Iran closes a strait and Netflix doubles its profits so at least someone's shipping is going fine · Daily Briefing

In 30 seconds: Iranian threats have sharply curtailed shipping through the Strait of Hormuz, driving up jet fuel prices and forcing Iraq to truck oil overland, while US crude grades trade in the $70–$80 range and the SPR draws down at ~600 thousand barrels per day to offset supply losses. Analysts are debating whether gold could replace US Treasuries as the settlement currency for oil trade, pointing to post-WWII US–Saudi precedent and arguing that expanding global money supply and bonds' poor performance as a hedge make gold a more attractive store of value for creditor nations. Netflix reported record Q1 revenues of $12.3 billion (+16% YoY) and net income of $5.3 billion (+83% YoY), with operating margins expanding to 32.3%. Fed chair nominee Kevin Warsh is set to tell the Senate that Fed independence is the Fed's own responsibility and that fighting inflation requires no excuses, while observers note tension between his stated views and those of the administration that nominated him.

The global oil supply system serves 7.5 billion people every day. Shippers are expected to hold off on attempting passage through the Strait of Hormuz due to the significant risk of Iranian attack. When you lose the Gulf's main artery, you improvise. Iraq fuel oil trucked overland via Syria runs at about 150-160 thousand barrels per day, compared with pre-war Gulf exports of 3,600 thousand barrels per day. It is, in other words, a rounding error dressed up as a logistics operation. The SPR release represents a meaningful effective supply addition to the market, but not enough — it covers only about half the expected draw rate on US strategic stocks given what has been announced. Downstream, the squeeze is vicious. Singapore jet fuel prices have doubled, rising from $82 per barrel in January to $166 per barrel so far in April. Stateside, the picture is strange in a different way.

There is a corner of financial commentary where people look at gold not as a barbarous relic but as the obvious invoice currency for the world's most important commodity. If you are a creditor nation sitting on oil revenues, the question is what you do with the proceeds. If your store of value loses purchasing power every time something bad happens, it is not really a store of value. Whether anyone actually reprices oil in ounces is a different, much harder question.

There is a version of the streaming wars narrative in which everyone bleeds cash forever, content budgets spiral into oblivion, and the whole sector converges on a grim equilibrium of subsidized entertainment. Netflix would like you to know that this is not its version. The company posted $12.3 billion in Q1 revenue, a record for quarterly revenues, up 16% year over year. That is a nice number. The bottom line is a nicer one. Net income came in at $5.3 billion, also a record for quarterly net income, rising 83% from the year-ago period. If you are doing the math, revenue grew 16% while profits grew 83%. The gap between those two figures is the whole story. It means operating leverage is doing what operating leverage does: once fixed costs are covered, incremental revenue falls to the bottom line with relatively little friction. Operating margins expanded to 32.3%, up from 31.7% a year ago. That is not a dramatic move in percentage-point terms, but it is directionally important. It tells you the company is not buying growth by torching profitability — revenues up 16% and net income up 83%, with operating margins actually expanding year over year. Netflix revenues: $12.3 billion. The margins say so.

He will also declare that inflation is the Fed's responsibility without excuse or equivocation. These are, on their face, the most orthodox things a Fed chair nominee could possibly say. They are also, given the administration that nominated him, quietly remarkable. The trick with central bank independence is that it sounds like a structural guarantee but is really a behavioral one. If the Fed acts like an independent institution, it gets to be one. If it starts trimming its sails to please the building across the street, no amount of statutory language saves it. The 'without excuse or equivocation' line on inflation reads like a direct rebuttal to anyone who might suggest the Fed should tolerate a little more price growth. The nominee served as a Fed governor from 2006-11, which means he has actually sat in the room where these decisions get made. He was involved in early planning and scope work for the renovation of the Martin building, a project so long running that it was not completed until 2021. The Fed's physical infrastructure apparently moves on the same timeline as its policy normalization. Several pushback factors complicate the picture: demand-side pressures from the AI buildout, a higher neutral rate if there's a productivity boom, and different starting conditions from Greenspan's 1996 patience. None of those conditions obviously obtain today. Whether the person who nominated him wants to hear it is a separate question entirely.