As if tariffs, AI disruption, and this cursed latest season of Love Is Blind weren’t enough to frazzle the economy, Americans now have another reason to feel jittery: The war with Iran could trigger a fresh bout of inflation.

Like the faint beeping of an appliance in your kitchen you can’t quite find the source of, inflation hasn’t fully gone away since it spiked in 2022, even though everyone got used to it being the background. But just when it feels like we’ve finally made progress towards the Fed’s 2% goal, the US and Israel attacked Iran, which immediately spiked the prices of oil and natural gas.

Zoom out: When oil and gas prices rise, they push up the price of fuel, transportation, and a slew of consumer goods. When energy gets more expensive, the costs are passed on to the consumer in the form of higher prices on store shelves.

Our friends over at Bloomberg modeled four potential scenarios: In the worst case, if fighting continues to be severe and protracted, a prolonged closure of the Strait of Hormuz could result in oil prices reaching $108 per barrel, which is roughly 80% higher than they were before the war started. That would trigger a severe resurgence of inflation across the world, wreaking havoc on prices and the stability of the US economy.

But in the case of a ceasefire or the immediate collapse of the Islamic Republic of Iran, prices could come down to about $65 per barrel. In another, more likely scenario, oil prices settle at $80 per barrel if the war continues, but there are limited attacks on energy suppliers and facilities.

The Fed is stuck

The dilemma leaves the Federal Reserve in a tough position. President Trump has repeatedly demanded that rates come down, and some experts have agreed, pointing to a slowing labor market and faltering consumer confidence as reasons for an economic pick-me-up.

But the central bank has thus far been reluctant to lower rates, and the risk of high oil prices makes it even less likely now. After all, inflation never even sank to the Fed’s 2% target before the war began, and costs from tariffs were just starting to reach consumers right as the Supreme Court ruled Trump’s retaliatory tariffs illegal.

Right now, traders are pricing in a 97.3% chance that the Fed keeps rates steady in its next meeting this month—up from 90% a month ago.

Now, treasury yields are skyrocketing as traders pare back expectations that the Fed will actually cut rates, which could spike borrowing costs across the entire economy, from mortgage rates to student loans (keep in mind, yields move inversely to bond prices).

But this isn’t the end of the world—inflation is more like a “skunk at a party,” as JPMorgan CEO Jamie Dimon described it to CNBC on Monday. “This right now will increase gas prices a little bit,” he explained. “If it’s not prolonged, there’s not going to be a major inflationary hit.”

Honestly, we’re just surprised Jamie Dimon still gets invited to parties.—LB

🟢 What’s up

• CoreWeave gained 7.75% on news of a multi-year partnership with AI search startup Perplexity.
• Moderna rose 15.99% thanks to the biotech company resolving a lengthy legal dispute tied to its Covid-19 vaccine technology.
• Ross Stores added 8.03% after posting stronger-than-expected fourth-quarter results.
• Box advanced 10.16% as the cloud-storage provider beat Wall Street’s revenue and earnings estimates for the fourth quarter.
• Western Digital popped 4.27%, Micron jumped 5.55%, Intel gained 5.75%, and Seagate rose 4.86% as tech stocks rebounded on renewed optimism around AI infrastructure spending.
• KKR rose 3.67% on the news that co-CEOs Joseph Bae and Scott Nuttall bought roughly $8.8 million worth of company stock last week.

What’s down

• Adidas slipped 4.59% after issuing 2026 operating profit guidance below expectations, citing US tariffs and currency headwinds as pressure points.
• Abercrombie & Fitch fell 3.6% as the same trade concerns resurfaced, with management warning that higher tariffs could weigh on margins and slow sales growth.
• GitLab dropped 6.18% following underwhelming guidance, with concerns that AI-driven code generation could weigh on growth and limit revenue contribution from its Duo Agent platform.
• Alcohol maker Brown-Forman declined 6.65%, giving back prior gains after noting continued weakness in developed markets amid persistent macroeconomic pressures.
• Exxon Mobil edged down 1.32% and Chevron slid 1.45% as crude prices retreated from earlier gains.

401(k)s may be geared for your golden years, but a growing number of Americans are cracking them open ahead of schedule.

A record 6% of people with 401(k) plans administered by Vanguard took a “hardship withdrawal” last year, up from 4.8% in 2024, and triple the pre-pandemic average of about 2%. The typical withdrawal of $1,900 was most often used to fend off foreclosure or eviction, or to cover medical bills.

