BLS Labor Reports and Iran Update -2

08:55 06-Mar-26


The BLS Labor reports for February headlined at -92K with the unemployment rate rising to 4.4%, versus forecasts of +50K or more and steady at 4.3%.  The Particpation Rate and Employment Population Ratio both ticked down by a tenth.  Earnings rose +0.4%, a tenth higher than expected.  American equity futures were negative before this report and they accelerated that trend on broad realization of what this service has long maintained: "stagflation is the best possible outcome".  The only caveat to that is the opinion that conflicting ADP data is higher quality.

Consequently, heading into the weekend, a brief update on the war with Iran also seems in order.  The sinking of the IRIS Dena seems most significant, in that it shows how far the White House is willing to go outside the norms of territorial boundaries and imminent threat assessments.  Though it's noteworthy that such an operation would have been nearly impossible in the Strait of Hormuz, which remains effectively closed, the goal of destroying Iran's heavy naval firepower is already mostly accomplished.  If the strait can be opened, that would be a major step, as it has global economic impact beyond hydrocarbons, and this service would expect the White House to declare victory and move on to some other distraction, since the new DHS nomination signals little change in the domestic agenda.  

From there, ground operations led by the CPFIK and PFF would be the main question for the Middle East, and such medium to long term considerations have generally proven beyond the ambit of the current American administration.  As originally implied, Israel is the big winner here, since power in the region is being restructured and Iran seems unlikely to be able to threaten it in the short term, thanks to the fall of the Assad regime in Syria.  India & Russia get thrown a bone in the form of 30-day waiver on oil purchases, not that they were ever really constrained, and China gets further help in its primary goal of gaining global influence.

In summary, it's looking like Trump's 4-5 week timeline was made to give Epic Fury as much time as could possibly be needed, keeping operations within the 60-day timeline established by the War Powers Act.  That should give oil, gasoline and diesel prices time to normalize well before the midterms, after only rising into the mid-eighties, $3.25 and $4.00 respectively.  This service expects that American voters will be fairly tolerant of war and that mainstream media and prediction markets are overpricing the impact over $100 for NYMEX Crude this month.  However, with more pernicious problems at home, it remains to be seen if Democrats can make better progress in the midterms than they did on recent resolutions.  What is more certain over that time frame is that long term issues with the structure and election process of federal government will remain a barrier to any real political progress.