How One Central Banker Is Sizing Up the Iran War

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Luke Vargas (0:33)

Markets hold their breath ahead of President Trump's looming deadline to take out Iran unless it reopens the Strait of Hormuz. Plus, how should central bankers respond to the ripple effects of the war? We'll ask one.

Pierre Wunsch (0:46)

If we are not at the end of it by June, we're probably going to have too high crates. But if it would morph in some form of financial crisis or tension in financial systems, then it truly becomes much more difficult to manage.

Luke Vargas (0:58)

And Bill Ackman makes a play for the world's largest music company. It's Tuesday, April 7th. 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.

Iran and the US are rejecting each other's diplomatic offers. Just hours ahead of President Trump's deadline to start bombing Iran's bridges and power plants unless it opens the Strait of Hormuz. We report that Iran has rejected a proposal from Washington that would have seen a 45-day pause in fighting in exchange for reopening the strait, saying that it wanted a permanent ceasefire, the lifting of sanctions, compensation for war damages, and a new arrangement for governing the strait going forward. In response, President Trump said that Iran's proposal was, quote, not good enough, but it's a significant step. US stock futures are flat and oil prices are hovering around $110 a barrel ahead of this evening's deadline. US health insurance stocks are rallying off hours after the Trump administration said it would boost 2027 Medicare Advantage payments by almost 2.5 percent. That dramatic increase, which represents about $13 billion in additional payments to insurers, comes after an earlier proposal to hold payments flat drew fierce criticism from the industry and torpedoed shares back in January. While the move signals strong federal support for the private insurer program, officials are proposing to eliminate a lucrative billing practice by requiring that diagnoses be linked to specific medical services, a new rule that's meant to prevent insurers from receiving payments for medical chart reviews that lack an associated doctor visit. Samsung is forecasting a more than 8-fold jump in its Q1 operating profit as demand for its AI chip source. Journal tech reporter Ji-Yong Son says it's a major reversal of fortune for Samsung, who just over a year ago had simultaneously yet to make a splash with its specialized HBM memory chips used in data centers and was seeing its more conventional chips pile up on shelves.

Ji-Yong Son (3:16)

A year ago, these conventional memory chips were in a demand slump. But today, they're in a massive shortage, mostly because demand has bounced back for data servers that are now needed to support all the AI models that are being used today. So AI has basically put Samsung in a very good position. They're continuing to see strong demand for HBM, while prices of conventional memory chips are surging exponentially. As a result, Samsung shares are performing very well. They're up more than 60% since the start of the year, and that's even as markets have remained volatile due to the Middle East conflict.

Luke Vargas (3:47)

Meanwhile, fellow South Korean consumer electronics giant LG is forecasting a Q1 earnings rebound, with profitability slated to improve as it beefs up production in the US to avoid tariffs.

Bill Ackman's Pershing Square Capital is offering to buy Universal Music Group, whose roster includes the likes of Taylor Swift, heard there, Kendrick Lamar, and Billie Eilish. Pershing Square said the transaction, which would involve a new entity listing on the New York Stock Exchange, is expected to close by year's end. Universal didn't immediately respond to a request for comment. The deal would value the company at around $60 billion, and its stock is soaring on news of the offer. And Amazon and the US. Postal Service have made a deal. After threatening a two-thirds pullback in the number of packages that it ships through the USPS, we exclusively report that a tentative agreement will lead to just a 20% reduction in volume. If approved, the deal would avoid a major revenue drop for the struggling post office and avoid delivery headaches for Amazon, especially in rural areas. Coming up, will the shock of the Iran War force Europe into interest rate hikes before the summer, and we'll look at the brands saying no to AI slop in their ads after the break. Legal teams face more data and more scrutiny than ever. They need AI built for both. Relativity is the AI platform for legal work, delivering defensible AI that handles the tedious tasks so judgment stays where it belongs, with you. Learn more at relativity.com/wsj. A month into the Iran War, Gulf oil and gas remains mostly locked off from the world. Energy prices keep rising, and even with second-order effects caused by fertilizer shortages or disrupted shipping still months off, we are already seeing higher inflation cropping up in official statistics. So how should a central banker react? Do nothing? Well, you risk higher prices being baked into an economy still scarred by the pandemic or raise rates and risk sapping economies of their growth potential. One central banker facing just such a decision later this month when he'll vote on the European Central Bank's next rate move is Pierre Wunsch, the governor of the National Bank of Belgium. Governor, thank you so much for being with us on What's News.