With the government shutdown still running and official data on ice, markets are reading tea leaves this week, and the tea is very geopolitical.

China just fired back at U.S. trade investigations with probes of its own, both sides are playing hardball before Trump lands in Beijing in May, and investors are left guessing what a deal (or no deal) actually looks like.

Daily Insight (Sponsored)

The Morning Edge You Need

Every day before 6AM, Matthew Tuttle sits down at his trading desk in Connecticut to write to you about hedges, edges, asymmetric opportunities and themes in the market.

Get his free Daily H.E.A.T. email for a dose of actionable market insight every weekday morning.

The Big Picture

Airlines

The Fuel Spike Could Reshape U.S. Air Travel For A Decade

Jet fuel hit $4.24 a gallon last week. Fuel accounts for roughly a quarter of airline operating costs, and carriers sell tickets weeks or months in advance.

That timing mismatch means prices can spike long before fares catch up.

United Airlines is modeling Brent crude at $175 a barrel and above $100 through 2027. Under that scenario, its annual fuel bill would jump by roughly $11 billion — more than double its best-ever annual profit.

The Big Two Are Built To Absorb It

Delta Air Lines and United posted the highest operating margins among major U.S. carriers last year.

Both carry low leverage, strong liquidity, and a high share of premium revenue, giving them room to ride out sustained fuel increases without abandoning strategy.

American Airlines has over $10 billion in available liquidity but sits on $25 billion in long-term debt. Every one-cent increase in jet fuel adds about $50 million to its annual costs.

Southwest has a strong balance sheet but could face pressure on earnings and tougher cash allocation decisions if the spike persists.

Low-Cost Carriers Are In Trouble

The 2008 fuel crisis triggered a wave of mergers that compressed U.S. air travel into four dominant carriers.

This cycle may not produce mergers immediately, but it will widen the gap between airlines that can absorb the hit and those running on fumes — literally.

Wine Industry

Your Favorite French Wine Might Disappear From The Menu

Tariffs on European imports have been stacking up since last year, and the wine industry is running out of ways to absorb them.

Producers initially shipped stock early to beat the levies or ate the cost themselves to keep holiday pricing intact.

Those strategies have run their course. Restaurants and bars are now seeing wholesale price increases of up to 20% on European wines.

Champagne and Cremant brands that were once menu staples are being swapped out for cheaper alternatives. When a bottle jumps five dollars at wholesale, it hits the glass price fast.

Domestic Wines Are Picking Up The Slack

U.S. restaurants have moved their entire cheese and charcuterie programs to domestic sourcing.

European artisanal imports have gotten too expensive to justify, and in some cases, the American replacements still cost more than the old European versions did before tariffs hit.

The Menu Is The Battleground

The sweet spot for a glass of wine in America sits around ten to twelve dollars. Edge above that, and you get dropped from the list because most diners will not pay more.

That ceiling is forcing restaurants to rethink every imported label on their menus.

This is not a temporary adjustment.

As tariff pressure continues into 2026, expect more European wines to quietly disappear from American menus — replaced by domestic bottles that keep the price right and the pour flowing.

Watch Closely (Sponsored)

Another Big Winner Coming?

The Trump Administration is Loading Up on Stocks.

15% Stake in MP Materials... Up 216% in 4 Months.

10% Stake in Lithium Americas... A triple in 3 weeks.

10% Stake in Trilogy Metals... Up 388% in 8 days!

Why America's Economist Predicts THIS Could Be the administration's Next Big Stock Buy.

Natural Gas

The U.S. Natural Gas Boom Just Entered A New Phase

The U.S. Energy Information Administration projects that domestic natural gas production will reach a new record in 2026 and continue to climb into 2027.

Output has been rising steadily, and the latest forecasts were revised upward from earlier estimates, driven by increased drilling activity and favorable market conditions.

Meanwhile, domestic consumption is expected to hold flat near record levels.

The U.S. is producing more gas than it uses, and the surplus is increasingly heading overseas as liquefied natural gas exports continue to expand year over year.

A Cold Winter Shook The Market

A severe winter drove gas prices sharply higher as heating demand surged and production temporarily dropped.

