The Fed's Next Move, The Iran Timeline, and Food Inflation? 3/18/26

Summary

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Podcast Summary: The Exchange — “The Fed’s Next Move, The Iran Timeline, and Food Inflation?”

Date: March 18, 2026
Host: Kelly Evans (CNBC)
Featured Guests: Steve Liesman, Jim Bianco, Claudia Sahm, Steve Whiting, Michael O’Hanlon, Diana Olek, Peter Galbo, Jonathan Krinsky, Pippa Stevens, Angelica Peebles

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Overview

This episode of The Exchange explores three urgent topics shaping economic sentiment and markets: the rising pressure on the Federal Reserve as inflation heats up, the evolving Iran war timeline and its energy implications, and worries about how supply chain shocks may drive food inflation for American consumers. Anchored by Kelly Evans, the episode draws on CNBC correspondents and a panel of economic, foreign policy, and market experts to dissect breaking developments.

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Main Themes & Key Discussion Points

1. The Fed’s Dilemma: Rates, Inflation, and Market Expectations

• Run-Up to the Fed Decision (01:00–06:00, 06:16–16:16)

  • Hot inflation data: This morning’s wholesale inflation report (core PPI) came in stronger than anticipated—.8% monthly (01:00–01:40, 06:16–08:49).
  • Inflation complicates future policy: With energy prices surging post-Iran war, the Fed faces a credibility challenge about meeting its 2% inflation target.
  • No imminent rate cut: “Fed officials greeted at the door on the second day of their policy meeting with a hotter than expected wholesale inflation price report giving them more reason to leave rates unchanged and probably signal no immediate cuts on the way.” — Steve Liesman (04:16)
  • Split opinions on next policy moves: Some experts see possible rate hikes if inflation remains stubborn, others worry about the labor market softening.
    • Jim Bianco: “I am in the possible hike camp. I don't mean anytime soon, maybe not this year, but I am in the camp that I think we've seen the last rate cut and I think the next move will be a hike...” (07:14)
    • Claudia Sahm: “They're uncomfortably high [the risks of a rate hike]... The war in Iran and the potential inflationary shock really does change the dynamic, it changes the risks that are on the table...” (08:49)
    • Steve Whiting: Warns rate hikes during an oil-based inflation shock risk deepening a potential recession (09:39–11:55).

• Labor Market Debate & Population Trends (11:55–14:48)

  • Discussion about labor supply constraints (immigration slowdown) and their influence on job numbers and unemployment trends.
  • Claudia Sahm: “We’re facing two problems. There are downside risks on the employment side and there are upside risks on inflation.” (14:29)

• Market Reaction to Fed Communication (15:04–16:16)

  • Markets dislike “hawkish tilts” from the Fed; experts debate if current sell-off is a buying opportunity.

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2. The Iran War: Timelines, Geopolitics, and the Oil Price Shock

• White House Response & Market Interventions (02:05–04:04, 18:25–20:30)

  • Vice President J.D. Vance sets expectations: The White House is preparing Americans for a short but challenging few weeks as the Iran conflict disrupts energy markets (02:21–02:34).
  • Actions to mitigate energy shock: Sanctions eased on Venezuela, Jones Act suspended for 60 days—implying the administration anticipates a longer conflict (03:20–04:04, 18:25–19:06).

• Expert Pulse Check: War May Drag On (19:06–25:31)

  • Michael O’Hanlon (Brookings): “I think we're now into a period of fundamental uncertainty and a likelihood of an extensive war. I'm not saying it's likely to last many months, but certainly my money would be on weeks, not days.” (19:06)
  • Deep skepticism on regime collapse or a quick end to Iranian resistance, regardless of leadership succession speculation (21:18).

• Global Energy Risks and Responses (35:30–37:23)

  • Middle East crude prices spike to $150+/barrel, causing “real-world impacts” such as electricity rationing in Egypt and surging US diesel and jet fuel prices.
  • Pippa Stevens: “Dubai is acting as a leading indicator of where broader prices could move if disruptions persist and inventory draws start to spread globally…” (35:30)
  • US gasoline hovers around $3.84/gallon, with analyst warnings that $4 is likely.

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3. Food Inflation: The Next Consumer Challenge

• Rising Input Costs (38:53–41:56)
  • Bank of America warning: Fuel and fertilizer disruptions could raise corn prices by 20–30%, wheat by 15–20%.
  • Peter Galbo (BofA): “If we start to see six or seven dollar corn...think about what corn goes into as a feed cost for things like meat, particularly in chicken.” (39:27)
  • Price increases from grains ripple through meat, dairy, and broader food categories.
  • Growing tension between passing along new price hikes to consumers or forcing companies to absorb costs after a period of deflation (40:25–41:15).

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4. Markets, Technicals, and Sector Fallout: Housing, Semiconductors, and Staples

• Equity Market Technical Breakdown (31:54–34:44)

  • Jonathan Krinsky (BTIG): Suggests key support for the S&P 500 is at 6550–6600, warns of “distribution” underway since last October.
  • Semiconductors’ crucial role: “The market's already lost software, it's already lost...financials, it really cannot afford to lose the semiconductors.” (33:25–34:44)

• Housing Market Softness (27:25–28:49)

  • Diana Olek: Mortgage demand, especially refinances, is plunging as rates spike; spring housing market faces headwinds from high prices and low sentiment.

• Consumer Staples Feeling Pressure (37:23–41:56)

  • Rising costs, supply disruptions, and inability to push further price increases to consumers are squeezing margins, particularly for foods with heavy grain-based inputs.

