CWS Market Review – March 17, 2026

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“Ship me Somewheres East of Hormuz”

The stock market posted a small gain today. It was the second daily gain in a row. Thanks to some bearish sentiment earlier this month, March could go down as the weakest month in a year. Frankly, the stock market has been rather boring over the last few days.

Don’t get me wrong, I like a boring market. The big question now is how much of an energy shock the U.S. economy can handle. This is no longer 1973, so I suspect we can absorb a lot. So far, the impact on the stock market has been modest. I don’t know how long that will last but I’m sure a lot will depend on the Strait of Hormuz.

The oil shock has already been felt. Check out this chart from Gasbuddy for prices at the pump.

Last week, the government released a disappointing GDP growth report for Q4. I’ll go over the details in a bit, but first, I want to pay my respects to the late Paul Ehrlich.

RIP: Paul R. Ehrlich

Dr. Paul R. Ehrlich died on Friday at the age of 93. Ehrlich achieved a degree of fame in the 1960s and 70s with a string of pronouncements predicting that the planet was quickly headed towards mass starvation.

In 1968, he laid out his beliefs in the book The Population Bomb. He advocated that couples have no more than one or two children.

Ehrlich quickly became something of a celebrity apocalyptic. He appeared on Johnny Carson 20 times where he predicted famine and food riots. Ehrlich said 65 million Americans will starve to death.

The public loved it. The Population Bomb sold more than three million copies. In 1974, Ehrlich and his wife wrote The End of Affluence which held that “before 1985, mankind will enter a genuine age of scarcity.” Ehrlich later said, “If I were a gambler, I would take even money that England will not exist in the year 2000.”

You might say that he was a wee bit off. Or as the New York Times put it, “he faced criticism when his predictions proved premature.” Yes, premature.

There must be something deep down in the human psyche that refuses to believe that things are getting better and that Doomsday is coming next Tuesday.

I’ve been writing investment newsletters for 30 years and I certainly could have grabbed a bigger audience telling people that the world was done for.

In truth, being an investor means believing in a better tomorrow. Of course we have many problems that need urgent addressing, but we have to bear in mind the stunning progress that we’ve made.

A few years ago, Hans Rosling wrote a book called Factfulness which outlined how poorly people understood the trends of progress. Consider this question:

In the last 20 years, the proportion of the world population living in extreme poverty has…
A. Almost doubled.
B. Remained more or less the same.
C. Almost halved.

The answer is C. Only 5% of Americans got it right. In the last 20 years. Global poverty has fallen from 34% in 1993 to 10% in 2013. Longer-term, the global population living on an inflation-adjusted $2 a day or less is down from 50% in 1966 to 9% in 2017. An average of 100,000 people left extreme poverty every day for the last 35 years.

How about this question: How many of the world’s 1-year-old children today have been vaccinated against some disease?
A. 20%
B. 50%
C. 80%

Again, the answer is C: 80%, and now it’s closer to 90%. Only 17% of Americans got it right.

The end of the world was a big thing in the 1970s with movies like Soylent Green. In that movie, the world was dealing overpopulation, pollution and poverty. The movie takes place in 2022.

If you predict the Apocalypse and you’re wrong, you’re rarely held to account.

In 1980, the economist Julian Simon bet Ehrlich that the prices of five metals would go lower over the next 10 years, but Ehrlich thought they’d go higher. Simon allowed Ehrlich to pick the metals of his choice. Erlich chose copper, chromium, nickel, tin, and tungsten.

All five went down. Tin and tungsten fell by more than half. Ehrlich paid up. Over that decade, the world’s population increased by 800 million. Also in 1990, Ehrlich won a MacArthur prize.

In 1981, Simon wrote The Ultimate Resource which said that the world was not running out of resources. He said that the rise in price of a resource makes a greater incentive to extract it more efficiently. Simon said that adjusting for inflation and wages, the price for resources has been falling for decades. The ultimate resource is human ingenuity.

Academic studies have shown that over the long-term, stocks have beaten every other investment category. The key is that stocks are different from assets. Assets are things, like Ehrlich’s metals. They don’t do anything by themselves. Gold doesn’t do anything. It’s a metal (or element). Same for bitcoin, or a house. These assets only have economic relevance once they come in contact with people who can employ them.

It’s interesting that Ehrlich was completely unbothered by the fact that his predictions were wrong. This is something else you see a lot of in finance. For example, 65 million Americans didn’t starve to death, but Ehrlich kept right along. He even said, “My language would be even more apocalyptic today.”

So he got a few predictions wrong. It’s not the end of the world.

GDP Growth Revised Downward to 0.7%

On Friday, the Commerce Department said the U.S. economy grew by just 0.7% during the last quarter of 2025. That number is annualized and adjusted for inflation. Wall Street had been expecting growth of 1.5%. Last month, the initial report said the economy grew by 1.5% during Q4.

Here’s the quarterly growth rate of GDP for the last several quarters.

Thanks to the government shutdown, government spending fell by 16.7%. This was a big change from Q3 when the economy grew by 4.4%. For the whole year, the economy grew by 2.1%. Last year had the third-slowest growth of the last 14 years.

According to the BEA, the downward revision came due to adjustments in consumer and government spending and exports. A decline in imports, which technically subtract from GDP, also was less than the previous estimate.

Consumer spending rose 2% for the quarter, following a 0.4 percentage point downward revision that represented a decline from the 3.5% increase in the third quarter. The largest contribution for the downward revision from services, specifically health care spending, according to the release.

We also got the PCE numbers for January which is the Fed’s preferred measure of inflation. It showed that prices increased by 0.3% in January and by 2.8% over the last 12 months. Core PCE inflation rose by 0.4% in January, and by 3.1% over the last year.

The report also said that personal income and spending in January both increased by 0.4%, and the personal savings rate rose to 4.5%. Note that this data came before the start of military operations against Iran.

The Federal Reserve meets again tomorrow, and you can forget about any rate cut. The futures market currently has the Fed doing nothing at 99.1%. That’s about 0.89999% too low.

That threat of inflation, which was an issue before the war, is a bigger one now. Put it this way: baseball is currently in spring training, and traders don’t see the Fed cutting rates until three days after the regular season ends.

That’s all for now. The Federal Reserve’s policy statement will be out tomorrow afternoon. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

Posted by on March 17th, 2026 at 6:27 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.