Diplomatic Efforts Fail in the Middle East… Interest Rate Cuts Won’t Come Anytime Soon… The Fed’s Hands Are Tied… The Copper Case Gets Stronger
This weekend’s peace talks were supposed to be the beginning of the end for the Iranian conflict.
Vice President J.D. Vance led the US delegation to Islamabad, Pakistan, for 21 hours of negotiations. Officials were cautiously optimistic. Markets were calculating some possibilities of deviating from the diplomatic route.
Then, on Sunday morning, Vance announced that the delegation would return home without reaching an agreement. Iran has refused to agree to end its pursuit of nuclear weapons. Iranian negotiator Mohammad Bagher Qalibaf – who is also the speaker of Iran’s parliament – said the United States had “failed to gain the trust” of his delegation.
By last night, President Trump announced a naval blockade of the Strait of Hormuz, effective at 10 a.m. eastern this morning. US Central Command later clarified that ships traveling to non-Iranian ports would not be hindered.
Iran’s response was immediate – and directly targeted American consumers.
From Qalibaf on social media:
Enjoy the current pump numbers.
And with the so-called “siege,” you’ll soon be nostalgic for $4-$5 gasoline.
As I write on Monday, the price of oil is rising toward $100 a barrel again. However, stocks are ignoring this news, betting that this is just a political posturing and that the deal will eventually come through.
In this regard, a second round of talks is still possible. Officials say the door was not closed. But “possible” and “priced” are two completely different things.
So, for now at least, the scenario that was supposed to lead to lower energy prices – a negotiated solution, reopening of the strait, and a return to something resembling normal shipping flows – is farther away than it is getting closer.
This puts the risk of higher inflation squarely in the crosshairs – which brings us straight to the Fed, upcoming interest rate policy, and your wallet…
Goodbye to interest rate cuts
In their March summary of economic forecasts, Fed policymakers expected a quarter-point rate cut by the end of the year.
Oh, how things have changed…
This forecast came before oil prices rose due to the Iranian conflict… before the Strait of Hormuz was closed to fertilizer and energy shipments… before gasoline exceeded $4 per gallon and diesel exceeded $5… before last week’s two inflation reports – the February personal consumption expenditures index on Thursday and the March CPI on Friday – came in well above the Fed’s 2% target, both trending in the wrong direction.
Here’s the interesting thing: The PCE report captures data from before the full inflationary impact of the Iran war on the economy. The CPI tells a partial story — it captured some of the early rise in gas prices, but not the full force of what is now moving through the system.
Either way, the path is clear, and the worst is still ahead in the data.
So where does this leave interest rate cut expectations?
According to CME Group’s FedWatch tool, “hold current interest rates steady” remains the market base case all the way through September.
To be clear, this is September 2027.
Why is the Fed under siege?
Legendary investor Louis Navelliereditor Growth investorThe economic spider webs of the conflict have been traced. Here’s his take from last week:
Higher energy prices in the United States are expected to spread across other markets, with higher shipping costs and higher food prices.
So March data on food and energy inflation is expected to be ugly – and will not dissipate immediately even after the ceasefire and reopening of the Strait of Hormuz.
It will likely take months for prices to stabilize.
The numbers support this. The Organization for Economic Co-operation and Development (OECD) updated its inflation forecasts at the end of March, expecting inflation in G20 countries to rise to 4% in 2026, up from its previous estimate of 2.8%.
For the United States specifically, the OECD now expects inflation to reach 4.2%. Some economists expect 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 deep the Iranian conflict has complicated the Fed’s calculations.
As we’ve been tracking here at digestThis leaves the Fed in a bind.
Slowing growth usually calls for cuts. But with inflation at today’s levels – and trending higher – cutting inflation now means adding fuel to a fire that is already at risk of spiraling out of control. So the Fed will wait, but that would risk further sanctions on the already nervous American consumer.
The takeaway for investors is clear: If the Fed doesn’t come to the rescue, you’re better off working at companies with real structural winds — companies whose fundamental case doesn’t depend on cheaper money to operate.
Currently, there is one commodity that fits this description better than almost anything else on the market.
Copper: Wiring an AI-powered world
While stocks rose sharply last week, copper got a show of its own — jumping more than 5% to nearly $6 per pound as I write on Monday. Behind these gains, investors are refocusing on what actually drives the metal’s long-term story.
Our global macro expert Eric Fryeditor Fry investment reportFrame it well:
Copper has always been the wire of the world. But now, the world needs more wires than at any time in history.
Every macro trend that sounds futuristic, electrified, digital or carbon neutral runs straight through a big bundle of copper.
This means that AI infrastructure, electrification, decarbonisation, data centers and electric vehicles are all copper stories.
We can zoom in on any of these uses, but let’s focus on data centers to illustrate.
A modern hyperscale data center is essentially an exoskeleton made of copper and aluminum wrapped around silicon racks. The demand for copper is huge.
Back to Eric:
It is estimated that data centers alone could need hundreds of thousands of tons of copper per year by 2030, with individual AI-focused hyperscale facilities consuming up to 50,000 tons each.
Meanwhile, the supply side is nowhere near keeping up.
The International Copper Study Group expects the refined copper market to turn into a deficit of about 150,000 tons 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 investment in mining, the world won’t have enough copper. In context, the total investment in copper mining over the past six years amounted to only about $76 billion.
This is a structural imbalance between supply and demand, with a decade-long runway behind it.
Eric isn’t our only analyst eyeing copper…
Our trading expert Jonathan Roseeditor Master of Commerce He liveshas been tracking capital flows into the copper space for months.
He noted a strong call-side flow building in copper-related names last week – and traders in his community posted double-digit gains, with many pushing into the 80%-100% range on their positions.
From Jonathan:
It’s not about chasing moves. It’s about knowing where capital is flowing – and getting there early.
So, how do you play brass today?
Eric and Jonathan both tagged independently Freeport-McMoRan Corporation (FCX).
Eric’s case focuses on evaluation and timing. Freeport’s main Grasberg mine in Indonesia – one of the world’s largest copper deposits – suffered a tragic accident in late 2025 that temporarily halted production. This led to a breakup.
But as Grasberg recovers, Eric expects FCX’s EBITDA to rise from about $12 billion this year to $17.5 billion by 2027 — leaving 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 several widely held stocks that he believes are at risk today – you can find his full details in his book. free Sell this, buy that Offer here.
Reading Jonathan on Freeport is simpler…
The flow of options told the story first. He noted building strong activity on the call side of FCX last week – and the trade he recommended was delivered to his subscribers.
You can get the full story for free by Jonathan Master of Commerce He lives Episode from last Friday here.
And if you’re interested in how Jonathan finds trades like these – and want to catch up right from the start – he goes through his process and tags trading ideas every day of the week during his free time. Masters in Trading Live Broadcast.
wrap
Between the blockade, the Fed’s frozen hands, and the structural copper story, let’s get to the big picture…
The old rules of the game – wait for interest rates to fall, rely on cheap money, and take advantage of the ensuing rally – no longer seem to exist today. Investors who adapt and focus on strength independent of price policy will be better positioned for what comes next.
We’ll continue to track it all here at digest.
I wish you a good evening,
Jeff Remsburg