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Notable Quotes & Memorable Moments (with Timestamps)

• Fed & Inflation Debate

  • Steve Liesman: “The risk to that strategy with inflation running above target could undermine the credibility of that commitment to the 2% target.” (05:42)
  • Jim Bianco: “I think we've seen the last rate cut and I think the next move will be a hike.” (07:14)
  • Claudia Sahm: “There are downside risks on the employment side and there are upside risks on inflation. Like this is, this is a tough one.” (14:29)

• Iran Timeline & Oil Strategy

  • Eamon Jabbers: “There's an all hands on deck effort here inside the administration to do everything they can to keep those prices in line as best they can.” (03:32)
  • Michael O’Hanlon: “I think we're now into a period of fundamental uncertainty and a likelihood of an extensive war. I'm not saying it's likely to last many months, but certainly my money would be on weeks, not days.” (19:06)
  • Pippa Stevens: “Dubai is acting as a leading indicator of where broader prices could move if disruptions persist and inventory draws start to spread globally rather than remaining regionally constrained.” (35:30)

• Food Inflation Ripple Effect

  • Peter Galbo: “If we start to see six or seven dollar corn...think about what corn goes into as a feed cost for things like meat, particularly in chicken and so that's probably where you're going to see it show up first.” (39:27)
  • Peter Galbo: “They’ve worked too hard to try and get their price points in the right spot, I think, to do that [raise prices again]... they've been focused actually on decreasing price. We've seen this with Pepsi and these other companies talking about price cuts for the first time in years now. And now they're being hit by a supply chain issue.” (40:50–41:15)

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Key Timestamps for Important Segments

• 01:00 – Stock market reaction to inflation and oil headlines; hot wholesale inflation data
• 02:05 – Breaking news: White House and VP Vance set expectations on Iran war timeline
• 04:16 – Steve Liesman’s analysis on the Fed’s policy puzzle
• 06:50 – Panel opens: Diverging views on rates, inflation, risk management (Bianco, Sahm, Whiting)
• 14:29 – How the Fed weighs inflation vs. employment risk
• 18:25 – Michael O’Hanlon on Iran war duration and implications for energy security
• 27:25 – Mortgage demand and housing market health check
• 31:54 – Jonathan Krinsky’s technical market analysis (S&P 500, semiconductors, energy)
• 35:30 – Pippa Stevens on Middle East crude prices and energy market disruption
• 38:53 – Peter Galbo: Rising food input costs, implications for meat/protein prices and consumer staples

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Conclusion

Amid breaking news and fast-evolving headwinds, the March 18 episode of The Exchange captured the acute dilemmas facing the Fed, the real-world consequences of the Iran conflict for energy and food prices, and the market’s jittery mood. The panel agreed: this is a period of elevated uncertainty, with the central bank on hold but vigilant, the White House braced for continued volatility, and American consumers (and investors) about to feel the pressure—at the pump, the grocery store, and in their portfolios.

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Transcript

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[Kelly Evans]

yields in oil are rising, rising after that hot pie number this morning. And that has stocks under pressure as we wait for the Fed. Welcome to the exchange everybody. I'm Kelly Evans. The Dow is down about 400 points, a little less this hour, but it's pacing for its biggest monthly drop in more than a year now as we wait the Fed decision that'll come at 2pm Eastern time. That'll be their next move on rates. No change is expected though many expect a hawkish tilt to their projections and the chair's rhetoric, especially after core pie rose 8. 10 of a percent this morning. That's the monthly rise and it comes before the Iran war broke out. We'll have more on that in a moment. Complicating the situation, oil prices they have reversed higher after selling off overnight. On the latest developments in the Middle East. WTI is at 98, Brent is at 108 and yields are higher as well. The 10 year is around 422. It's hovering close to a 7 month high. The 2 year has risen a little bit as well. I mean market a little bit, but a lot in the grand scheme of things to 371 as people try to game this out. Let's begin with some breaking news out of Washington. We mentioned the latest developments in the Middle East. Eamon Jabbers, what's happening?

[Eamon Jabbers]

Hey Kelly. The Vice President, J.D. vance has been speaking to voters in Michigan over the past hour and as he talks to them he's doing some expectation setting about how long the war in Iran will last and what that means for them in terms of gas prices. Here's what he said.

[Kelly Evans]

We're going to take care of business, we're going to come back home and when that happens, you're going to see

[Michael O'Hanlon]

energy prices come back down to reality. But in the meantime, we got a problem.

[Kelly Evans]

We know that we have a problem.

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We're doing everything that we can to address it.

[Eamon Jabbers]

So the vice president there very much suggesting this is a temporary military engagement with Iran. It's going to end soon, he says. But in the meantime, he says the administration knows it has a problem. A couple of other things that the vice president said there. One is, he says that a couple of announcements are coming from the administration in the next 24 to 48 hours in terms of ideas to lower gas prices. And then he talks about the overall timeframe and expectations. He says we've got a rough road ahead of us for the next few weeks, but it's temporary. So an expectation setting from the vice president that this war will last at least for the next few weeks, but calling that temporary and saying that oil prices and gas prices for consumers and the voters he's speaking to will come down after that.

[Jim Bianco]

Kelly.

[Kelly Evans]

And we eased sanctions on Venezuela as well. So first on Russia for I believe it was 30 days then. Now we've suspended the Jones act for 60 days, if I'm not mistaken. And now we've eased sanctions on Venezuela as well.

