Tuesday 31/03/26

Iran could emerge from the war stronger and more dangerous (Financial Times, Gideon Rachman) is an interesting article that goes further than my suggestion last week that Iran could just open and close the Strait of Hormuz whenever it feels like it by saying that it could potentially set up a toll booth on the Strait and charge ships for safe passage. The country’s finances have been a nightmare for years – so toll income could be very welcome indeed. Iran has now realised – after threatening to do this for so long – that closing the Strait causes global calamity pretty quickly. Also, if it decides to do so, there’s absolutely nothing the US can do to stop it! I would also wager that if the US somehow managed to get control of the Strait that it would try to do exactly the same thing, justifying it by saying that everyone should pay for American liberation. Shipping industry casts doubt on Donald Trump’s ‘present’ from Iran (Financial Times, Jamie John and Humza Jilani) already suggests that the shipping industry knows on which side the power really lies in that “present” from Iran to let 20 Pakistan-flagged ships to pass through the Strait of Hormuz. * SO WHAT? * As I’ve said before, I think that this whole operation has been a massive and costly failure that has already damaged the whole world. It has not achieved regime change and it looks likely to me that Trump is going to have to withdraw, leaving the region with an emboldened Iran charging all and sundry protection money to pass through the Strait of Hormuz. To my mind, the only way that this will end at all well for Western countries, the Gulf States and Israel is if a new regime is installed that is more Western friendly. Anything short of that will be a victory for the Iranian regime IMO. An empowered and emboldened Iran could continue to sponsor terrorist groups and provide more powerful support for the Russians against Ukraine.

Iranian strike on Kuwaiti power and water plant stokes infrastructure fears (Financial Times, Simeon Kerr) shows further escalation in the war, raising worries about the likelihood of more strikes across the region and Iran War Chokes Off Helium Supply Critical for AI (Wall Street Journal, Georgi Kantchev) highlights additional shortages while Trump could ask Gulf states to

contribute to war costs, says White House (Financial Times, Abigail Hauslohner) provides yet another example of the president’s transactional diplomacy as it has been suggested that he’ll want to charge for America’s services – which sounds ridiculous given that no-one seems to have wanted Trump’s “help” other than Israel in the first place…

In the meantime, UK to receive last tanker of jet fuel from Middle East this week (Financial Times, Camilla Hodgson and Ryohtaroh Satoh) shows that time is running out for flights despite the government tying to reassure people that everything’s fine. Official data on jet fuel storage is scarce but industry execs are getting increasingly worried that there will be shortages. Some are saying that airlines will start to get hit at the end of April if the supply issues get worse but Thousands of flights cancelled as jet fuel costs soar (Daily Telegraph, Pui-Guan Man) shows that some airlines (so far, Vietnam Airlines and United Airlines) are already taking action, or are on the verge of taking action, as jet fuel price rises become a nightmare for airlines around the world. * SO WHAT? * I would have thought that this is going to mean that holiday insurance is going to get more expensive and that insurance companies may be tempted to change their policies and/or increase premiums to cover holiday cancellations…

In Need to be extracted from the Middle East? Call your wealth manager (Financial Times, Harriet Clarfelt and Mercedes Ruehl) we see that wealth managers are increasingly stepping up to the plate for their clients as they’ve broadened their services from investment and tax advice to include evacuating their clients from the Middle East! It seems that, with increasing competition from fintech firms, family offices and wealth managers are offering concierge functions to help justify their fees. A report from research firm Cerulli Associates found that almost a third of advisers to high-net-worths now offer concierge and lifestyle services! * SO WHAT? * This sounds like an interesting development and I’m sure that there’s plenty of scope for growth here for companies that can feed into this. 

IMF warns Middle East conflict will lead to higher prices and slower global growth (The Guardian, Phillip Inman) highlights the IMF doing what they do best – telling everyone what they already know 🤣! UK facing one of the biggest hits from energy shock, warns IMF (Daily Telegraph, Szu Ping Chan and Joe Barnes) cites the latest IMF report which echoes what the most recent OECD report suggested – that the UK is going to suffer particularly badly from the effects of the war.

