In markets there is often a ‘risk-off/risk-on’ dynamic around economic news.

At the moment, that’s shifted to more of a war-on/war-off footing, or at least a shift in how long the war might take.

This view is winning out at the moment:

1) The US tried to talk to Iran but Iran refused and is determined to make the US feel the pain of $200 oil via closing the Strait for a couple months

2) The US is going to Plan B, which involves using navy escorts to allow passage through the Strait

The main evidence for the second part is that Pentagon is moving a Marine expeditionary unit to the Middle East. Hegseth has reported approved a request from Central Command for the expeditionary unit, typically consisting of up to 2,500 Marines but it will take 12-16 days to get there. That timeline lines up with the ‘month-end’ talk on escorts we’ve heard from the US and France.

It also shows why the US and others ordered the release of emergency crude supplies, as this is now going beyond the 4-5 week timeline that Trump laid out (and then shortened).

On the tape today, WTI crude has gone from $92 in early European trade to $97.80 last. That’s going to ensure a painful weekend at the pump.

Trump notably today that he would end the war when he “felt it in his bones” so we’re all basically trading on his whims. We will see if $120 or $150 oil presses that timeline forward. Today’s price of just +0.7% GDP growth (annualized) in Q4 won’t make the White House feel any better about the situation it’s in.

As for the market, the Nasdaq is down 1% and perilously close to testing the war low from Monday. If that breaks, we could very quickly be back to September levels.