Going into the weekend, Iran had agreed to end its de facto blockade of the Strait of Hormuz as part of a tentative two-week ceasefire with the United States.

By Sunday, when the Strait remained essentially closed after talks led by Vice President J.D. Vance failed to yield an agreement, the US was threatening to impose its own blockade. The rapid escalation leaves the immediate future unclear for not only oil markets but also roughly 800 ships and 20,000 sailors stranded in the Persian Gulf.

The Strait Talk Express

The UN Conference on Trade and Development said traffic through the Strait fell 95% after the US-Iran conflict began in late February. The tiny number of ships that have tried to cross the Strait in the meantime took on an immense risk. Since the conflict began, the United Kingdom Maritime Trade Operations (UKMTO) Centre has tallied 30 security-related incidents involving vessels in the region, including 18 attacks. The war risk became too much for many insurers, a critical pillar of the shipping economy: JPMorgan estimated that $352 billion in private-market insurance was canceled faster than a dinner reservation at a Manhattan restaurant that just received a dismal health department rating. Insurers who did offer coverage hiked premiums by multiples. Governments have since begun to backstop war insurance, like India moving last week to establish $1.5 billion in sovereign guarantees and the US partnering with major US firms on a $40 billion reinsurance facility. But, without Tehran holding up its end of the bargain, it could all be for naught:

• Lloyd’s List reported last week that, even after the ceasefire agreement was announced, tankers in the Gulf region were warned via radio broadcast that they would be “destroyed” by military strikes if they tried to navigate the Strait without clearance from Iran. Only 17 vessels transited the waterway in the 24 hours through Sunday evening, according to aggregated data, a fraction of the roughly 140 in normal times.
• Iran began charging tankers up to $2 million each to cross the Strait last week, something tanker groups and UN officials said is illegal under the UN Convention on the Law of the Sea, which forbids tolling peaceful ships for “innocent passage” on an international strait. In announcing the “immediate” US blockade on the Strait on Sunday, President Donald Trump said it was necessary to prevent Tehran from profiting “off this illegal act of extortion.”

Optimistic Notes: Iranian President Masoud Pezeshkian tweeted that an agreement could still be reached, and US officials including Vance suggested the weekend talks were productive, though the two sides remain at an impasse over Iran’s nuclear ambitions. On the other hand, hope alone won’t take the pressure off energy markets: S&P Global said the combined production of OPEC+ fell 8.1 million barrels per day last month to 34.8 million amid the Strait blockade.

It’s déjà vu for big banks: Last April, blockbuster earnings were overshadowed by the specter of a trade war; this year, record margins are being eclipsed by the reality of a shooting one.

Goldman Sachs kicks off first-quarter reporting today, followed by JPMorgan Chase, Wells Fargo and Citigroup on Tuesday. Bank of America and Morgan Stanley are up on Wednesday.

Bank execs have a lot on their mind. Besides the war and Friday’s skunky CPI report, Wall Street continues to wrestle with what artificial intelligence disruption could mean for the entire economy. And don’t forget the private credit market woes that were top of mind before the Iran War.

As JPMorgan Chase CEO Jamie Dimon said in his letter to shareholders last week, “Some of the larger risks are much like tectonic plates, always moving and periodically causing earthquakes and volcanoes when they crash into each other.”

On the Bright Side

Still, banks are likely to offer the markets some relief. Anxious investors trade more, which is good for them: The largest banks are expected to post a record $18 billion in stock-trading revenue for the quarter ending March 31, according to estimates from Bloomberg. That’s a roughly 14% increase from the same period last year. The analysts estimate $4.79 billion from Goldman Sachs, $4.67 billion from Morgan Stanley and nearly $4.4 billion from JPMorgan Chase.

But net interest income (or NII, the difference between what banks earn from charging interest on loans and what they pay depositors) will be the biggest factor to keep an eye on, Sean Dunlop, director of equity research at Morningstar, told The Daily Upside:

• Loan demand has held up better than the macro backdrop would have implied. “It’s worth watching whether that’s balance sheet pre-positioning ahead of regulatory reform, businesses stockpiling cash or something more durable,” Dunlop says. The market is also predicting that the Federal Reserve won’t cut interest rates this year, which typically helps buoy what banks can charge on their loans, and that easing regulatory standards may free some capital for lending.
• The average analyst estimates compiled by LSEG for net interest income growth in the first quarter range from 6.89% for Wells Fargo to 10.67% for Citigroup.

Bargain Buy: Morningstar’s top stock pick among the major banks is Bank of America. “Trading at roughly a 15% discount to fair value, it’s essentially a junior varsity JPM at a compelling price,” Dunlop says.

Sending an email has never been as cool as BlackBerry made it feel in the 2000s. But after losing dominance in the then-emerging smartphone space to a rival fruit-named company, BlackBerry has become unrecognizable from its QWERTY roots.

BlackBerry’s pivot to software and cybersecurity solutions for automobiles, governments, and more recently, AI-driven robots has been a lucrative twist in the Y2K brand’s story. The 42-year-old company is projecting double-digit revenue growth in its current budget year, and its stock surged more than 10% last week after earnings beat expectations.

Breaking Down BlackBerry’s Revenue Pie

BlackBerry stopped making phones in 2016 and stopped supporting its phones in 2022, effectively ending any attempts to play Snake on old devices folks find in their junk drawers. But in 2010, the company made a pivotal acquisition as its phone biz wound down, scooping up QNX Software Systems for $200 million. Now BlackBerry expects QNX, which serves as the backbone for tech in everything from cars to medical equipment, to generate between $290 million and $307 million this year.

The company’s revenue is largely split between its software and cybersecurity segments:

• QNX was running critical systems in more than 275 million vehicles globally as of December. QNX is used in most major automakers’ vehicles, including BMWs, Hondas and Toyotas. But QNX is diversifying beyond cars, too, with BlackBerry saying Thursday that about a fifth of QNX revenue comes from non-auto sources, including medical equipment and AI robots.
• The other half of BlackBerry’s revenue pie comes from its Secure Communications segment, which supplies encrypted communications for governments like Germany’s and Canada’s, defense agencies and other organizations.

Growing Season: BlackBerry was caught up in the meme-stock craze of 2021, as retail investors boosted nostalgic brands such as GameStop and Bed Bath & Beyond. But now, its stock seems to be rising on solid fundamentals as it secures biz that should keep revenue flowing into the future. It has built a backlog of $950 million worth of QNX contracts from automakers and other companies that plan to keep using its software.