Daily Commentary

MarketMinder’s View: This long-ish piece mentions several publicly traded companies, so please note MarketMinder doesn’t make individual security recommendations. They are coincident to our highlighting a broader theme: As the Iran war passes its one-month anniversary, economic sentiment is becoming increasingly dour, America included. As described, if the Strait of Hormuz remains blocked, oil and gas prices will continue rising—forcing central banks to raise rates—and stores won’t be able to stock their shelves. Under projected worst-case scenarios shared here, the longer the war lasts, the higher the likelihood of a global recession. Mind you, the Strait’s blockage is a global economic negative that has contributed to higher energy prices and raised uncertainty. We don’t dismiss how supply disruptions have caused hardships in some countries. But before concluding a global recession looms, consider: Early data suggest manufacturers were acting as the war started to avoid shortages and lock in lower prices. They are already applying pandemic-era lessons to mitigate the war’s effects. As for US energy supply worries, America just doesn’t rely on Hormuz-bound energy imports much. Per the US Energy Information Administration, only about 2% of America’s total petroleum liquids consumption and roughly 7% of its crude oil imports pass through the Strait. The war is affecting prices globally, but energy shortage concerns are off base right now. This piece’s decidedly negative slant further indicates sentiment has tumbled in the US since the war’s start—raising the likelihood of positive surprise as a better-than-feared economic environment emerges.

MarketMinder’s View: The Institute for Supply Management’s (ISM’s) US services purchasing managers’ index (PMI) hit 54.0 in March, down from February’s 56.1 but still well above the 50.0 line that separates expansion and contraction. As the title suggests, Iran war-related price pressures were the main culprit in March’s moderation, as the subindex for “prices paid for services and materials jumped to 70.7, the highest since October 2022.” Weak employment conditions, which predate the war, also weighed on results. Overall, several of the subindexes disappointed, but taking a step back, ISM’s trends are in line with the moderating-but-growthy services sector we saw globally in S&P Global’s flash March PMIs, and as we wrote then, this is likely more about sentiment and uncertainty than broad business fundamentals. For example, most of the commentary here focuses on businesses’ adjusting and preparing for war-related disruptions—a negative spin. But as the final sentence notes, “service providers experienced the strongest growth in new orders in more than three years.” Today’s orders are tomorrow’s production, so this bodes well for future readings (and likely reflects businesses’ acting preemptively in case of potential disruptions). Second, and perhaps more important, these data are backward looking—stocks have already moved on from what happened in March. Still, though, we think it is worth noting the overly negative reaction here to what was a “meh” report overall—bullish.

MarketMinder’s View: Some politics here, so please note MarketMinder is nonpartisan. We favor no party or politician over another and assess policy for its potential market or economic effects only (or in this case, the lack thereof). Some background for context: The UK’s Employment Rights Act 2025, which came into force today, provides some workers with more generous benefits, including starting statutory sick pay from the first day of absence (instead of the fourth) as well as enhanced paternity rights for new fathers. Sounds great if you are a worker, but the Confederation of British Industry (CBI), a think tank, suggests these changes will raise employment costs, deter investment and hiring and price young people out of jobs—the titular “precipice” being UK business costs, which rose elsewhere last April. Perhaps these reforms choose different winners and losers as any new legislative changes tend to do. But other seemingly “anti-business” rule changes haven’t shown to be a major macroeconomic negative (see the UK’s payroll and minimum wage hikes last year, which haven’t wrecked growth), and we doubt these reforms are materially different. To us, the handwringing over this government policy is another example of the persistently dour viewpoints across the pond—evidence of a relatively higher wall of worry in non-US nations.