U.S. Gas Prices Top $4 a Gallon

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0:32President Trump weighs ending the Iran war without forcing a reopening of the Strait of Hormuz. Plus, Washington state moves to tax millionaires as the blue state, red state tax divide widens. While Washington, D.C. is taking us backwards, the good news is here in Washington state, we're moving forward, everybody. And new diet advice from the American Heart Association contradicts the government's recommendations on red meat and dairy. It's Tuesday, March 31st. I'm Luke Vargas for The Wall Street Journal, and here is the AM edition of What's News, the top headlines and business stories moving your world today.

1:16U.S. gasoline prices have crossed the$4 a gallon mark, according to AAA, and are now up more than a dollar compared to a month ago. That's after a Kuwaiti oil tanker was struck by a drone near Dubai overnight, an attack that market analysts say highlights the growing threats to key shipping routes. It also comes as we report that President Trump has told aides that he's willing to end the war against Iran without reopening the Strait of Hormuz, a mission that he and his aides have assessed would push the conflict beyond his timeline of four to six weeks. Such an outcome could extend Tehran's grip on the waterway and leave the complex task of reopening it for a later date.

1:54Our Lindsay Ellis asked White House Press Secretary Caroline Levitt how the Strait fits into President Trump's plans. I'm trying to square the four objectives laid out by the administration with the goal of reopening fully the Strait of Hormuz. Would President Trump declare victory and wind down military operations if the four objectives are met, but still passage remains quite slow through the strait? Look, as I've said repeatedly, and as the president has laid out, the objectives of Operation Epic Fury are as follows, destroying the Iranian Navy, destroying their ballistic missiles, dismantling their defense industrial infrastructure that produces those weapons that have long threatened the United States and our allies, and then, of course, preventing Iran from ever obtaining a nuclear weapon.

2:37The full reopening of the strait is something the administration is working towards, but the core objectives of the operation have been clearly defined for the American people by the commander-in-chief. Defense Secretary Pete Hankseth and Joint Chiefs Chairman General Dan Cain are set to brief reporters at 8 a.m. Eastern this morning, their first news conference on the war in almost two weeks.

3:00High earners in Washington state will face a new tax on income over$1 million starting in 2028. The 9.9 % tax was signed into law yesterday and comes as a number of Democratic states debate similar measures, which proponents cite as necessary to combat inequality and to plug budget holes caused by President Trump's cuts to federal health and nutrition assistance programs. Here was Washington's Democratic Governor Bob Ferguson, courtesy of Fox 13 Seattle. This is truly a historic step forward on rebalancing our tax code. It's the right thing to do for Washington's working families. It's the right time to do it.

3:38And it's the right policy. Republicans in Washington and beyond have warned that the tax could drive residents to move to lower-tax states, of which there's an increasing number. Mississippi and Oklahoma are among those aiming to eliminate personal income taxes altogether, while South Carolina is on course to lower its top income tax rate to under 2 % this year. Whose diet advice to trust? Americans could be asking that question today after the American Heart Association recommended getting protein from plants instead of meat, choosing low-fat or fat-free dairy, and skipping butter and beef tallow in favor of olive, soybean, and canola oil.

4:20That stands in sharp contrast with elements of new guidelines introduced by the Trump administration this year, which endorsed full-fat dairy and specifically suggested that Americans eat red meat as a protein source. Health Secretary Robert F. Kennedy Jr. has been pushing those guidelines on social media, including in this remix he shared of a South Park episode about the food pyramid. What? Sir, the pyramid is upside down. Turn the pyramid upside down. It can't be serious. That would put butter and fat at the top of the... Flip the damn food pyramid! AHA president and cardiologist Dr. Stacey Rosen said the government's encouragement to eat red meat and full-fat dairy products could hurt people's health and said that the AHA's new recommendations were based on decades of science.

5:06And President Trump has unveiled the design of his future presidential library. It's a tower in downtown Miami set to feature golden escalators, a gold statue of the president, and what appears to be one of the planes used as Air Force One in the lobby. Construction of the complex will be partly funded by millions of dollars that Trump collected from lawsuits involving Disney's ABC News, Meta Platforms, and Paramount, and he also directed his followers on Truth Social to a website soliciting donations. The new tower would be built on a parcel of land originally owned by Miami-Dade College and sit next to the city's Freedom Tower, the site where thousands of Cuban refugees were processed in the 1960s.

5:49A poll conducted in October found that about three-quarters of Miami voters said they were opposed to the land, which is valued at around$67 million, being used for the library. The project reveal comes as Florida Governor Ron DeSantis yesterday signed a bill allowing Palm Beach International Airport to be renamed after Trump, a move that'll be finalized in July. Coming up, why bonds aren't proving to be the safe haven that many investors hope for, and Netflix looks to go big on its NFL coverage. Those stories and more after the break.

