Comments based on information available as of 6:00 am CT on 4/3/2026

Growth: Running on Fumes?

February’s personal income and outlays data raised an uncomfortable question about how much fuel the U.S. consumer really has left in the tank. Personal income fell in February even as nominal consumption continued to rise. It’s become an increasingly familiar pattern where spending is maintained by lower saving, not stronger cash flow. That matters because the report captured household positioning right before the Iran conflict pushed gasoline prices sharply higher. Households have some cushion, but not a lot. Growth isn’t rolling over yet—but it increasingly looks like it’s coasting and set to hit a rough patch.

Inflation: The Warm‑Up Act

In February, inflation was remarkably well-behaved, but that all changed in March. Headline inflation moved mechanically higher with higher gasoline prices. The key question for markets and policymakers isn’t whether headline inflation rises further, but how much and how quickly those energy effects bleed into core inflation through transportation, services, and inflation expectations. The main performance–and inflation angst–hasn’t started, yet.

Policy: Operation Epic Exit

Operation Epic Fury may have degraded Iran’s conventional naval capabilities and nuclear program, but getting commercial vessels safely and quickly back through the Strait of Hormuz is a different mission altogether, one that could be described as Operation Epic Exit. Skepticism is warranted: shipping traffic remains well below normal levels, insurers are cautious, and logistics experts warn normalization could take weeks, not days. There is room for guarded optimism. The two‑week ceasefire, Pakistan‑brokered diplomacy, and increasing international coordination all raise the odds of a more rapid reopening than feared. Markets don’t require perfection, just improvement.

Looking Ahead: Climbing the Wall of Worry

Sir John Templeton famously argued that markets move from pessimism, to skepticism, to optimism, to exuberance. Recent price action fits that script unusually well. The ceasefire announcement came almost exactly when pessimism peaked with volatility elevated, oil prices surging, and investors heavily worried about disaster. The rally that followed has not eliminated doubt; instead, it has ushered in a healthier phase of skepticism. The combination of rising prices alongside calls for caution gives rise to another favorite market term: the wall of worry that markets so often need to climb. If the ceasefire evolves into something more durable, optimism will follow. For now, skepticism may be the market’s greatest strength—not its weakness.