Trump's Iran war speech on Wednesday night was not the hit that he hoped it would be. It only lasted 19 minutes, but it was more than enough to send investors' hopes crashing and the price of oil higher by 11 percent. Yet hours later, on Thursday morning, Iran hinted at some progress toward opening the Straits of Hormuz. Stocks rallied back to even. Go figure.

 

It was a fitting ending to a wild holiday-shortened week for the markets. The S&P 500, after dropping 70 points on Monday, hit 6,343.72, down 9.1 percent from its record high made on Jan. 27. On Tuesday, the last day of the quarter, and Wednesday, markets gained more than 3.5 percent but then fell flat on its face on Thursday. A combination of events provided the triggers.

 

After five weeks of declines, markets were oversold and were stretched to the downside. We were within 1 percent of my 10 percent downside target. The indexes were flirting with a level that, if broken, would have led to a lot more downside. To me, markets seemed primed for a relief rally. All we needed was a couple of comments from the administration.

 

The tendency of professional money managers to "window dress" their clients' portfolios (by selling their losers and buying the quarter's winners) helped set the stage. In addition, the execution of a quarterly $30 billion hedging trade fueled the fire. And lastly, as I warned readers before, with the markets teetering on the edge, Donald Trump announced that the end of the war was all but over and the Straits of Hormuz was someone else's problem to fix. Markets roared higher.

 

It seemed to be all coming together for the bulls. Wall Street anticipated that the president, in his first wartime, primetime speech to America on Wednesday night, would further clarify his earlier comments. That was not to be. Instead, his words seemed to indicate additional short-term aggression and at least 2-3 weeks of further conflict. The president's key takeaways on Iran were his vow to "send them back to the Stone Age" and that the war would end soon.

 

Shortly thereafter, a U.S./Israeli airstrike launched a large-scale attack on Iranian infrastructure across Iran. Trump did not mention the Straits of Hormuz in his address, although the open passage of oil through that body of water is key to a return to global growth and to reining in inflation. Yet from the market's point of view, there was still no clear pathway to peace.

 

Overnight, futures plummeted, and markets were down by more than 1 percent Thursday morning. However, stocks recovered on reports that Iran and Oman are drafting a protocol to monitor transit through the Straits. That was old news, but in this market, the bulls were looking for any port in this storm. Traders used it as an excuse to bid up stocks anyway.

 

Equities ripped higher just before the Iranian public announcement was released on Thursday morning. Leading one to wonder if Iran was joining the ranks of the administration's insider traders, or did someone in the White House profit once again? We will never know.

 

The Iranian release did not specify which nations will be permitted passage, or at what cost. The statement reportedly originated from the Iranian state news agency. Oil, as I wrote at the onset of this conflict, is my primary indicator for predicting financial market direction. The Iranian news barely impacted the $11 surge, raising a barrel of oil to $110. For context, this translates to an overnight jump of 60 cents or more per gallon in gas prices.

 

For readers who may have missed it, and I assume most did, Iran's parliament approved a bill a week ago that imposes transit fees of up to $2 million on all ships passing through the Straits. It also bans vessels from countries imposing sanctions on their country and allows selective access to friendly states such as China, Russia, India, Pakistan, Iraq, and Bangladesh. The monitoring and control of maritime traffic news was part of the same bill.

 

Based on statements from over 40 European leaders and ministers, forcing passage through the Straits is no longer an option, regardless of Donald Trump's wishes. They would rather pay a toll or negotiate with Iran than join Trump's war. None were consulted before the attack, but after the fact, they were expected to participate in a decision made without their input.

 

On Friday, the March non-farm payroll showed 178,000 new jobs added. Although this exceeded expectations, as I've noted before, don't accept this figure at face value. Typically, at least 60,000 jobs are overstated each month. Furthermore, revisions are large, for instance, last month's loss of 133,000 jobs was revised downward by 41,000, while January saw an upward revision of 34,000.

 

Year-to-date, the S&P 500 is only down 6 percent after gaining more than 3 percent in two days this week. That is encouraging given the noise and destruction of the past weeks. This is also a holy week for much of the world, which may invite more violence. In addition, weekends, especially three-day weekends, have become too risky for most traders to hold longs.

 

Are we out of the woods? Not yet. We need to see oil and the dollar both drop substantially next week before calling a bottom in the market. In the meantime, to those who celebrate, Happy Easter, and for those who don't, bless you anyway!

