Alex Etra

@DannyDayan5 @JoshYoung Oh. And here I thought there was some 4D chess to kill inflation by crushung demand by crashing equities...turns out you cannot fight inflation with inflation...oh well...

@EtraAlex @JoshYoung They do not!

This week the big development was the market realizing that oil will take a material amount of time to get fixed. I would not be the least bit surprised if within a week or two we get some form of stimulus announcement from Trump. Midterms beckon.

@JoshYoung @DannyDayan5 Almost makes you wonder if they know what they're doing?

@DannyDayan5 I mean, it will help, and is better than not releasing it. It also should have been released the day the war started. This is what it's for.

@Brad_Setser @M_C_Klein @TimDuy I have very mixed feeling about looking at oil in real terms...isn't it in some senses a numeraire here?

$150 was plenty scary in 2013! High oil prices from 2010 were one reason why the US recovery was slow (reduced real incomes) and folks didn't like the economy (conversely low oil prices in Trump 1 did improve sentiment ... ). Scaling v income is useful but not determinative. Folks hated the 70s economy

This is going to be an unpopular position but it is not wrong.

Honestly pretty chuffed to be moderating a panel with two legends whose work has a had a huge influence on me. Looking forward to it @HyunSongShin and @Brad_Setser

biden total spend on ukraine: $180 billion the pentagon just asked for $200 billion for war in iran.

@MichaelRStrain @greg_ip @NickTimiraos Obvious solution (per POTUS dots): cut rates 4x this year...🤔

@greg_ip @NickTimiraos My theory: The labor market is strong. The economy is strong. Inflationary pressure is broad based due to strong demand. giftarticle.ft.com/giftarticle/ac…

. @NickTimiraos stumps Powell. Why hasn't non-housing services inflation moved down, esp without tight labor market? "Good question...frustrating ... bunch of idiosyncratic things...One of the things we should be seeing ... it's a good question ... "

@PauloMacro @HFI_Research But but but what about 'real' oil [brent] prices? 🙃

Forget 2008 or 2022. With exception of Taiwan Dollar ("heavily managed float"), among major non-China Asian economies, Brent crude has never been this expensive. That's it -- that's the tweet.

If we are now looking at an average of $85 a barrel for oil for 2026 then that could shave off around 0.3-0.4pp from global growth. Headline inflation could rise by 60 bps. Before the Iran conflict global growth was projected at 3.3% for 2026 on the assumption oil would average $65 a barrel.

Thanks to @GitaGopinath for this useful benchmark. The question i would love to get her and others' take on is twofold: one, is the effect linear? Two is that on a q4q4 basis and if so, what does it imply for sequential growth in q2?

This is the week that oil markets started to wake up to not-so-short-term supply risks. Unprecedented outperformance of Brent third-month vs front-month in an up market (since at least 1989) sherwood.news/markets/these-…

@policytensor Pretty sure Caine is 'constitutionally' required to follow the order (assuming no recourse to laws of war and international treaties). But cabinet officials can use 25th amendment. Military is though I think simply supposed to refuse the order/resign?

Suppose that Trump orders a nuclear strike on Tehran in an attempt to coerce Iran into suing for peace. Caine, as the top military officer sworn to protect the constitution, would …

@adam_tooze x.com/i/status/20327… x.com/i/status/20328…

"... in this case, actually closing a kill chain" ... CLOSING A KILL CHAIN!

@policytensor When you say 'interdiction' war can you elaborate on what you mean exactly?

In the countervalue war, the most exposed are the Arab states on the gulf littoral with all their soft targets which are within range of the plentiful short range missiles and drones. The second is the Iranians, bc US air power holds all population centers, industry and infrastructure assets at risk. The least exposed is Israel bc of its layered defense and hardened facilities. The point that @DavidSacks is making is that even Israel is still painfully exposed. I’d add that it is becoming ever more exposed as the interceptor stocks get depleted and the Iranians bring out their heavy missiles. If the US tries to use Schelling’s “power to hurt,” the Iranians will respond in kind. Some ways down that lane, cities, vital infrastructure, oil and water facilities will be destroyed all around. You can prosecute such a countervalue strategy, but it is really hard to see how that can coerce Iran into suing for peace. It’s certainly a distraction from the all-important interdiction war. Meanwhile, by demonstrating US inability to protect the oil monarchies, it will further undermine the US position in the region. So, escalation is not going to buy you much beyond the grief of your allies and adversary. Its only productive role is in potentially persuading the enemy to accept terms more attractive to you. But two can play the game. Ie, the Iranians may have the upper hand in this “productive version” of Mercy. The upshot is that a negotiated ceasefire is the most attractive of all options here. The only possibility of a superior option is to somehow fight the interdiction war more successfully. But that requires systematic preparations that the US had failed to do. So that’s not a realistic possibility either.

New at THE OVERSHOOT: Markets Are Still Sanguine About the Oil Outlook theovershoot.co/p/markets-are-… Prior oil shocks in 1973 and 1979 involved far larger price increases than what we have seen so far. Yet this shock involves a hit to volumes that is unprecedented outside of Covid.

Needless to say, this seemingly small modification makes the logistics and calculus of the SPR draw much more complex for potential buyers. In a global supply crisis, the goal should be to get barrels in the market as efficiently as possible.

Today, Rapidan CEO Scott Modell joined @CNBC to explain why the U.S. has been slow to address the growing threat to global energy flows in the Strait of Hormuz amid the Iran conflict. cnbc.com/video/2026/03/… #StraitOfHormuz #Iran #oilprices #EnergySecurity #Geopolitics #OilMarkets

@Trader_Hasini @DeItaone @grok @grok how much oil can this action bring to the market and over what time frame?

@DeItaone @grok what does it mean?

*US INVOKES DEFENSE PRODUCTION ACT FOR SABLE OFFSHORE CORP.

'The reason, multiple sources said, was administration officials believed closing the strait would hurt Iran more than the US — a view that was bolstered by Iran’s empty threats to act in the strait after US strikes on Iranian nuclear facilities last summer.'

"Top Trump officials acknowledged to lawmakers during recent classified briefings that they did not plan for the possibility of Iran closing the strait in response to strikes, according to three sources familiar with the closed-door session." cnn.com/2026/03/12/pol…

'Trump’s preference of leaning on a tight circle of close advisers in his national security decision making had the effect of sidelining interagency debate over the potential economic fallout if Iran were to respond to US-Israeli strikes by closing the strait.'