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This is Washington Edition, the newsletter about money, power and politics in the nation’s capital. Every Friday, Bloomberg Intelligence senior analyst Nathan Dean gives his insights into what’s been happening and what’s coming up in the nooks and crannies of government and markets. Sign up here. Email our editors here. Talking it OutAs I write this, Vice President JD Vance is on a plane heading to Islamabad, Pakistan, to start negotiations with Iran over an end to the conflict. To say a lot is riding on it is a major understatement, especially as both sides begin to stake out positions ahead of the peace talks. So that raises the question: How should we think about this weekend? Let’s start with the geoeconomic strategists. For those of you with Bloomberg Terminals, Bloomberg Economics analysts Jennifer Welch and Dina Esfandiary detail how President Donald Trump essentially has two options: Re-engage the military — keeping the Strait of Hormuz closed for now and sending oil prices higher — or make a deal. Their current view is that Trump wants out and probably is willing to pay a price, so option two could be in the cards. Is that price allowing Iran to retain some form of control over the Strait of Hormuz? Unclear, though Trump has warned Iran not to charge fees for ships transiting the strait. We’ll see what happens, but keep in mind that some analysts are expecting oil to test “wartime highs” if the waterway remains closed beyond May. 
Ships of all types were seen on Wednesday morning clustered on either side of Hormuz, around Dubai in the Persian Gulf and Khor Fakkan in the Gulf of Oman.
via Bloomberg
But what about the actual negotiations? Jennifer Kavanagh, Director of Military Analysis at Defense Priorities, said on Bloomberg Television today that “success” could be just an agreement for another meeting. Yet Bloomberg News’ Patrick Sykes writes that this weekend’s negotiations could be rougher than the negotiations that took place in February. That is, don’t expect a major agreement to be solidified this weekend. And for more on the negotiations — as well as a deeper dive on how the conflict impacts China, Russia and NATO — my colleague Elliott Stein and I hosted Bloomberg Intelligence Senior Defense Analyst and Retired Army Colonel Wayne Sanders on our podcast “Votes and Verdicts”. Here’s the Apple and Spotify links. What Else To Know This Weekend
Today’s Top NewsThe war in Iran has fueled the biggest jump in US inflation in nearly four years and sent consumer sentiment tumbling to a record low. Economists say that’s just the beginning. 
In another sign of just how punishing higher gas prices are for some Americans, pawn shop owners across the US say they’ve seen an increase in demand for loans in the past month or so. 
Jewelry being displayed at a pawn shop.
Photographer: Pedro Pardo/AFP/Getty Images
Pope Leo XIV challenged the Trump administration’s argument that God is on the side of the US in the conflict with Iran, the latest in a series of rebukes even as the Vatican and the White House denied any rift. A group of small businesses and 24 mostly Democrat-led states urged a panel of trade judges to vacate Trump’s latest global tariffs, arguing that they were issued improperly under an outdated law. US-China relations risk becoming more complicated if Beijing’s involvement with Iran hurts American interests, US Trade Representative Jamieson Greer said as Trump and Chinese counterpart Xi Jinping are preparing for a summit. White House Deputy Chief of Staff James Blair is considering a temporary leave of absence to helm Trump’s political organization during the midterm elections. A present for Santa: The Treasury Department and IRS clarified that celebrity and character impersonators — including holiday party Santas — can deduct up to $25,000 in tipped wages from their taxes. Must Reads From Bloomberg GovernmentA rare bipartisan immigration bill triggered a Republican feud this week, highlighting a widening divide between GOP hardliners and moderates amid backlash to Trump’s deportation policies. The Foreign Intelligence Surveillance Court has renewed its approval of a controversial spy law that permits US intelligence agencies and law enforcement to collect the communications of foreign citizens in certain circumstances, according to three people familiar with the process. Watch & ListenToday on Bloomberg Television’s Balance of Power early edition at 1 p.m., host Kailey Leinz interviewed Republican Representative Nicole Malliotakis of New York about the ceasefire with Iran and whether the GOP will try a strictly party-line funding bill for Homeland Security and other priorities. 
On the program at 5 p.m., she talks with former Defense Secretary Leon Panetta about the ceasefire negotiations and attempts to get ship traffic moving through the Strait of Hormuz. She also interviews Florida Democratic Representative Debbie Wasserman Schultz. 
Chart of the Day
The collapse in consumer sentiment is the headline, as noted above, but another measure in the University of Michigan’s latest survey may have bigger implications for this year’s midterms: Americans’ views of government economic policy have fallen to the lowest level on record. Only 11% say the government is doing a good job managing the economy, while 71% say it’s doing a poor job. New presidents typically get a brief honeymoon as voters give them time to implement their economic program, but Trump’s second-term trajectory has mostly been straight down, with the index now well below levels seen during past periods of inflation, recession and financial crisis. It’s not just that voters feel frustrated by rising prices. They’re skeptical that policymakers have a plan to turn them around. — Gregory Korte What’s NextExisting home sales in March will be reported on Monday. The Senate is scheduled to return to Washington Monday and the House on Tuesday. The producer price index for March is scheduled for release on Tuesday. Export and import prices will be reported on Wednesday. The deadline to file tax returns is midnight Wednesday. Industrial production in March will be reported on Thursday. More From BloombergLike Washington Edition? Check out these newsletters:
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