[Eamon Jabbers]

That's right. And clearly there's a couple other ideas on the shelf inside the White House that they're getting prepared to roll out along, I would imagine along those lines. You know, in each one of those, I think economists and oil industry experts can tell you better than I can. You know, there's a dispute over exactly how much they could lower the price of gas at the pump that will affect those voters that the vice president's talking to. But clearly, you know, there's an all hands on deck effort here inside the administration to do everything they can to keep those prices in line as best they can.

[Kelly Evans]

Right. Amen. Thanks for now. Appreciate it.

[Steve Liesman]

Amen.

[Kelly Evans]

Jabbers let's stay in Washington as we await the Fed's next move. Steve Liesman joins us with the final setup. And Steve, a big data point just this morning that could really impact their thinking.

[Steve Liesman]

Yeah, Fed officials greeted at the door on the second day of their policy meeting with a hotter than expected wholesale inflation price report giving them more reason to leave rates unchanged and probably signal no immediate cuts on the way. But the historic surge in oil prices will unavoidably influenced the statement, the Fed's forecasts and the Chair's commentary at the press conference. Some of the keys to the meeting today, the dots, those forecasts of future rates likely signal one, maybe no cuts in 2026. We'll talk about that in a second. Future policy is going to be linked to inflation expectations and whether the oil price surge raises core inflation as well. The inflation outlook will be rised higher and geopolitical tensions and uncertainty likely added to the statement. Whether the Fed dot signal that one or no cuts depends on if hawks become more hawkish with the worsening of inflation data and the surge in oil, and if the doves have become less optimistic. Worth watching what Governor Myron does. He's continuously dissented in favor of more rate cuts, continues to oppose the consensus, and whether or not others will join him. As for the market rate cut, probability is taking another leg down after that pie came out above expectations. A single cut remains priced into Fed futures markets, but the chance of a second cut becoming vanishingly small. Right now, the overriding question for the Fed whether to look through the oil price surge and address potential economic weakness. The risk to that strategy with inflation running above target could undermine the credibility of that commitment to the 2% target.

[Kelly Evans]

Kelly, that's Steve Any, you know, you've been covering the Fed, you know, everyone there for so long and there was some, I guess, discord, you know, even going into this. Just what's your sense of the importance you think they might assign to the pie readings and to the fact the last couple of months have seen, you know, look at the core. PC was at 3.1 in January.

[Steve Liesman]

Yeah. I mean, the Fed cannot argue right now that inflation is headed towards the 2% target. It's a, it's an argument you can't make. And I think you may throw out the dissents. If it's just Myron, he has been sort of always. A lot of times dissents tell you where the panel's going. But that's not been the case with Myron. Nobody's really joined him. But if Waller joins, if Bowman joins, that's a different story. It's a sense that what they're going to do is thinking about addressing the oil price surge more on the weakness side. And I will say the Fed survey had a lot of that in it where people said the Fed should look through it. But again, there's that risk that having having looked through the tariff inflation, that you can look through the oil inflation and then it's that old joke that once you X everything out, everything's flat.

[Kelly Evans]

Right. Life is much easier that way, I think. Right, Steve, thanks. We'll let you get ready. Really appreciate it. Steve liesman, and let's get right to our first panelists now, who range from thinking we'll get two cuts to no cuts to maybe a hike this year. Steve Whiting is chief investment strategist at CEO Group. Claudia Sam is chief economist at New Century Advisors. And Jim Bianco is president of Bianco Research, who is in the possible hike camp. Jim, is it you?

[Jim Bianco]

I am in the possible hike camp. I don't mean anytime soon, maybe not this year, but I am in the camp that I think we've seen the last rate cut and I think the next move will be a hike might be 27 again. And I'll just point to you to the ECB, that market is already pricing in that they're going to raise rates twice this year. Everybody's moving in that direction. The Fed's been a bit slow.

[Kelly Evans]

That said, Jim, I was asking some kind of different analysts about this in the last few weeks and they said, well, the ECB was much quicker to get back towards news. I think their rates are pretty low. And so their, you know, I guess reaction can afford to be a bit more hawkish than ours.

[Jim Bianco]

That's true. They can be a bit more hawkish. But I also think that, as Steve Liesman was saying, when you look at the inflation numbers and you look at what we're probably looking at, maybe a.7 2.9 for March CPI coming this month, the Fed is, is definitely done cutting rates until something changes. And I do think if the economy rebounds and everything that we might be talking about a hike. And I'm not alone on that. Beth Hammock of the Cleveland Fed has even brought up the hike word, too.

[Kelly Evans]

So has Ms. Sahm, who is sitting next, well, remotely sitting next to you. And I really took notice of that, Claudia, because of course, we all follow your work very closely and I think you're always very measured and in fairness, you are very measured throughout this piece saying this is, this is really about risk management. They have to the risks of a serious economic downturn, the risks of a worse labor market. But you also acknowledge the risks of a rate hike. How high do you think those risks might be right now?

[Claudia Sahm]

So I think they're uncomfortably high. And what's important is they've really shifted since the Fed last met in January. The war in Iran and the potential inflationary shock really does change the dynamic, it changes the risks that are on the table, the ones that are possible. I think, you know, my base case, and I imagine many Fed officials is it's going to be a temporary disruption. While they will wait to see that, they will look through it largely. But there is a risk that this is protracted and you know, inflation really moves high and this is such a salient price to have go through gasoline to have it then maybe hit inflation expectations. So at this point the Fed really can't take anything off the table. And it is possible the next move will appropriately be a hike, but is far too soon to say that. Right. It's just we've got to put all these, these, these scenarios on the table right now.