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7:022026 was shaping up to be a banner year for Wall Street. Just ahead of the new year, economic growth was accelerating. The Federal Reserve appeared set to make further interest rate cuts, and markets had moved past fears of international trade disputes. And even when concern set in that the AI boom could drag down software stocks and cracks started to show in the private credit market, stocks kept on moving higher. But so much for that. Investors are now just hoping to avoid a global recession triggered by a historic run-up in energy prices, with U.S. stocks on track to deliver their worst quarter in nearly four years.

7:40So where can investors find safety amid the war in Iran? As the journal's Sam Goldfarb is here to discuss, the answer, lately at least, has been not very many places. Sam, your latest reporting revolves around bonds. Tell us what's going on in bond markets. So for about 20 minutes after the Iran war started, bonds were a place where you could seek safety. They rallied in a kind of traditional flight to safety move. But ever since then, they've been basically selling off. Yields on Treasuries rise when bond prices fall, so this sell-off has pushed yields higher. The yield on the 10-year Treasury note, which is the most closely watched one, has risen close to 4.5 % from being just a little bit under 4 % right before the war started.

8:23It was kind of this milestone that that yield had fallen below 4%. And then just like that, the war started and they started rising. And it's important because treasury yields kind of set a floor on interest rates across the economy. And the 10-year treasury yield is very important for setting mortgage rates. So as yields go up, mortgage rates go up. Mortgage rates had also fallen to multi-year low right before the war. Now they're back up to around 6.3 % on average. Yeah, yields very closely linked to interest rate expectations, as you mentioned. And another factor you write about is inflation fears, those fears rising now because of energy prices in particular.

9:01And that's something that we know the Fed uses in its long term rate outlook. So yeah, I mean, people are basically worried that the Fed might not cut rates or even raise rates because energy prices have gone up. And often the Fed will quote, quote, look through energy price swings when they're looking at inflation. But there's always concerns that energy prices are what people pay, and that if they're rising fast, it could feed into consumer expectations for inflation. And if everybody, investors, businesses, consumers are feeling inflation, expecting it to be high in the future, that that actually can feed into actual inflation.

9:38And so that's the dynamic that the Fed is concerned about. But you also have these other measures of interest rate expectations, basically like interest rate futures. And they also show that from before the war, people were expecting about two interest rate cuts this year. Now they basically think that the Fed is likely to not raise rates at all, and even have been pricing as high as 30 % of a chance that the Fed would raise rates this year. And finally, Sam, as we've discussed, there's already been a lot of bond market movement in the first few weeks of the Iran war. What's going to determine the road ahead from here?

10:10So far, signs that the war will continue have led to higher yields, sort of hopes that it'll end. I've seen it called Hormuz hopes. When there's Hormuz hopes, bonds have rallied. But investors keep on telling me this sort of psychology could change, the analysis could change. And even if if the war continues, that people could start worrying more about its impact on economic growth, which actually could be good for bonds and cause them to rally. And there are a lot of investors who are quite bullish on bonds right now and kind of expect them to rally eventually, whether the war goes on or not.

10:41That was Journal Markets reporter Sam Goldfarb in New York. Sam, thank you so much. Yeah, thank you.

10:50In other market news today, a key gauge of China's sprawling manufacturing sector has returned to growth this month, fueled by a rebound in business activity following an extended Lunar New Year holiday which landed in February this year. China's latest PMI data also showed a bounce back for both service and construction activity. While rising commodity prices and global freight costs because of the Iran war could risk a supply shock, economists suggest that should demand hold, China could once again expand its global market share, mirroring the manufacturing dominance that it saw in 2020. CVS is planning to open 60 new locations this year, including traditional storefronts, pharmacy-only sites, and outposts inside Target.

11:36The expansion follows years of downsizing, with the closure of more than 1 ,000 stores since the company announced plans to cut its retail footprint in 2021. The smaller pharmacy-only storefront is one way that CVS says it can address a rise in theft and competition from discount retailers that of her national drugstore chains in recent years. And finally, Netflix already airs NFL games on Christmas. But we are exclusively reporting that the streamer is now eyeing a four-game NFL package, including a Thanksgiving Eve and international game, as it looks to attract subscribers and grow its advertising business.

12:18That comes as the league takes a flexible approach to selling the games, with Amazon, Google's YouTube, and other broadcast partners also expressing interest. Netflix is currently in the final year of a three-year Christmas Day game package, where it paid roughly$75 million per game. And that's it for What's News for this Tuesday morning. Today's show was produced by Hattie Moyer. Our supervising producer was Daniel Bach. And I'm Luke Vargas for The Wall Street Journal. We will be back tonight with a new show. And until then, thanks for listening.

13:20Transcription by CastingWords to the Wall Street Journal. Visit subscribe.wsj.com slash takeontheweek to subscribe now.