Today
Futures are paring gains this morning after Iran rejected a ceasefire and said it is not logical to enter such a process with parties that violate agreements. This comes after the U.S. tabled a 15-point plan which covers sanctions relief, civilian nuclear cooperation, a rollback of Iran’s nuclear program, missile limits and access for shipping through the Strait of Hormuz. Yesterday, the prospect of de-escalation pushed oil prices down roughly -5%, easing inflation fears. Emerging market assets rose on signs of potential de-escalation, with equities and currencies gaining following the latest developments. The MSCI EM index rose 1.7%, led by strength in South Korea and China, while currencies also advanced modestly, including moves in the Mexican peso and Brazilian real. As one can see from the action this morning, markets remain highly sensitive to geopolitical headlines, and promises of peace talks, with volatility expected to persist. The broader backdrop remains challenging as higher energy prices continue to pressure growth and inflation, particularly in energy-importing economies, where rising fuel costs weigh on activity, prompting responses from central banks and governments.
PMI oh my. The Iran war is beginning to show up in global data, with business surveys showing weakening growth and rising inflation across major economies. March PMIs from Europe, Asia, and Australia all point to slowing activity or contraction, while input costs are quickly rising, including the fastest increases in years in places like Germany and the UK. The pressure is being driven by disrupted energy supplies and higher oil prices, which are squeezing businesses, weakening demand, and denting confidence, putting the earlier global recovery at risk. Central banks are shifting more hawkish, with rate hikes back on the table despite slowing growth, as policymakers grapple with balancing inflation risks against recession threats. Overall, the data suggests the war is already impacting the global economy, with the uncertainties now centered on how long energy disruptions last and how aggressively central banks will respond.
A new kind of toll. Iran has begun informally charging some commercial ships up to $2 mln per voyage to pass through the Strait of Hormuz, creating an unofficial transit fee on one of the world’s most critical energy chokepoints, through which roughly 20% of global oil and gas flows. The payments are inconsistent and not very clear, with only a limited number of vessels transiting (often close to Iran’s coastline) and some reportedly complying to secure safe passage amid heightened conflict risks. This highlights Iran’s growing leverage over the strait, adding friction, uncertainty, and legal tension as countries like India push back on freedom of navigation grounds. Longer term, the risk is these fees stick, setting a precedent for monetizing global trade routes and adding complexity to energy markets and supply chains.
Not just an oil issue. The Iran war is now spilling into agriculture, triggering a scramble for fertilizer that risks escalating into a global food crisis, as the shutdown of the Strait of Hormuz halts shipments from a region that supplies a major share of the world’s fertilizers. Prices for key inputs like urea and phosphates are rising, threatening to push food costs higher just as inflation was easing. Governments across the globe are intervening, subsidizing farmers, securing emergency supplies, easing trade barriers, while major buyers like India rush to obtain fertilizer and producers like China and Russia restrict exports, intensifying competition. The shock underscores the tight link between energy and food, since natural gas is critical for fertilizer production, meaning higher energy prices directly raise farming costs and squeeze margins. If disruptions continue into mid-year, the impact could lead to reduced crop yields, higher global food prices, and worsening food insecurity.
Liquid markets take the lead. Public equities have been the primary driver of returns for Canada’s largest pension funds, with stocks materially outperforming private equity across major plans. In 2025, Ontario Municipal Employees Retirement System (OMERS) posted 12.3% from public equities versus -2.5% in private equity, Ontario Teachers’ Pension Plan saw 15.0% versus -5.3%, while Healthcare of Ontario Pension Plan (HOOPP) and Caisse de dépôt et placement du Québec delivered 22.2% and 17.7% in public equities compared to modest positive returns of 3.6% and 2.3% in private equity, respectively. This divergence reflects stronger performance in liquid markets alongside headwinds in private assets from higher rates, slower deal activity, and limited exits, challenging the consistency of the illiquidity premium. While some funds, such as Teachers’, have modestly increased public market exposure, the shift remains incremental, with the broader takeaway pointing to a cyclical phase where liquidity has led returns and private markets remain constrained.
March madness meets AI. OpenAI, Anthropic, and Google, are being put to the ultimate test, with their AI models entering into a March Madness bracket pool. While all three are outperforming most human participants after the first weekend, Claude is emerging as a top contender thanks to a slightly contrarian strategy (picking Illinois to win) while still leaning heavily on favourites. The models approached the task analytically, balancing probability with differentiation, by choosing upsets with strong justification (like injuries or off-court issues) rather than chasing unlikely Cinderella outcomes and largely avoiding crowded picks. Despite early hiccups, all three produced viable entries, with intact Final Fours and realistic winning paths, highlighting that while AI still struggles with certain tasks, it can rival human decision-making in probabilistic, strategy-driven environments like betting.
Diversion:
Pit stop 