[Kelly Evans]

Steve White Yesterday I was sitting with Steve Grasso who thought it would be a terrible mistake to raise interest rates in response to an oil price shock. Shock which I would generally agree with. I think a lot of people would actually. I mean the last thing you want to do is take something that acts like a tax on the consumer and double down by tightening monetary policy. That said, this report shows that we've had pipeline inflationary pressures building for a few months time. Can you give us any clarity on why that is? And do you think a rate hike versus a cut, I mean what, what makes sense in this kind of environment?

[Steve Whiting]

I just want you just imagine going forward if the economy is in a recession. Employment is contracting by a couple hundred thousand per month, month after month. The unemployment rate is rising to five and a half percent. What is the Fed doing? Regardless of what they can do and what they can impact, The Federal Reserve would be easing and they'd be easing very significantly. We probably wouldn't hit zero again pretty easily, but the Fed would be cutting hard. And that's the problem with just focusing in on the immediate view of the economy. The opportunity to restrain inflation during a stronger period for growth, being a little hawkish when things are going well. That was the Fed that we used to know. Now they're not really going to do what they did in 20, 20, 21. We saw the mistakes that they made being excessively accommodated. But knowing what would happen to the economy, they wanted to be very accommodative. So I think we're in a situation where, okay, the 92,000 jobs in the month of February probably not representative of exactly where the labor market is, but this is a weakening labor market trend. You can see this in consumer surveys that are telling us there is less demand than there is supply. And okay, the issue that we just had with energy like the tariffs. Yet another thing that constrains potential economic growth should mean that the Fed can't do anything about it. But a lot of what we're seeing in the labor market now has roots all the way back in the tightening steps of 2022 and 2023. And the federal Reserve sooner or later is going to react to this labor market, ideally when the inflation shock is out of the way.

[Kelly Evans]

So, Claudia, I have a bigger picture abstract question for you, which is we're in a strong capex cycle right now. We're in a, you could argue we were an underinvestment during the 2010s, and a lot of our physical infrastructure now we're scrambling to catch up, especially when you throw AI on top of that. If or as that drives up interest rates, what do you do with a somewhat weak labor market at the same time?

[Claudia Sahm]

But the fact that we have a good capital expenditure backdrop, that is a plus. Right. It falls right in there with we have a consumer that overall has been relatively solid over the past year. So, you know, whenever we want to go into a shock like the energy price shock, on the best footing possible, I don't think, you know, so I see this more the CapEx spending, I see that as a buffer, not a challenge for the Fed at this moment, you know, that we want to see those expenditures. And I don't think whether you look at on the capital expenditure side, the consumer side, the labor market, there's not this like overheating vibe that we could have seen potentially in, you know, coming out of the pandemic in 2021, when things were kind of really heating up. So I just, that's not the backdrop that we have now.

[Kelly Evans]

Okay. And Jim Bianco, kind of same question. I also love to hear your response to what the case that Steve was laying out there, which is, you know, he perceives a weakening or weaker labor market, that you should cut rates or lower rates now so that it doesn't get a whole lot worse.

[Jim Bianco]

Yeah. There's the other side of the equation, and that's the labor supply side. The population growth in the US has been declining because of lack of immigration. And so even though we've seen jobs average 150,000amonth back in the middle of 24, down to around 9,000amonth now, the unemployment rate's only up 2.10of a percent. The thing about this is we might be averaging 9,000 jobs a month over the last 12 months, but that might be all we need in that even Chairman Powell said in his September press conference, we still might be in balance down at these low numbers right now because of the change in immigration.

[Kelly Evans]

Steve Whiting, last word.

[Steve Whiting]

I think you need to take a look at the total growth of the labor force, including both native and immigrant populations and the shifts that we've seen in these surveys. What that's telling us is that we do have an imbalance and the unemployment rate is actually going up. It will go up more if it matches what the survey data, if we read the conference board data, for example, is telling us, which for decades has told us that right now we are in a deficit of jobs.

[Kelly Evans]

Claudia, do you want to weigh in here as well? I mean, you know, the unemployment, the way it behaves as well as anyone.

[Claudia Sahm]

Yeah, I just want to underscore, I mean we're facing two problems. There are downside risks on the employment side and there are upside risks on inflation. Like this is, this is a tough one. And honestly the Fed is just going to point out whatever it thinks is the bigger problem and respond to it. So I agree with all these points and that's what makes this so challenging right now.

[Kelly Evans]

Can they say they're both big problems? I know.

[Claudia Sahm]

I think that's part of the uncertainty of this moment and part of their pause of being on hold today is to gather more information so that when they act they really feel confident the way they're acting and they could move pretty fast when they get that confidence.

[Kelly Evans]

All right, Steve Whiting, I know we have to go. I appreciate you guys just giving me a couple extra minutes here. I the market is always, you know, it doesn't like a hawkish tilt. Let's just say just what do you think happens if the Fed doesn't come out and talk about what you're talking about and acknowledges that there's been, we just showed that chart upward pressures and prices and they have to kind of think about those risks. What would you say to the market if it is, you know, quite upset at that outcome? You see this as a buying opportunity?

[Steve Whiting]

Look, I think dollar strength, some of the weakness in foreign markets, the big rise that we've seen in energy related shares, it's a focus on the immediate and at the same time, if you take a look at futures markets out a year, it's saying that all the $10 of this oil price rise is going to be erased. You know, it's a little sad that the Fed is in this position. It's very hard. And if it wasn't for the overshoot in inflation during the pandemic, they would be able to look through this one. So I think the market again takes it hard if they're going to be hawkish right now. But I think in the end we know what the Fed does, whether you want it or not. The Fed is very activist and will respond to the labor market when the signs are clear, if it is clear that it is weakening.

