WSJ What’s News - Why War Isn’t Spooking Wall Street—Yet

Episode Date: March 18, 2026

A.M. Edition for Mar. 18. Gulf leaders insist on crippling Iran’s regime before ending the war, marking a major pivot from a region that once courted Tehran. Plus, as fighting drags on, Barclays’ Emmanuel Cau discusses why the mood in U.S. equity markets has remained largely upbeat. And bad news for the struggling U.S. Postal Service, as Amazon plans to take its business elsewhere. Luke Vargas hosts. Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

The game begins in three, two, one. Ready or not, too, here I come. Only in theaters, Friday. After surviving one deadly game, Grace and her sister Faith must now face off against four rival families in a fresh round of blood in games, filled with more action, scares, laughs, and combustions. Starring Samara Weaving,

Catherine Newton, Sarah Michelle Geller, and Elijah Wood. Ready or not two, here I come, only in theaters, Friday. Get tickets now. Gulf leaders insist on crippling Iran's regime before ending the war. Plus, as fighting drags on, we'll look at why Wall Street isn't freaking out, at least not yet. So we see the shorter this conflict will be the smaller the impact should be on the economy and the consumer. But as of now, we're clearly having a statutory risk that is growing by the day without a quick de-escalation. And bad news for the struggling U.S. Postal Service,

as Amazon plans to take its business elsewhere. It's Wednesday, March 18th. I'm Luke Vargas for the Wall Street Journal, and here is the AM edition of What's News. The top headlines and business stories, moving your world today. Gulf officials say they want the U.S. to keep up the fight against Iran in order to render it incapable of future attacks,

a major pivot from a region that once courted Tehran. Speaking to the journal, Emeradi and Qatari officials described Iran as the belligerent party citing its attacks on infrastructure and civilian targets, while another senior Gulf officials said the only acceptable outcome of the war would be in Iran so enfeebled that it could never imperil its neighbors again. Iranian leaders in recent days have said they'd only accept a ceasefire with the U.S. and Israel if the country received reparations and ironclad guarantees against future attacks.

Meanwhile, Iran struck Central Israel with missiles overnight, causing heavy damage and killing two people, raising the death toll in Israel since the start of the war to at least 14. And authorities in Iraq report that the U.S. Embassy in Baghdad suffered a fresh attack without providing more details. The compound was hit by a missile over the weekend and targeted by rockets and drones Monday and Tuesday. Well, with the war dragging on, the effective closure of the Strait of Hormuz, sending energy prices soaring, and inflation warnings now cropping up around the world, why are U.S. equity markets off just a few percentage points since before the fighting started? Emmanuel Coe is the head of European equity strategy at Barclays, and he joins me now to discuss

why that is and whether that trend will continue. Emmanuel Wall Street's reaction this far has been much less negative compared to past conflicts in the Middle East, in spite of concerns that this all could become a protracted situation. Why is that? Hey, look, I think the market is pretty comfortable with the view that President Trump cannot afford to have a long-lasting shock and stuasionary heat to the U.S. economy, right? And I think there is still a lot of trauma from investors having sold equities after Liberation Day a year ago, which was a big mistake.

So I think investors are hopeful of a Swiss resolution to this conflict on the view that Trump will ultimately do whatever is good for the U.S. economy. And that includes triggering a swift policy response, pushing in particular the IEA to release all of the soil? I think this is part of the toolbox. But I guess what we can conclude from Trump communication in the last couple of days, because at the oil price, as touch, he spent threshold. So that was already seen a week ago when Trump was starting to talk about this de-escalation

after all price went above $120. Obviously, it's not just about him tweeting about the end of the question. conflict, we need to see the other parties, whether it's Israel or Iran, willing to support this de-escalation effort. So I think this is where we have a bit of question, Mark, about whether the market is too complacent about the outcome of this conflict and whether you could get the situation too worse than before it gets better. So I think what we said is that typically for a 30% move up in oil, what about 10 to 15% drop

in equity market? And so far, the global equity market is down only 4%. So it's not the typical risk of we had in previous old super shocks. Yeah, and we've spoken on the show in recent days about some of the factors that have insulated the U.S. economy in particular from this crisis, more so than the rest of the world. It really helps, for instance, to be a net energy exporter. What else? Look, I think the U.S. markets, whether it's U.S. equity market or the U.S. dollar have behaved as a safe haven again, right? And think about this in the context of the past six months, where the only game in town was sell America and rotation towards international market. What we saw in the last couple of weeks is the safety of the U.S. market prevailing again.

And yes, I think the most heat market are those which are the most energy sensitive. So we've seen Asian equities, Europe inequities coming down quite a lot more than the U.S. equity market, which is, again, less directly impacted by this kind of staccationary fields. And even if you look at the rate market, we had a pretty hokey repricing in European race because now the market is looking for the ECB to high rate as a consequence of this inflationary shock while seeing the market is still looking for one cut from the Fed this year. So the market is really seeing that this factationary shock, we're much more acute in Europe than it will be for the U.S. The consumer outlook worsening in your view?

I would say today compared to two weeks ago, yes, the consumer outlook is worsening because, you know, we have lower growth and higher inflation as a consequence of this oil shock. And again, if we look at gasoline prices, they're going through the roof in the U.S., and some of the sentiment surveys are starting to be hit, right? So we see the shorter this conflict will be, the smaller the impact should be on the economy and the consumer. But as of now, we're clearly having a stack stationary risk that is growing by the day without a quick de-escalation. Emmanuel, I want to talk about central banks. The Fed is making a rate announcement today.

