director Fatih Birol said.  The Paris-based agency has already described the current supply disruption as the biggest in history, saying a recovery could take as long as two years. “Prices are already high, but they are not reflecting the severity of the problem,” Birol said. “I think soon we will see they will converge, which is an extremely sensitive issue for the global economy.” As for Donald Trump’s latest effort to squeeze Iran, Nouriel Roubini, chief executive of Roubini Macro Associates, is not optimistic. “A blockade by itself is a game of chicken that I think Iran eventually wins, because they can suffer for a while,” he said at the Greenwich Economic Forum in Hong Kong Monday. “We’ll be in a worse world because we’ll still have higher oil prices, stock markets falling, bond yields higher.” —David E. Rovella What You Need to Know TodayThe leader of the US Republican Party has now attacked the leader of the Catholic Church on Easter week, the latest in more than a year of broken rules of American politics—both written and unwritten—laying at the feet of Trump. Aside from his frustration with Pope Leo XVI’s calls for peace amid the US-Israel war with Iran and the pontiff’s implicit criticism of the Pentagon’s militarization of bible passages, about half of US Catholics identify as Republican. That may create a problem for the GOP in an election year. Trump subsequently added to the global furor by posting a picture on social media depicting himself as Christ. A growing number of Democrats, some Republicans and now a former Central Intelligence Agency director are calling for Trump’s cabinet to remove the twice-impeached president as unfit for office under the 25th Amendment to the US Constitution. A firm that describes itself as the world’s biggest software-focused investment manager is planning a wind-down of its growth equity business less than five years after debuting it. For anyone paying attention to what artificial intelligence has been doing to the software sector, and by extension those lending it money, this may come as less than a surprise. To be sure, Thoma Bravo, a software-focused investing firm, made its decision before private equity alarm bells started going off. But like other investors in the sector, it is facing a reckoning over the health of its portfolio companies. With Canada pushed closer to China by dint of the US trade war and Trump saying he’s willing to “let China come in” as long as it builds factories and hires American workers, Ford’s top executive is warning that allowing Chinese automakers to sell their cars in the US would be “devastating” to American manufacturing.  A Ford F350 at the North American International Auto Show in 2022. Photographer: Erin Kirkland/Bloomberg The US currently has 100% tariffs on Chinese-made electric vehicles, which has effectively shut out automakers such as BYD and Xiaomi. But China’s low-cost, high-tech cars are taking off in the rest of the world. That includes Mexico, where BYD alone accounts for seven out of 10 electric and plug-in hybrid vehicles sold there, and Canada, which recently inked a deal with China to import 49,000 cars a year. Those cars could spell big trouble for a domestic American market overrun by expensive, oversized, gas-guzzling pickups and SUVs. The race to take on conservative Keiko Fujimori in Peru’s presidential runoff remained deadlocked Monday, with thousands of Peruvians still voting because of logistical mishaps a day earlier. A conservative, she is the daughter of former leader Alberto Fujimori, who was sentenced for human rights violations and corruption before his death in 2024. A fresh quick count by pollster Ipsos has Fujimori leading the first round with 17.1%. Leftist lawmaker Roberto Sánchez was second with 12.4%, while another conservative, Rafael López Aliaga, placed third and center-right sociologist Jorge Nieto was fourth. The pollster warned that the trio were in a statistical tie to advance to the runoff. The too-close-to-call scenario leaves the political future of Peru still wide open, dragging out an election that was supposed to bring an end to the Andean country’s chronic upheaval. “The order could invert itself and any of them could make the runoff,” said Alfredo Torres, the head of Ipsos in Peru. Sales of previously owned US homes fell in March to the lowest since June, showcasing the challenges facing the housing market as it heads into the key spring selling season. Contract closings decreased 3.6% to an annualized 3.98 million, according to National Association of Realtors data out Monday. That was below the median estimate in a Bloomberg survey of economists.  The report highlights the different ways in which the war in Iran is impacting the US economy. Mortgage rates have climbed substantially since the conflict started, adding to ongoing affordability issues facing the housing sector. Housing affordability has been a key issue ahead of November’s midterm elections. Trump is attempting to invigorate the housing market with a series of initiatives, including proposing a ban on institutional investors purchasing single-family homes.
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