Storage withdrawals hit the largest single-week drawdown ever recorded, tightening supply and pushing near-term price forecasts well above previous expectations.

The pattern is familiar — a weather shock creates a price spike, producers respond, and the market rebalances over the following quarters.

Coal Keeps Losing Ground

As natural gas and renewables take up a larger share of the power generation mix, U.S. coal production is expected to fall to its lowest level since the early 1960s by 2027.

Power generators are burning less coal each year, and the decline is accelerating.

Carbon emissions from fossil fuels are also projected to decline over the next two years as oil and coal use decline.

The U.S. energy mix is shifting in real time — natural gas is winning the transition, and coal is quietly being shown the exit.

Metrics to Watch

• Shutdown Data Blackout (Ongoing)
  With official stats still missing and the Fed having already lost its ADP payroll feed, private data like card spending, staffing firm surveys, and airline loads is doing a lot of heavy lifting this week.
  
  Expect markets to overreact to anything that looks like a signal.
  
  

• Section 301 Tariff Probe Timeline (Watch Closely)
  After the Supreme Court struck down the global tariffs, the U.S. opened fresh trade investigations into China under a 1974 law.
  
  If they find unfair practices, new tariffs could land later this year. China's counter-probes have a six-month clock. Both fuses are burning.
  
  

• Pre-Summit Leverage Watch (May 14-15)
  Trump meets Xi in Beijing next month, and both sides are clearly stacking chips before sitting down.
  
  The probes, the rare-earth controls, the fentanyl pledges, it's all theater with real stakes. Watch for any headline that moves the "deal probability" needle.
  
  

• Rare Earth Supply Signals (All Week)
  China eased rare-earth export controls as part of last fall's trade truce, but those materials are still a pressure point for U.S. defense and auto manufacturers.
  
  Any tightening talk out of Beijing would ripple fast through EV, defense, and semiconductor names.
  
  

• Dollar Drift and Gold's Mood (Ongoing)
  If rate-cut expectations keep building, the dollar softens, which is good for multinationals reporting overseas earnings and good for gold, but trickier for anyone pricing imports.
  
  Gold already sprinted past $4,000 and is catching its breath, but the reasons it ran haven't gone anywhere.

Market Movers

🀄 The Pre-Summit Poker Game 

China's new trade probes aren't really about trade. They're about leverage before May.

Both governments are building their negotiating hand, which means every headline between now and the summit is a potential market mover.

Companies with deep China exposure like semiconductors, agriculture, and aircraft are essentially hostages to the mood music.

Watch how management teams talk about "supply chain optionality" on earnings calls. That's code for "we're nervous."

🛑 Shutdown: The Slow Bleed

This isn't a dramatic crash.

It's death by a thousand paper cuts. Delayed government contracts, frozen approvals, and missing economic reports mean companies reliant on federal spending or regulatory sign-offs are quietly losing ground.

Boring, steady cash-generating businesses look better by comparison every week this drags on.

🛢️ Energy: Sanctions, Probes, and Crude Math 

The Russia oil sanctions are already snarling shipping routes and financing. Layer on China restricting fuel exports to manage its own supply, and energy markets have a lot of moving parts.

Refiners and tanker operators often catch a tailwind here, while airlines and chemical producers who need cheap fuel inputs feel the squeeze.

Any crude spike is basically a tax on everything else.

🧱 Trade Truce on Thin Ice 

The fall detente bought some calm with lower tariffs, fentanyl crackdowns, rare-earth easing, and more U.S. ag purchases.

But U.S.-China trade is still at its lowest in two decades, and fresh probes from both sides suggest the truce has a time limit.

Retailers, toy makers, and electronics brands that already rerouted supply chains to Vietnam or Mexico might look like the smarter bet if the pre-summit sparring gets louder before it gets quieter.

Market Impacts

Equities: The Dow just entered correction territory, down 10% from its high, and the S&P 500 logged its fifth straight losing week.

The Strait of Hormuz being largely closed is the culprit, and Trump's 10-day deadline extension didn't really calm anyone down.

Until there's an actual resolution (not just "talks are going well" posts), the path of least resistance is still down.