While this rise underscores how many Americans are struggling financially, the rosy flip side is that we’re also socking away a lot more to borrow. Automatic enrollments have helped set employees on the right path, as have automatic escalation programs that enabled a record 45% of participants to ratchet up their savings rate last year. Along with soaring markets, these trends have pushed the average 401(k) balance to an all-time high of $167,970.

Loosening laws around hardship withdrawals have also helped boost their popularity:

• Workers who tap these funds no longer have to take out a 401(k) loan first.
• While withdrawals are subject to income tax—and a 10% early-withdrawal penalty for those under 59½—you can take out up to $1,000 penalty-free once every three years. Replace the money you borrowed, and you can do it all over again next year.
• The allowed “hardships” have expanded to include domestic abuse and federally declared disasters such as hurricanes or pandemics.

Bottom line: Maybe 401(k)s are evolving from buttoned-up “retirement accounts” into “break-the-glass-in-case-of-life” piggybanks that can help out now and once you’re sipping something fruity on a beach someday.—JD

Bitcoin jumped 7.3% today, climbing back above $73,000 after briefly dipping to $63,000 last Saturday.

At first glance, the rally seems counterintuitive. Bitcoin is typically viewed as a high-beta, risk-on asset, the kind that should struggle during geopolitical turmoil. So why is it rising?

• Policy tailwinds: In a post on Truth Social yesterday, President Trump pushed banks to soften their stance on stablecoin yield rules, a key hurdle in Congress’s debate over the Clarity Act.
• Fresh capital flows: On Monday, US spot bitcoin ETFs pulled in $458 million in one day with zero outflows, one of the largest daily totals seen so far this year, and a clearly bullish sign.
• The “digital gold” narrative: Some investors still frame bitcoin as a hedge against instability, though recent performance complicates that claim. Since peaking above $126,000 in early October, bitcoin has fallen roughly 45%, while gold has gained about 30% over the same stretch.
• Positioning and price reset: After such a sharp selloff, much of the speculative excess may already be washed out. With sentiment low and positioning lighter, even small catalysts can drive a rebound.

Iran’s $7.8 billion crypto market

While bitcoin may trade like a risk asset in developed markets, it plays a much different role in economies under strain. In countries dealing with sanctions, currency instability, and now military escalation, digital assets offer an alternative to fragile domestic financial systems.

Iran is a clear example. Years of pressure on the Iranian rial have eroded purchasing power, pushing individuals and institutions to look for dollar-linked alternatives. Over the past year, the country’s central bank reportedly accumulated more than $500 million in dollar-backed digital assets.

Now that the war is escalating, Iranians are moving assets out of local crypto exchanges. Crypto analytics firms Chainalysis and Elliptic reported that about $2.3 million exited platforms in the peak hour after airstrikes earlier this week—nearly nine times normal levels—with withdrawals from the largest cryptocurrency exchange in the country, Nobitex, jumping around 700%.

However, while there are sharp swings in local crypto activity, the volumes are far too small to materially impact global prices, where hundreds of billions of dollars trade daily.

What comes next?

Whatever is driving the rebound, the lift is spreading across the ecosystem: Strategy gained 10.37%, Coinbase rose 14.57%, Galaxy Digital climbed 17.7%, and Robinhood rallied 8.07%.

Still, don't pop the champagne just yet. Analysts are worried that bitcoin still hasn't hit rock bottom, and that volatility in the stock market could translate to more selloffs in the crypto market.—SY

• Apple unveiled the MacBook Neo, its cheapest laptop ever.
• A judge in the Court of International Trade made a ruling today that opens the door to massive tariff refunds for companies.
• Nvidia CEO Jensen Huang said the company’s $30 billion investment in OpenAI “might be the last time” the firm funds an AI startup.
• Deja vu: Traders are using a history lesson from Russia’s invasion of Ukraine to map out their plays during the Iran conflict.
• The war with Iran is reigniting concerns about insider trading on prediction markets like Polymarket.
• Treasury Secretary Scott Bessent said Trump’s 15% global tariff will be implemented this week.
• Top Goldman Sachs lawyer Kathryn Ruemmler, Microsoft founder Bill Gates, billionaire Leon Black, and others are set to testify to a House panel about their connections with Jeffrey Epstein.

Economic reports: A strong ADP report should give investors hope heading into the next labor market reading with tomorrow’s initial jobless claims. We’ll also get a look at both the Q4 US productivity report and the import price index.

Earnings announcements: Costco, Gap, Marvell Technology, Kroger, JD.com, Bilibili, Ciena, and Burlington Stores