Diplomatic efforts fail in the Middle East… rate cuts aren’t coming any time soon… the Fed’s hands are tied… copper’s case gets stronger
This weekend’s peace talks were supposed to be the beginning of the end of the Iranian conflict…
Vice President JD Vance led the U.S. delegation to Islamabad, Pakistan, for 21 hours of negotiations. Officials were cautiously optimistic. 蜜桃传媒s had been pricing in some probability of a diplomatic off-ramp.
Then Sunday morning, Vance announced the delegation was flying home without a deal. Iran had refused to agree to end its pursuit of nuclear weapons. Iranian negotiator Mohammad Bagher Ghalibaf – also Iran’s parliamentary speaker – said the U.S. had “failed to gain the trust” of his delegation.
By last night, President Trump had announced a naval blockade of the Strait of Hormuz, effective 10 a.m. Eastern this morning. U.S. Central Command later clarified that vessels traveling to non-Iranian ports wouldn’t be impeded.
Iran’s response was immediate – and targeted directly as U.S. consumers.
From Ghalibaf on social media:
Enjoy the current pump figures.
With the so-called ‘blockade,’ soon you’ll be nostalgic for $4-$5 gas.
As I write on Monday, oil is pushing up toward $100 a barrel again. However, stocks are brushing off the news, betting that this is political posturing and a deal will eventually arrive.
On that note, a second round of talks remains possible. Officials say the door hasn’t closed. But “possible” and “priced in” are two very different things.
So, at least for now, the scenario that was supposed to bring energy prices down – a negotiated resolution, a reopened strait, and a return to something resembling normal shipping flows – has moved further away, not closer.
And that puts the risk of higher inflation directly in the crosshairs – which brings us directly to the Fed, upcoming interest rate policy, and your wallet…
Goodbye, rate cuts
In the March Summary of Economic Projections, Federal Reserve policymakers projected one quarter-point interest rate cut by the end of the year.
Oh, how things have changed…
That projection came before oil prices surged due to the Iranian conflict… before the Strait of Hormuz closed to fertilizer and energy shipments… before gasoline topped $4 a gallon and diesel crossed $5… before last week’s two inflation reports – the February PCE on Thursday and the March CPI on Friday – that came in well above the Fed’s 2% target, with both trending in the wrong direction.
And here’s the kicker: the PCE report captures data from before the Iran war’s full inflationary impact hit the economy. The CPI tells a partial story – it picked up some of the early gas price spike, but not the full force of what’s now moving through the system.
Either way, the trajectory is clear, and the worst is still ahead in the data.
So, where does that leave rate-cut expectations?
According to the CME Group’s FedWatch Tool, “hold current rates steady” remains the market’s base case all the way until September.
And to be clear, that’s September of 2027.
Why the Fed is cornered
Legendary investor Louis Navellier, editor of , has been tracking the economic spider webs of the conflict. Here’s his take from last week:
The U.S. energy price bump is expected to ripple through other markets, as shipping costs rise and food prices increase.
So, the March data for food and energy inflation is expected to be hideous – and it won’t dissipate immediately even after a ceasefire and the reopening of the Strait of Hormuz.
It will likely be months until prices stabilize.
The numbers back that up. The Organization for Economic Co-operation and Development (OECD) updated its inflation forecasts at the end of March, projecting that inflation for the G20 countries will rise to 4% in 2026, up from its previous 2.8% estimate.
For the U.S. specifically, the OECD now expects inflation to reach 4.2%. Some economists are projecting even higher.
Meanwhile, also in late March, Fed Governor Christopher Waller told CNBC that “oil prices are going to stay high for a long time” – an acknowledgment of how deeply the Iran conflict has complicated the Fed’s calculus.
As we’ve been tracking here in the Digest, this leaves the Fed in a bind.
Slowing growth normally calls for cuts. But with inflation at today’s levels – and headed higher – cutting now would mean pouring fuel on a fire that’s already at risk of growing out of control. So, the Fed will wait, but that will risk further punishing an already strained U.S. consumer.
The takeaway for investors is clear: If the Fed isn’t coming to save the day, you’d better be in companies with genuine structural tailwinds – businesses whose fundamental case doesn’t depend on cheaper money to work.
And right now, one commodity fits that description better than almost anything else in the market.
Copper: the wiring of an AI-powered world
While stocks rallied sharply last week, copper caught a bid of its own – jumping more than 5% to almost $6 per pound as I write on Monday. Behind that gains are investors refocusing on what actually drives this metal’s long-term story.
Our global macro expert Eric Fry, editor of , framed it well:
Copper has always been the wiring of the world. But now, the world is demanding more wiring than it has at any point in history.
Every macro trend that feels futuristic, electrified, digitized, or decarbonized runs straight through a fat bundle of copper.
That means AI infrastructure, electrification, decarbonization, data centers, and electric vehicles are all copper stories.
We could zoom in on any of these uses, but let’s focus on data centers to illustrate.
A modern hyperscale data center is essentially a copper-and-aluminum exoskeleton wrapped around racks of silicon. And the copper demand is enormous.
Back to Eric:
Estimates suggest data centers alone could require hundreds of thousands of tonnes of copper per year by 2030, with individual AI-focused hyperscale facilities consuming up to 50,000 tons each.
The supply side, meanwhile, is nowhere close to keeping up.
The International Copper Study Group expects the refined-copper market to flip into a deficit of roughly 150,000 tonnes this year, as mine production slows and concentrate availability tightens.
Eric puts the long-term gap in stark terms: Without more than $200 billion in new mining investment, the world simply won’t have enough copper. For context, total copper-mining investment over the past six years reached only about $76 billion.
That’s a structural supply-demand imbalance with a decade’s worth of runway behind it.
Eric isn’t our only analyst eyeing copper…
Our trading expert Jonathan Rose, editor of , has been tracking capital flows into the copper space for months.
He flagged strong call-side flow building in copper-related names last week – and traders in his community captured double-digit gains, with several pushing into the 80%-100% range on their positions.
From Jonathan:
It’s not about chasing moves. It’s about recognizing where capital is flowing — and getting there early.
So, how do you play copper today?
Both Eric and Jonathan have independently flagged Freeport-McMoRan Inc. (FCX).
Eric’s case centers on valuation and timing. Freeport’s flagship Grasberg mine in Indonesia – one of the world’s largest copper deposits – suffered a tragic accident in late 2025 that temporarily knocked production offline. That created a dislocation.
But as Grasberg recovers, Eric expects FCX’s EBITDA to climb from roughly $12 billion this year toward $17.5 billion by 2027 – which would put the stock trading at less than four times forward earnings at current prices.
FCX is just one name on Eric’s buy list. He also has a “drop immediately” list that flags many broadly-owned stocks he believes are at risk today – you can find his full breakdown in his .
Jonathan’s read on Freeport is simpler…
The options flow told the story first. He flagged strong call-side activity building in FCX last week – and the trade he recommended to his subscribers delivered.
You can get the full story in Jonathan’s free .
And if you’re interested in how Jonathan finds trades like this – and you want to catch them from the very beginning – he walks through his process and flags trading ideas every weekday during his free broadcasts.
Wrapping up
Between the blockade, the Fed’s frozen hands, and the structural copper story, let’s recognize the big-picture takeaway…
The old playbook – wait for rate cuts, lean on cheap money, play the ensuing rally – doesn’t appear to be in the cards today. The investors who adapt and focus on strength independent of rate policy will be the ones best positioned for whatever comes next.
We’ll keep tracking all of it here in the Digest.
Have a good evening,
Jeff Remsburg