[Kelly Evans]

All right, thank you all very, very much today. Stephen White and Claudia Sam, Jim Bianco, and we'll see what happens in about 45 minutes time. In the meantime, the president waiving the Jones act for 60 days in an effort to steady the oil market. Is it a sign the White House expects the war in Iran to last that long? Maybe longer than expected. We'll talk about that next. Plus the technical trade ahead of the Fed, the key levels to watch on the S and P, and whether the chip makers are flashing a bullish sign. The biggie today, folks, might actually be micron after the bell. We're back with a lot more after this.

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[Dr. Guy Winch]

their mental health at some of the highest rates we've ever seen. But most aren't getting the support they need. And that needs to change. I'm Dr. Guy Winch, your host for season three of the Visibility Gap, presented by Cigna Healthcare. This season we're focusing on men's mental health, bringing together real stories and expert insight to explore the pressures men face every day and why opening up can feel so difficult. Join us for the new season wherever you stream your podcasts

[Kelly Evans]

issuing a temporary waiver of the Jones act earlier today in an attempt to stabilize oil markets amid the Iran war. The suspension will also allow resources like natural gas, fertilizer and coal to flow freely to US ports for 60 days, according to the White House. Not having a big impact on oil today. WTI reversing higher to 98 a barrel. Brent's at 108. As we mentioned earlier on for more, let's bring in Michael o'. Hanlon. He's Brookings Institution Foreign Policy Program director of research. Michael, it's great to see you with just kind of a pulse check here on where you think we are in the war, how far along, how many more days? If some are even saying if we suspended the Jones act for 60 days instead of 30, does that mean we see a risk of more prolonged conflict?

[Michael O'Hanlon]

Greetings. Well, that's a distinct possibility. Yeah. I think we're in the phase now where we've President Trump, as my colleague Tom Wright has said, is losing his ability to decide when this war ends. Maybe he's already lost it because and maybe, frankly, that was preordained as soon as Ayatollah Khamenei was killed, because once you had his son replace him, who is at least his hard line and who at that point had lost his sister, wife and father to Israeli strikes in consortium with the United States, the idea that Iran was going to back down was pretty unlikely. And Iran now has recourse to sort of a maritime version of insurgency or asymmetric war, which plays to Iran's historical strengths. For 40 years, they've given us a lot of military trouble in the broader Middle east, starting with 1983, Beirut, Khobar Towers, the Iraq stabilization effort, where a lot of Iranian weapons killed American forces. They're good at this kind of warfare. They think they're good at it. And now the Strait of Hormuz shutdown is sort of a maritime equivalent. And they're going to see how it goes for a while, I think, before they desist or certainly do any deal, their nuclear program and so forth. So, yeah, I think we're now into a period of fundamental uncertainty and a likelihood of an extensive war. I'm not saying it's likely to last many months, but certainly my money would be on weeks, not days.

[Kelly Evans]

I don't know if you read the Al Jazeera piece Making the Rounds that basically argues the US Israeli strategy against Iran is working. Here is why. And one of the things mentioned in there is precisely the succession. You Know, my understanding this goes back a decade or so. Correct me where I'm wrong in Shia Islam is you don't want a line of succession that was part of the dispute with the Sunnis. And so by choosing a son instead of having the committee able to choose their next leader, that's actually a sign of weakness and not strength. And this is a regime that's kind of behaving as if it is anticipating its collapse, the way that there's this kind of decentralized plan to just spray, you know, artillery around the Gulf and that kind of thing. What would you say to the idea that ultimately we may have more of an upper hand here than the consensus than most of us can currently perceive?

[Michael O'Hanlon]

Well, not being a scholar of Islam myself, I'm a little hesitant to disagree with the Al Jazeera analysis, except to say that this theocracy has spent 47 years entrenching itself into power. And fundamentally, it cares about power and about its vision of an Islamic republic that's a revolutionary state throughout the region, taking on the Great Satan, taking on Israel, destabilizing neighbors it doesn't like. I think that agenda matters more to whoever's in power in Iran than whether or not some theoretical Islamic precept about avoiding dynastic succession kicks in. So count me as a skeptic on that argument at first blush, not claiming to have deep authority on the subject. And I just think that the allure of thinking that AI has now allowed us to find any and all Iranian leaders, wherever they may be, could be partly right. But count me in as a skeptic on that as well, because the top layers of the regime were always people that Israel was trying to track. And it's not so much it's partly through AI, but it's also through hacking closed circuit television cameras near the Ayatollah's house, things that were not necessarily rocket science. They were impressive. They took a lot of very good tradecraft in terms of human intelligence. But it was not some fancy new technology that's. That's going to now be reproducible for every next leader in the Iranian theocracy, especially because Iran has militias that are not uniform, that are not overly centralized, that have been preparing for a dispersed command and control for at least a year and probably much longer than that. And so I'm afraid this regime is likely to survive.

[Kelly Evans]

And what do you make of the President's latest post? And again, he's kind of reiterating or reposting these calls for allies to join us and opening the strait. And some analysts have suggested that it's going to be hard for us to guarantee the strait is open unless we can put boots on the ground along the Iranian coast to make sure that, you know, we've kind of cleared them from being able to disrupt its passage. Then the president says, I wonder what would happen if we, quote, finished off what's left of the Iranian terror state and let the countries that use it. We don't be responsible for the so called strait. That would get some of our non responsive allies in gear and fast.

