Global Tensions Rise… Brings Oil Along

MONETARY

• In the March publication of the Federal Reserve’s Beige Book, the Fed noted that economic growth has recently increased at a slight-to-moderate pace with overall consumer spending remaining strong. Extreme winter weather conditions across large swaths of the country also had a significant, but temporary, effect on growth¹
  • • (Federal Reserve) “Overall economic activity increased at a slight to moderate pace in seven of the twelve Federal Reserve Districts, while the number of Districts reporting flat or declining activity increased from four in the prior period to five in the current period.”¹
    • (Federal Reserve) “Although consumer spending increased slightly on balance, two Districts reported ongoing declines, and many noted that sales were dampened by economic uncertainty, increased price sensitivity, and lower-income consumers pulling back on spending. Districts impacted by winter storms said that retail traffic generally slowed.”¹
    • High demand for energy and data center related items was seen as further bolstering the overall manufacturing sector¹
      • (Federal Reserve) “Manufacturing activity improved overall since the previous reporting period, with eight Districts reporting varying degrees of growth and two reporting declines. Manufacturing contacts in many Districts reported increases in new orders, and several cited boosts in demand from data centers and, relatedly, energy infrastructure.”¹
    • The residential housing market was still seen as ‘frozen’ as affordability and availability remain parallel issues in the sector¹
      • (Federal Reserve) “For most Districts that reported on residential real estate and construction, sales and activity decreased slightly, with low inventories and affordability remaining key issues”¹
    • Outlooks on future economic growth were confident, with many contacts projecting solid growth to continue¹
      • (Federal Reserve) “Overall, economic expectations were optimistic, with most Districts expecting slight to moderate growth in the coming months.”¹
    • Within the labor market, contacts reiterated the trend of “retention is the new hiring” by increasing wages to combat labor poaching. Additionally, contacts were seen as increasingly looking to AI to gain efficiencies and drive higher productivity rather than worker replacement¹
      • (Federal Reserve) “Firms in some Districts and in various sectors looked to AI or other forms of automation to gain efficiencies, with most emphasizing the goal of productivity enhancement rather than worker replacement. Wages rose at a modest or moderate pace in most Districts as firms competed for talent in select areas, including the skilled trades.”¹

GEOPOLITICS

• The U.S. and Israel launch a massive, joint military assault on Iran named Operating Epic Fury. The stated goals of the operation include dismantling Iran’s nuclear and missile programs and targeting the regime’s leadership^2,3,4,5
  • Iranian Supreme Leader Ayatollah Ali Khamenei, who ruled for 37 years, is killed alongside roughly 40 other senior regime officials in an Israeli airstrike on his compound in Tehran^2,3,4,5
  • Following the airstrikes, President Donald Trump announces that nine Iranian naval ships have been sunk or destroyed by U.S. forces and that Iran’s naval headquarters was heavily damaged^2,3,4,5
    • S. Central Command confirms three American service members are killed in action during the combat operations, with several others seriously wounded^2,3,4,5
    • In a separate naval engagement, U.S. Defense Secretary Pete Hegseth officially confirms that a U.S. Navy submarine sank an Iranian warship (the frigate IRIS Dena) in the Indian Ocean off the coast of Sri Lanka. This marks the first time an American submarine has sunk an enemy ship with a torpedo since World War II^2,3,4,5
  • Iran’s retaliation to Operation Epic Fury have included launching ballistic missiles and drones at Israel, as well as targeting U.S.-linked assets in neighboring countries like Bahrain and Kuwait^2,3,4,5
  • The conflict has caused severe disruption in the Strait of Hormuz, with an effective shipping stall taking place. Iran’s Islamic Revolutionary Guard Corps (IRGC) officially declared the Strait of Hormuz closed^2,3,4,5
    • Satellite data shows maritime activity in the strait dropping by more than 80%^2,3,4,5
    • To break the shipping paralysis, President Trump announces that the U.S. will step in to ensure the free flow of energy. The administration’s plan includes providing U.S. Navy warships to escort commercial oil tankers through the Strait, as well as utilizing the Development Finance Corporation (DFC) to provide financial backing and insurance for the shipments^2,3,4,5

MISCELLANEOUS

• In a massive breakthrough in the world of pure mathematics, Google’s AI system ‘Aletheia’ solved numerous/previously unsolvable problems across multiple disciplines in what many professional mathematicians are calling the first instance of Mathematical AGI⁶
  • Unlike the 2024 AlphaProof system which took days to solve a single IMO problem, the 2026 Aletheia (powered by Gemini 3 Deep Think) achieved a 100x reduction in compute while reaching 95.1% accuracy on advanced benchmarks⁶
  • Google’s Aletheia autonomously solved 6 out of 10 “novel” research-level problems in the First Proof Challenge. These problems were specifically curated to be absent from any training data and had never been solved by an automated system before, marking a huge leap in the achievements of frontier AI abilities⁶
  • Separately, Google DeepMind unleashed its Aletheia AI on about 700 famously unsolved math puzzles left behind by the legendary mathematician Paul Erdős, which have stumped humans for decades⁶
    • The AI successfully generated 63 correct mathematical proofs, including 13 that offered genuinely new, meaningful breakthroughs for researchers to build upon. It’s a massive milestone that shows AI is officially moving from just being a super-fast calculator to acting as a creative, problem-solving research partner⁶

[See Below for Disclosures & Annotations]

DISCLOSURES

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

The companies presented here are for illustrative purposes only and are not to be viewed as an investment recommendation.

Tax laws and regulations are complex and subject to change, which can materially impact investment results. LPL Financial does not provide tax advice. Clients should consult with their personal tax advisors regarding the tax consequences of investing.

ANNOTATIONS

1. The Federal Reserve. “The Beige Book”. March 4, 2026
2. Council on Foreign Relations. “Iran’s War With Israel and the United States”. March 1, 2026
3. The Wall Street Journal. “Sinking of Iranian Ship Illustrates U.S. Goal of Destroying Tehran’s Navy”. March 4, 2026
4. The White House. “America’s Warriors Are Obliterating Iranian Terror Regime with Unrelenting Force”. March 4, 2026
5. The White House. “Operation Epic Fury: Unmatched Power, Unrelenting Force of America’s Warriors”. March 3, 2026
6. Google DeepMind. “Accelerating Mathematical and Scientific Discovery with Gemini Deep Think”. February 11, 2026