Hormuz Enters a “New Phase,” Warsh May Take Over the Federal Reserve

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Summary:

Control of the Strait of Hormuz has entered a new phase; the White House is betting that Warsh will take over the Federal Reserve in May...

Top Headlines

1. Iran says control of the Strait of Hormuz has entered a new phase

2. Netanyahu: Israel will not stop fighting in Lebanon until Hezbollah is disarmed

3. Democrats’ efforts to limit Trump’s military action against Iran blocked again

4. U.S.–Israel rift emerges: Netanyahu pushes to expand the war as Trump’s ceasefire plan faces resistance

5. Shipping through the Strait of Hormuz remains below 10% of normal levels; Iran orders vessels to reroute through its territorial waters

6. White House bets on Warsh to take over the Fed in May; uncertainty grows over Powell’s future

7. Weak income undermines consumer spending; the main engine of the U.S. economy is losing momentum

Details

Iran says control of the Strait of Hormuz has entered a new phase

In the early hours of April 10 (local time), the Iranian Revolutionary Guard Corps Navy issued a statement declaring that control of the Strait of Hormuz has entered a “new phase,” without specifying the measures involved.

Earlier, Iran’s Supreme Leader Mojtaba Khamenei stated that Iran would not let any aggressor go unpunished and would pursue compensation for war losses and retribution for fallen martyrs. Control of the Strait of Hormuz, he said, would also enter a new phase.

Netanyahu: Israel will not stop fighting in Lebanon until Hezbollah is disarmed

On the evening of April 9 (local time), Israeli Prime Minister Benjamin Netanyahu stated that Israel would not cease its military operations in Lebanon until security is restored for residents in the north and Hezbollah is disarmed.

Netanyahu said he had ordered direct negotiations with Lebanon aimed at disarming Hezbollah and achieving a historic and lasting peace agreement. He added that Israel’s actions against Iran and the “Axis of Resistance” had yielded significant results, fundamentally reshaping Israel’s position in the Middle East.

He emphasized that Israel is stronger than ever, while Iran is weaker than ever. Netanyahu also noted that Israel has already reached four peace agreements with Arab countries and intends to pursue genuine peace from a position of strength.

Democrats’ efforts to limit Trump’s military action against Iran blocked again

On Thursday, Republicans in the U.S. House of Representatives blocked Democratic efforts to end U.S. military operations against Iran. Representative Smith (R-NJ) adjourned a procedural session before Democrats could attempt to pass the resolution by unanimous consent. The resolution had called for an end to military action.

Dozens of Democrats have called for Trump’s removal from office. The White House maintains that Trump’s actions are lawful, stating that as commander-in-chief, he has the authority to order limited military operations to protect the United States.

Although the Constitution grants Congress—not the president—the power to declare war, this restriction does not apply to short-term military actions or situations involving direct threats to national security. Democrats have openly discussed restarting impeachment proceedings or invoking the 25th Amendment to remove Trump.

Democrats are also linking efforts to limit military action to affordability concerns. Disruptions to oil and gas transportation have driven up gasoline prices and fertilizer costs, placing pressure on consumers. Democratic leaders in both chambers have pledged to revisit war powers legislation after the current recess.

U.S.–Israel rift emerges: Netanyahu pushes to expand the war as Trump’s ceasefire plan faces resistance

Trump’s decision to go to war with Iran fulfilled years of lobbying by Netanyahu. However, as Trump attempts to disengage from the conflict, growing differences with his close ally may leave him in a difficult position.

Within hours of Trump announcing a two-week ceasefire, Netanyahu challenged the terms and launched the largest offensive in Lebanon since the start of the conflict, resulting in hundreds of casualties.

Sources say Netanyahu strongly opposes restarting diplomatic efforts to end the broader conflict with Iran. Trump reportedly informed Netanyahu only shortly before the agreement announcement that Lebanon would be included in the ceasefire terms. Although Trump has publicly downplayed the differences, cracks in their alliance have become evident.

A former Israeli government adviser noted that while Israel initially sought the war, events have now moved beyond its control. Trump said his phone call persuaded Netanyahu to scale back operations, but Israeli leadership reiterated on Thursday that military action in Lebanon would continue.

Shipping through the Strait of Hormuz remains below 10% of normal levels; Iran orders vessels to reroute

Despite a ceasefire between the U.S. and Iran, vessel traffic through the Strait of Hormuz on Thursday remained below 10% of normal levels. Only seven ships passed through in the past 24 hours, compared with a typical daily volume of around 140.

Roughly one-fifth of global oil supply remains disrupted, with some physical crude grades hitting record highs.

The Iranian Revolutionary Guard has instructed vessels to sail through Iranian waters around Larak Island to avoid mines in the main shipping lanes. Ships must coordinate with the IRGC Navy, entering north of the island and exiting to the south.

White House bets on Warsh to take over the Fed in May; uncertainty grows over Powell’s future

White House economic adviser Kevin Hassett said on Thursday that he is highly confident Kevin Warsh will assume the role of Federal Reserve Chair in May, and that current Chair Jerome Powell is unlikely to remain on the Fed’s Board of Governors.

Hassett indicated that Warsh’s confirmation hearing could begin as early as next week and suggested that Powell has signaled he would step down once a successor is confirmed, a move considered consistent with institutional norms.

However, Powell stated in March that he would not leave the Fed at least until a criminal investigation involving him is concluded. He has also not decided whether to continue serving on the Board, with his term set to expire in 2028, while his chairmanship ends in May.

A U.S. judge last week upheld a ruling to freeze subpoenas related to the investigation, and the ensuing appeals process could delay the Trump administration’s timeline for installing a more aligned Fed leadership.

Analysts note that the timing and certainty of the Fed leadership transition are crucial for market interest rate expectations. If Warsh takes over and Powell fully exits, the policy stance could shift subtly, while any legal delays would prolong the current wait-and-see approach.

Weak income undermines consumer spending; the U.S. economic engine is losing momentum

U.S. personal consumption expenditures rose 0.5% month-on-month in February, slightly below economists’ expectations of 0.6% in a Wall Street Journal survey. However, after adjusting for inflation, real spending increased by only 0.1%, indicating that purchasing power remains largely stagnant.

Personal income declined in February for the first time in nine months, mainly due to a fifth consecutive drop in Medicaid-related benefits. Wage growth slowed to 4.3% year-on-year, the second-lowest rate since the end of the pandemic, eroding the foundation of consumer spending.

Warmer weather boosted foot traffic at auto dealerships, lifting spending on new vehicles and apparel. However, spending on entertainment, dining, and gasoline declined due to snow and difficult travel conditions, masking underlying demand trends.

Rising oil prices and stock market losses triggered by the Iran conflict are expected to weigh further on consumption in the coming months, though not enough to push the economy into a danger zone. Consumer spending has stagnated over the past four months, as households facing or anticipating financial strain cut back on spending, which in turn will weigh on overall growth.

Analysts believe that U.S. economic growth is unlikely to accelerate until the Iran conflict is fully resolved and legal disputes related to Trump’s tariff policies become clearer. Slowing wage growth and persistently high inflation continue to limit the Federal Reserve’s room to cut rates.

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