[Michael O'Hanlon]

Yeah, it's tempting to think that way, but, you know, I'm old enough to remember all the Iraq war debates and the early heady days where things seem to be going well and then the presumption that somehow the politics of that region would work to our favor because anything was better than Saddam. You know, we've been through this kind of thinking before. I realize Mr. Trump is not threatening a ground invasion or occupation, but I don't really think that threatening chaos is that much of an improvement. There were people in the George W. Bush administration who sort of favored the chaos. The just go in with a light touch and get out. And maybe they feel vindicated in the aftermath. But President Bush and others thought that was not a very good option because chaos in Iraq or Iran doesn't really serve our interests either. I think the president would be well advised myself, not that he takes my advice to give the allies some time to come along on this one. They were not consulted on this war, and the idea that they're going to fall in the minute that Mr. Trump demands they do so is a little unrealistic. But I believe over time they may want to help us because they do need the oil and gas themselves and they are our ally and they know that the Iranian regime that we attacked was not a good regime. So if we give some time for emotions to subside, for new strategic realities to set in, we may get some European and Japanese help. But I think it would be a mistake for Mr. Trump to push this too hard, too fast.

[Kelly Evans]

And meanwhile, I'm seeing comparisons again from military analysts between taking Iwo Jima and Kharg island and saying, you know, in that case it was 80,000 troops or something. You know, and I just even drawing that analogy, I thought was striking.

[Michael O'Hanlon]

Yeah, that's a good point. And we shouldn't assume it's going to be a cakewalk to get ashore. And even once we're ashore, we're within drone and missile range. So the idea of going to that step or as you mentioned earlier, trying to put US Forces along the littoral near the Strait of Hormuz to get rid of the fast boats and other things that could deploy mines or drones. These are daunting propositions that take us to a much higher level of risk than we're at right now.

[Kelly Evans]

All right, Michael, for now, thanks. Really appreciate it. Michael o' Hanlon of Brookings. Coming up, we'll pivot and talk some housing. The stocks are under pressure in March. LGI, top build, Lennar Masco, Dr. Horton all having their worst month in over a year as we see rates back on the rise. And we'll get the latest numbers what that means for mortgage demand. As you can guess, it's not great. We have the full details after the break.

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This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and [e-mail] MarketUpdatePodcast or find Schwab Market Update wherever you get your podcasts.

[Dr. Guy Winch]

Men are struggling with their mental health at some of the highest rates we've ever seen, but most aren't getting the support they need and that needs to change. I'm Dr. Guy Winch, your host for season three of the Visibility Gap presented by Cigna Healthcare. This season we're focusing on men's women's mental health, bringing together real stories and expert insight to explore the pressures men face every day and why opening up can feel so difficult. Join us for the new season wherever you stream your podcasts.

[Kelly Evans]

Welcome back. As we see the market selling off today largely after that stronger than expected PBI report, but also as developments in the Middle east have the oil price on the rise again. The Dow is near session lows down 453 points. That's about a 1% drop and you can see their pressure across the other major averages as well. About half an hour till we hear from the Fed and keep an eye on Micron hitting another all time high despite this market, despite everything ahead of its earnings later today, an all time high today. The options market is pricing in an 8% move once it does report after the bell. The shares of course are up 63% this year. Some say this is more important than in video when it comes to the next phase of this market move. And we'll hear from the CEO tomorrow morning on Squawk on the street around 9:00am Eastern Time. So again, the whole trade, really a lot of this hangs on what Micron says after the bell. I think Jim Cramer's line earlier on was they better triple the numbers that people are expecting. Meantime, Williams Sonoma is among the S and P leaders after reporting strong earnings and comps revenue missed estimates, but they are hiking the dividend by 15% to 76 cents a share and saying they continue to gain market share and that has WSM of 5%. Sticking with housing, the builders are struggling to post a fourth straight day of gains and that was after a nine day losing streak to start the month, the longest in eight years. New numbers show mortgage demand is down as rates are back on the rise. Let's bring in Diana Olek.

[Diana Olek]

Diana well Kelly, mortgage rates last week jumped to the highest level since the end of last year and that hit refinance demand hard. Last week the average rate on the 30 year fix for conforming loans with 20% down jumped from 6.19% to 6.3%. That's on the Mortgage Bankers Index. As a result, applications to refi a home loan plunged 19% week to week. They were still 69% higher than the same week a year ago when rates were 42 basis points lower. But that annual gap is shrinking fast now. Applications for a mortgage to buy a home did manage to eke out a 1% gain for the week and were 12% higher than the same week one year ago. Mortgage rates did come down from Friday's high to start this week according to a separate survey from Mortgage News Daily. But they did pop a tiny bit higher this morning following that hotter than expected PPI report. You can see though, they are still significantly higher than they were just at the start of this month. Not a great look for the all important spring housing market which officially begins Friday. There is slightly more inventory than last year, but home prices are still higher nationally and consumer sentiment in both housing and the economy is weakening.

[Kelly Evans]

Kelly all right. Diana, thank you very much. Diana Olich. To Angelica Peebles now for the CNBC news update. Hi, Angelica.