Could central banks here inadvertently dial up stagflation fears if it looks like their focus is returning back to fighting inflation instead of supporting growth? Yeah, absolutely. I think the key will be how central banks around the world respond to this development. And we have a busy week with the Fed, we have the ECB, the Bank of Finland as well, meeting on Thursday and the Bank of Japan as well. So all the main central banks around the world are going to have to tell us what they make of this oil shock and whether they are starting. to shift away from what has been a pretty dovish communication so far, and whether they start to embrace what the market seems to be pricing, which is basically a higher rate in the case of Europe or less rate cuts in the case of the U.S.

Emmanuel Coe is the head of European Equity Strategy at Barclays. Emmanuel, thank you so much for being with us on What's News. Thank you. Well, as we mentioned there, the Fed's latest interest rate decision is due this afternoon. An announcement that Journal Chief Economics correspondent Nick Timrose says comes as officials are contending yet again. again with a familiar foe, inflation.

It has a feeling of deja vu for the Fed. First, it was the aftershocks of the pandemic. Then it was Russia's war in Ukraine. Last year, you had sweeping tariff policy changes, and now it's the war in the Middle East. What the war does is that it freezes up your ability to make big judgments. So if you thought the bigger problem before all of this was still in the labor market, you may look at the possible destruction of Demandumption.

that comes from higher oil prices and say, well, now the labor market is going to be in an even more fragile position, and we should focus on that. If, on the other hand, before this conflict, you were worried that inflation wasn't getting better. You also can look at that and say, geez, inflation was not getting better. It was actually getting a little bit worse. And now we're going to have a new round of potential supply problems. While the war is likely to reinforce the consensus around holding rates steady. Nick says there's less clarity about where policymakers should head after that. Policymakers around the table this week face a question that would have seemed unlikely a few months ago when they were cutting interest rates. And that question is no longer,

when will they next cut interest rates, but rather can they credibly suggest that the next move in interest rates is still more likely to be a move down than a move up? And there were some officials even before this who wanted to get rid of that guidance that, suggested that the next move was more likely to be a cut. They wanted to go to a more neutral bias. And so that debate, I think, will continue. Today's rate announcement is due at 2 p.m. Eastern, followed by a press conference by Chair Jerome Powell. Coming up, the U.S. Postal Service risks losing business from its largest customer, Amazon. And Illinois Governor J.B. Pritzker dodges political embarrassment in a Senate primary. Those stories and more after the break.

Okay, when I sell my business, I want the best tax and investment advice. I want to help my kids, and I want to give back to the community. Ooh, then it's the vacation of a lifetime. I wonder if my out of office has a forever setting. An IG private wealth advisor creates the clarity you need with plans that harmonize your business, your family, and your dreams. Get financial advice that puts you at the center. Find your advisor at IGPrivatewealth.com.

Illinois's lieutenant governor, Juliana Stratton, has won the state's Democratic Senate primary, putting her in poll position to replace retiring Senator Dick Durbin, who's held a seat since 1997. Tonight we showed what's possible when you listen to the people and give the people what they want. Journal National Political Reporter John McCormick says the win is a boost for Stratton's boss, Governor J.D. Pritzker, as the eyes of potential White House run in 2008. The primary race tested Pritzker's political cloud in a state where he has leveraged his wealth to dominate the Democratic Party. Stratton's victory comes as he's working to raise his national profile with the parties based nationally. Helping elect Stratton could prove useful to

Pritzker should he run for the party's nomination after likely securing a third gubernatorial term for himself in November's election. The victory by Stratton could also help sue some of the bad feelings about Pritzker among members of the Congressional Black Caucus, which had backed another candidate in the race and was critical of the governor's financial involvement backing Stratton. If elected, Stratton would become only the sixth black woman to serve in the U.S. Senate. Voice of America could soon be back on the air. A federal judge yesterday ordered that the Trump administration restart the government-run

outlet after effectively shutting it down last year, putting hundreds of employees back to work. The ruling comes after the same judge last week ruled that Trump's pick to lead the U.S. agency for global media, Carrie Lake, lacked the authority to slim down VOA's operations. We are exclusively reporting that Amazon plans to slash the number of packages it sends through the U.S. Postal Service by at least two-thirds as early as this fall. That's after Postmaster General David Steiner solicited bids from Amazon and others for its last mile delivery. service for the first time. But with Amazon's existing contract ending in October and the results of the bidding not released until the second quarter, we report that Amazon grew concerned it would have little time to adjust operations if its bid wasn't accepted. And Amazon spokesman said that the e-commerce retailer initially wanted to increase volumes with the Postal Service, where it's long

been the largest customer and was surprised by the new bidding process. The USPS delivered more than a billion in Amazon packages last year, and the pullback comes as its finances are in dire straits. Here was Steiner testifying yesterday on Capitol Hill. At our current rate, we'll be out of cash in less than 12 months. So in about a year from now, the Postal Service would be unable to deliver the mail if we continue the status quo. Steiner is asking Congress to raise the Postal Service's debt limit and lift regulations on its ability to raise prices for stamps and other services.

And finally, celebrations in Caracas. Venezuela last night beat out the heavily favored U.S. in the World Baseball Classic in Miami, sparking celebrations in cities with large Venezuelan populations from Santiago to Madrid. Following the win, Venezuela's interim president, Delci Rodriguez, declared today a national holiday while Donald Trump took to truth social to suggest making the oil-rich nation the 51st state. And that's it for what's news for this Wednesday morning. Today's show was produced by Hattie Moyer, our supervising producer is Daniel Bach, and I'm Luke Vargas for the Wall Street Journal. We will be back tonight with a new show. Until then, thanks for listening. Getting ready for a game means being ready for anything, like packing a spare stick. I like to be prepared. That's why I remember 988, Canada's suicide crisis helpline. It's good to know, just in case. Anyone can call or text for free confidential support from a train responder anytime.

988 suicide crisis helpline is funded by the government in Canada.