 

Airlines and passengers alike are buffeted by everything from weather to war. Long lines at the security gates, cancelled or delayed flights, war, weather, and the stock market have hurt both commercial carriers and their human cargoes.

 

March had not been good for either airline or its passengers. More than 12,500 U.S. flights were delayed by storms in some cases on. Daily basis as storms buffeted the East Coast and other locales. American Airlines, Southwest, and Delta delayed or canceled 45 percent of flights in a recent week. This is nothing out of the ordinary. Severe weather this winter has become just another liability for both carriers and passengers.

 

As the U.S.-Israeli war with Iran began, conflict forced the cancellation of more than 52,000 flights to and from the Middle East. Since then, airlines that once relied on flying over Iran and other Gulf states must find alternative routes to their destinations. Geopolitical strife seems to be cropping up wherever you look (or fly over). What was once an efficient and finely tuned worldwide aviation travel network is now at risk of becoming a patchwork of fragmenting connections and workarounds.

 

As a result, not only are airplanes burning more fuel since they are forced to travel longer distances, but flights are getting longer and longer to get from point A to point B. Not only does this eat into carriers' profitability, but it also adds to the woes of your typical passengers. The price of flights is rising along with oil, making it harder to travel long distances, even if one is lucky enough to catch a flight.

 

Geopolitical conflicts have become a nightmare for travelers. Thousands have been stranded in the Middle East, and before that by the Venezuela/U.S. raids, and let's not forget the past four years of ongoing conflict between the Russia and Ukraine war.

 

Adding insult to injury, depending upon the airport, air travelers were encountering long airport security lines, some of which snaked out to the sidewalks surrounding the airport. Many major airports were experiencing nearly 3 hours in TSA lines, causing massive delays and missed flights during peak hours. Delays of at least 1 hour were reported in Atlanta, New Orleans, Charlotte, and Houston.

 

The culprit was the partial federal shutdown of Homeland Security funding, which had led to staffing difficulties at the Transportation Security Administration. Security personnel, until this week, had not received a paycheck for weeks. The U.S. Senate is still squabbling over funding.

 

The president sent his ICE agents to help but reports were that they were simply making matters worse. Finally, Trump ordered the head of Homeland Security to find the money and pay the TSA workers. He did. Readers might wonder why Trump had not simply done that in the first place. 

 

Like consumers, airlines are also grappling with higher energy prices. A sharp spike in jet fuel costs have decimated profits. Since the start of the war, the global average price of jet fuel has soared 58 percent, based on International Air Transport Association data. Since then, it has almost doubled. Fuel accounts for 20-25 percent of airline operating costs, and average prices have risen from $2.50 before the crisis to $4.57 per gallon now. Although some airlines hedge, many do not, and hedging often covers only part of their fuel needs.

 

Advance purchase fares more than doubled for transcontinental flights in the first week of the war. Fares to the Caribbean jumped 58 percent and 43 percent to Florida. Several airlines, mostly in the Asia-Pacific region, have either increased fares or announced fuel surcharges. Air India, for example, tacked on a $50 ticket charge for all flights to Europe, North America, and Australia. Cathay Pacific doubled fuel surcharges starting March 18.

 

U.S. airlines on domestic flights are prohibited from levying a separate fuel surcharge. Instead, they include fuel costs in the overall ticket price. Flyers can expect ticket prices to increase this summer unless oil prices drop back to pre-war levels in the next week or so. In the meantime, expect premium add-ons like seat upgrades, extra legroom seats, checked bags, or priority boarding to be adjusted upward.

 

Airline stocks have dropped sharply since the Iran war, driven by higher fuel costs and flight disruptions. U.S. airlines have generally underperformed the market this year, reflecting persistent concerns about weaker demand and limited pricing power. The industry also faces elevated labor costs and ongoing pilot shortages.

 

However, in recent days, some brave-hearted traders have been buying the dip in this area. Airline management says revenues are still increasing in both international and domestic travel, despite the challenges they face. Delta Airlines, American Airlines, and United Airlines all raised their revenue outlooks for the year. Consumer demand is still robust, they say, despite the long lines, added expense, and frustration.

 

Some airlines are now warning that they will be cutting back flights on less travelled and therefore less profitable routes. Analysts are warning that the higher oil prices climb and the longer they remain elevated, the greater the risk that flyers will pull back, and with them, the airlines' stock prices.