[Angelica Peebles]

Hey, Kelly. GOP Senator Mark Wayne Mullen testified today in his confirmation hearing to lead Homeland Security that he would require judicial warrants for federal immigration agents to enter homes and businesses. He was responding to questions about an internal ICE memo during Kristi Noem's tenure that allowed for the use of administrative warrants for entry and arrested. Democrats have demanded that DHS rescind that memo. Egypt is cutting energy use as the country struggles with soaring fuel costs amid the war. Starting March 28, malls, restaurants and other retailers were told to shut down by 9pm to conserve energy. Egypt relies heavily on natural gas imports for much of its power generation. And the country says its energy import bill has more than tripled since the war began to now more than 1.6 billion a month. And the trust responsible for paying restitution to the creditors in the collapse of crypto exchange RTX announcing it will distribute about $2.2 billion on March 31. It's the fourth such distribution since the company collapsed and founder Sam Bankman Fried was convicted of fraud. Kelly, back over to you.

[Kelly Evans]

All right, Angelica, thank you very much. Coming up, the chip makers are trying to get back above their 50 day moving average. A sign of weakness or is upside momentum building in the space? We'll check on those charts right after the break. Just off session lows, the stocks look to be snapping a two day win streak but a lot still to happen. We're about to hear from the Fed and the S and P and NASDAQ are still higher on the weekend week. My next guest is considering taking some risk off the table. Jonathan Krinsky is chief market technician at btig. Jonathan, good to see you. Are we in the red for all the major averages now for the year? The Russell as well,

[Jonathan Krinsky]

you know, I don't know a fan but yeah, we're, we're definitely weakening, I would say, you know, making lower highs, lower lows over the last couple weeks. And we're coming into some pretty, some pretty key levels for the major averages, I would say.

[Kelly Evans]

Let's talk about those key levels. What are you watching?

[Jonathan Krinsky]

So for the s and P500, you know, we, we've been trading below the 20 day and 50 day moving averages which are now inflecting lower. So those come in around 6868 70. So we've really been saying you need to get some, some closers above those short term levels to regain that kind of short term Upside momentum. But barring that we're kind of keying on the 6550, 6600 level on the S&P 500. That's kind of the November lows and the 200 day moving average. And if you were to lose that after what we would call a pretty decent period of distribution, that would suggest a potential breakdown towards the 6000 level for the S and P. And I think when you take a step back, the distribution we're talking about has really been going on since last October. If you look at the Russell 1000 Growth Index, that peak last October, the equal weight NASDAQ 100 actually has basically made zero net progress in about 10 months. So any of the weakness we're seeing is kind of preceded any of the escalation in the Mideast which is why we think even if you get a short term resolution there, it's not kind of the end all be all to the weakness we're seeing in parts of the market.

[Kelly Evans]

That's interesting. And you think the Mag 7 is going to remain heavy, to use your phrase, the semis, the smh. You think you continue to see downside risk here and you do see upside for the energy stocks, is that right?

[Jonathan Krinsky]

Yeah. So you know, tactically we coming into March we thought the Middle east escalation was you know like we like we've seen a lot of other periods just very short lived kind of quick blip. And that would mean energy markets would revert back lower. But clearly we've seen a sustained bid in the commodities. Gasoline futures actually hit a new cycle high today and those energy stocks which we also thought initially were just kind of poised to pull back have kind of held those gains and continued to push higher. So I do think the trend in energy clearly is more than just a little blip at this point. And then back to your other point about the semis. Look, semis are the strongest part of the market outside of energy. They're the most important part because they're the biggest industry group within the S&P 500 at about 15%. And so what we've been saying is, you know, the market's already lost software, it's already lost to some extent financials, it really cannot afford to lose the semiconductors. And I think, you know, the reaction to Micron tonight and tomorrow will be quite, quite telling for that group.

[Kelly Evans]

Yeah, I do. We are all going to be hanging on that I think to see what happens. Jonathan, thanks. We'll leave it there for now. Appreciate it. Jonathan Grensky BTIG. Coming up, WTI crude is back towards 100 a barrel despite President Trump temporarily waiving the Jones Act. But it's not all priced equally in the energy complex. We'll dig into some of the differences across grades of crude, what it means for global demand as the price of the gasoline pump hits 384 today. We're back after this. We are about 20 minutes a little less than that from the Fed decision. And keep an eye on the oil prices today. Both Brent and WTI are climbing, but it's Middle Eastern oil that's really soaring. Pippa Stevens is here with that story we just heard about Egypt doing 9pm curfews. Pippa, what does it all mean for international demand?

[Angelica Peebles]

That's right, Kelly. So we do follow Brent WTI so closely because they are the international and US Benchmarks with a lot of liquidity. But to show the extent of the current disruption, it's helpful to look at Middle east crudes. Both Dubai and Oman blend have now surged and are trading at over $150 on the spot market. That's according to Platts, significantly above Brent around 103 and WTI at 96. That's as of yesterday. And these prices are helpful to look at because it's not a market of speculators. The spot prices are for true buyers and sellers of crude. And CIBC Private Walsh, Rebecca Babin said that this is a clear warning sign from the physical market. Dubai is acting as a leading indicator of where broader prices could move if disruptions persist and inventory draws start to spread globally rather than remaining regionally constrained. On the product side, heating oil Future is adding another 5% today as diesel prices in the US top $5 per per gallon for the first time since 2022. Jet fuel prices hitting records. The Middle east accounts for about 6 million barrels per day of refined product exports. And Asian refiners now don't have access to the usual flow of oil from the region, further tightening markets. And as you said, Kelly, Egypt now cutting their electricity. You showing the real world impacts of these price surges.

[Kelly Evans]

And 384 at the pump here. And you mentioned earlier on that we had some pipeline inflation kind of going into this. Do you think? Now are we just tracking with the price of WTI pretty much or I hope it's not tracking with the price of Middle Eastern crude.