Lean toward companies with predictable cash flows and away from anything that needs cheap energy or a functioning global supply chain to hit its numbers.

Bonds: The 10-year yield is sitting just above 4.4%, relatively calm given the chaos in equities and oil.

The interesting move is at the short end, where the 2-year yield dropped, which usually signals the market is starting to price in more Fed caution.

If you want somewhere to hide, the short-to-medium part of the curve (two to five years) still offers decent income without taking on a lot of risk.

Long bonds work as a rainy-day hedge if growth really starts to crack.

Currencies: The dollar hit 160 yen for the first time since July 2024, and the broader dollar index is on track for its best month in nearly a year.

That sounds counterintuitive, but Middle East stress tends to push money into dollars rather than traditional safe havens like gold or government bonds right now.

Japan is in a tough spot: energy-import-heavy and fiscally stretched, which keeps the yen under pressure. Watch for possible intervention from Tokyo if yen weakness keeps accelerating.

Commodities: Oil closed at its highest level since 2022, with Brent at $112 and WTI almost touching $100.

The buffer of pre-war stockpiles that kept prices in check for the first few weeks is basically gone now, so the market is increasingly fragile to any new supply shock.

Refiners and midstream names hold up better here than pure drillers.

Gold bounced hard, up over 3% on the day after dipping earlier this week.

The drop earlier created a buying opportunity and the bigger story, which is war risk, inflation fears, and rate cut expectations getting pushed out, keeps the case for holding some gold intact.

Rate cuts are now fully priced out for 2026 per the futures market, which is a headwind, but gold is finding other reasons to stay elevated.

Hidden Strength (Sponsored)

5 Stocks Gaining Momentum

While many stocks stall, a small group is quietly strengthening.

Five companies just earned spots in a new high-upside report — each showing rare alignment between fundamentals and momentum.

Previous editions produced triple-digit winners¹.

Free access ends tonight.

See all 5 here

*Results may not represent all stock picks and may reflect partially closed positions. Investing involves risk, and past performance does not guarantee future results. This is not financial advice.

Key Indicators to Watch

• Powell Speaks (Mon, 10:30 a.m. ET) - The Fed chair takes the mic at the start of the week, which sets the tone for everything else.
  
  With rate cuts now priced out and inflation fears creeping back in, any hint about how the Fed is thinking about the war's impact on prices will move markets fast.
  
  

• Consumer Confidence (Tue, 10:00 a.m. ET) - Already sliding before oil hit $110, this one is expected to drop again.
  
  If it comes in worse than the 88.0 forecast, it confirms the war is starting to bite regular people's willingness to spend, which is bad news for discretionary retail names.
  
  

• Retail Sales (Wed, 8:30 a.m. ET) - A delayed read from February, so it predates most of the war-driven price spike. Even so, the expectation is a modest rebound after January's dip.
  
  A miss here on top of weak confidence would be a double signal that the consumer is pulling back.
  
  

• ISM Manufacturing (Wed, 10:00 a.m. ET) - The factory pulse check. Any reading above 50 means expansion, and the forecast is 52.
  
  Worth watching for what companies say about input costs, since supply chain stress and energy prices are starting to squeeze margins in ways that don't always show up immediately in the headline number.
  
  

• Initial Jobless Claims (Thu, 8:30 a.m. ET) - With the jobs report still on ice due to the shutdown, this is one of the cleanest weekly reads on whether layoffs are picking up.
  
  The forecast is 210,000, which would be calm. A surprise spike here would be the data point that tips more people from "slowdown" to "recession watch."

Everything Else

• 📈 Wall Street is starting to price in a Fed rate hike as the next move, not a cut, as oil prices keep pushing inflation fears higher.

• 🏭 China's industrial profits jumped to start the year, but the oil price shock is already casting a shadow over whether that momentum lasts.

• 🔥 A major forecasting group thinks U.S. inflation hits 4.2% this year, nearly double what the Fed is penciling in.

• 😟 American consumer sentiment slipped to a three-month low in March, another sign the mood at home is souring fast.

• 🌍 Eurozone consumers are getting gloomier too, with the Iran war stoking cost-of-living fears across the bloc.