Iran shocks make their way inexorably to the grocery aisle (Financial Times, Lex) shows that food price rises are looking inevitable as input costs (particularly fertilisers, fuel, gas and shipping costs!) are booming. UK growers warn of cucumber and tomato shortages as gas prices surge (Financial Times, Madeleine Speed and Philip Stafford) shows that growers are warning supermarkets that they’ll have to pay more to offset the price of natural gas as producers in Lea Valley – aka “the cucumber capital of Britain” where 75% of our cucumbers, peppers and aubergines are grown – said that output from greenhouses could be hit if they don’t get any help. Food giants were finally starting to cut prices — then the war began (Financial Times, Gregory Meyer and Madeleine Speed) takes a look at things from the point of view of consumer goods companies – that they are now going to have to deal with a second inflation surge in less than five years! The last time round (when Russia invaded Ukraine), there was scope to pass prices on to customers – but that’s going to be a lot harder to do now. It’s such a shame because companies including PepsiCo and Kraft Heinz had announced plans to cut prices only last month. And to illustrate the point, European food giant forces through emergency price rise (Daily Telegraph, Hannah Boland) shows that Princes – which sells canned tuna, Super Noodles and Branston beans – has warned European supermarkets that it will raise prices from tomorrow due to “unprecedented cost pressures”. Fun fact: according to TD Cowen, freight costs make up

about 7-8% of food companies’ input costs. Additional fun fact: the spot price for polyethylene, which is used in bags and bottles, has seen its price rise by over 50% since the end of February because of the restricted supply of chemicals. * SO WHAT? * Pressures continue to increase on the war to end as soon as possible. It doesn’t seem to me like Trump is in a good position at all to do this and we’re all going to have to pay for his actions. As I keep saying, it’s looking increasingly likely that Iran’s going to “win” by making Trump back down and it will become a major world power by being the gatekeeper of the Strait of Hormuz. Toll money will roll in, Iran will do what it likes and fund the rehabilitation of depleted terrorist groups and Russia’s army alike. In a way, you wonder why Iran didn’t do this before…

Another unfortunate consequence is that Asia turns to coal as Iran war chokes off gas supplies (Financial Times, Andres Schipani, Nic Fildes and Harry Dempsey) because Asia needs electricity NOW and the disruption to oil and gas flows is forcing their hand. China, Japan, South Korea and India are particularly dependent on the Strait of Hormuz. Coal producers including China and India are scrambling to access stockpiles while others are starting to fire up coal-fired power plants, shrugging off environmental concerns. Unlike oil or gas, no coal passes through the Strait and it’s cheap and abundant.

Back home, Rachel Reeves pockets tax windfall from Iran war and fuel crisis (The Times, Oliver Wright and Emily Gosden) shows that the chancellor is apparently pocketing £20m a day from taxes related to oil and gas. On the other hand, some argue that any gains will be more than offset by rises in the cost of government borrowing. As I’ve said before, if the government really wants to help consumers, it needs to lower the amount it takes in fuel duties rather than blame everyone else!

In a quick scoot around some of today’s other interesting stories, Why the Cost of Your Coffee Has Soared—and Isn’t Going Down Soon (Wall Street Journal, Inti Pacheco) is a really interesting article that actually came out over the weekend  – but I thought I’d mention it because of the subject matter! So…after crop failures in Brazil and Vietnam hit supplies, Trump’s tariffs were then slapped on Brazil, which produces over a third of the world’s coffee – and prices rose strongly. However, Trump pulled the 40% tariffs on some Brazilian food items – including coffee – last November so prices started to come down. Although Brazilian authorities reckoned at the beginning of this year that 2026 would be a record for coffee production, surging fuel and freight costs are starting to push prices back up. * SO WHAT? * Speculation on coffee has also been rife and so this has meant that coffee shops have had a nightmare buying coffee whilst also contending with higher wages and other costs. Just when it seemed that things were turning a corner, this happened…

Back home, Mortgage approvals rise to 62,600 in February but remain lagging (The Times,

Jack Barnett) cites the latest numbers from the Bank of England which show that mortgage approvals increased at a faster pace than predicted before the war in the Middle East started but it looks very much like the housing market will slow down after banks increased mortgage rates in anticipation of interest rate rises. We’re just going to have to wait and see where this goes but I think that the best everyone can hope for is interest rates staying unchanged.

Then in Boohoo turnaround on track despite pressure from Shein and Temu (The Times, Isabella Fish) we see that Boohoo Group – which changed its name last year to Debenhams Group – saw its share price rise 3.81% after headline profits came in “comfortably ahead” of guidance and its positive outlook. * SO WHAT? * This sounds great but you do wonder how the war is going to test its resilience given that it’s probably going to have supply chain issues. Next did OK last week and said that it would be able to weather the current storm but I think that it’s a better run company than Debenhams Group. We’ll just have to wait and see…

I thought I’d bring you a classic Eddie Izzard skit – but in Lego form! This is very good 😁 (there is a bit of swearing though)