[Angelica Peebles]

Definitely not with Middle Eastern crude given that we do refine a lot of the gasoline that we use in the U.S. although we do import gasoline on both the east and west coasts. But I think the trend higher is certainly higher, but maybe a slower move higher. We had that initial surge from that backup that we had to to get with to match up with RBAP futures. But Kelly, prices are not going down here. So while there aren't as wild swings, the trend is certainly higher and $4 is within range now.

[Kelly Evans]

Okay, Pippa, thanks. Appreciate it. Pippa stevens. Coming up, Staples are the worst performing sector today as oil and rates are elevated, inflation is sticky and ag prices are climbing with the strait of hormones moves more or less close. Bank of America sees quote, material upside risk to grain prices in its base case for the Iran conflict. We'll talk about the impact on grocery bills after the break. Welcome back about 10 minutes from the Fed decision. And here on the exchange, we've been following not just the rise in oil prices but also the spike in fertilizer component urea. In the past couple of weeks, the futures have soared 30% and they're sitting near record highs. Bank of America writing in a new note today that the increases in both fuel and fertilizer could mean 20 to 30% upside in corn prices, 15 to 20% in wheat. That's the base case. Now let's bring in Peter Galbo. Talk about what that means for the Staples names he covers. He's senior consumer analyst, Staples analyst at B of A. Peter, did you see the PPI this morning? I mean we already had a 50% increase month on month in the price of fruits and vegetables. I have no idea if that's immigration related. That's just one theory on it's a big month on month move with the same time we have a strike at a meat packing plant. At the same time you're telling me that corn and wheat prices could go up 20% at the same time that my delivery service just emailed and said the price of yogurt is going up 33%. So I'm like what is there a common thread behind all of this?

[Peter Galbo]

Yeah. Hey, Kelly, I don't know about a common thread of all of those factors. I think as you start thinking about, you know, what, what we wrote in terms of grain prices and the impact that that could have, that's probably the most discreet item if, particularly if we start to see six or seven dollar corn and you know, we're a ways off, I think from from the summer when we'll really know that the true outcome. But if that's the case, think about what corn goes into as a feed cost for things like meat, particularly in chicken and so that's probably where you're going to see it show up first, if in in actuality that's kind of what ends up flowing through.

[Kelly Evans]

So in other words, when you say that corn prices could go up 20%, you're also saying that chicken prices could do.

[Peter Galbo]

Typically what happens in an instance when corn prices go up is that the chicken producers will pull back, that the economics are not as favorable on a per chicken basis. And so you see supply start to get constrained and that's when you can see an increase in price basically to compensate for the increase in feed costs. And there's a little bit of switching they can do between things like corn and soybean. Right. And we have a plethora of soybean as well, so that can help offset some of it. But that's typically how you see the flow through on the protein side.

[Kelly Evans]

Back in 2020-2021, the whole Covid era, we had tons of liquidity sloshing around and all the price hikes were passed right on along to consumers who paid them and, and are still stunned by the numbers they're seeing. This time around is a little different, as I understand understand it. How much of these price increases do you think are going to be passed along and how much are is going to fall on the companies, take it out of their profit margin?

[Peter Galbo]

Well, yeah. Kelly, think about the number of companies that are talking about price investments. And we've just gone through that cycle over the past few months of some of the largest food companies talking about having to actually reduce prices. So are they really about to go out to consumers, roll prices back and then kind of come back a month later and say hey, actually, so we have to come back and increase them. You know, they've worked too hard to try and get their price points in the right spot, I think to do that, you know, kind of suddenly that's great news.

[Kelly Evans]

I mean it's not great news for this might explain why this consumer staples stocks have been under such pressure, Peter. But what you're saying is that the consumer staples companies have been focused actually on decreasing price. We've seen this with Pepsi and these other companies talking about price cuts for the first time in years now. And now they're being hit by a supply chain issue. So they're saying we're just going to eat that basically.

[Peter Galbo]

Probably still too early to tell, but I think if you look at what happened in 21, 22, 23, Kelly, you had the confluence of exiting Covid kind of stock up demand and Then you had an inflation supercycle in terms of grain costs moving up. It's just, it's a different scenario this time around. Again, we'll, we'll see. It's a little bit different than Ukraine. Again, Ukraine was a really big exporter of, of grains and still is a very big exporter of grains. And so that's what threw the grain markets kind of into haywire at that point with this conflict. Yes, there are, you know, derivative effects and things like fertilizer that could eventually be passed through, but it's probably not as parabolic a move as what you saw in 22 and 23.

[Kelly Evans]

Yeah, quickly, I'm just going to rattle off some of, you know, correct any of these. If they're wrong, you, you still a buy on Mandalay, Smucker, Coca Cola, a couple of beverage names, Monster Celsius. You like Utz, like Once Upon a Farm. So Jennifer Garner will be fine. A little bit more cautious on ConAgra, Kraft Heinz. Am I kind of capturing it? Tyson Foods.

[Peter Galbo]

That's, that's right, Kelly. I mean, and those concerns are probably more top line driven, you know, with an inability to really grow the margin from here. And so that's where the, the underperform ratings come in relative to the companies you mentioned, where the growth prospects are a little bit better.

[Kelly Evans]

Exactly. It's all about that growth, even in this environment. Peter, thanks very much. Good to see you. Peter Galbeau with Bank of America. And that's it for the exchange. We're going to go a little early so we can get ready for the Fed decision on Power Lunch. I'll join Dom Chu for that right after the break.

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This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Landsford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock, stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and [e-mail] Market Update podcast or find Schwab Market Update. Wherever you get your podcasts.