Stocks closed lower yesterday after it was reported that the U.S. will reimpose the Iranian blockade of the Strait of Hormuz, and charge a 20% fee for other ships safe passage thru the waterway.

President Trump said America will be the "guardian of the Hormuz Strait," and declared "it's open, and will remain open, with or without Iran."

The President asserted that, "as a matter of fairness," the U.S. is charging this fee as a reimbursement for the "costs necessary to do the job of providing safety and security to this very volatile section of the world."

Iran has been firing on ships in the Strait, and attacking U.S. assets in Gulf countries, in violation of the Memorandum of Understanding. That's led the U.S. to launch retaliatory strikes against Iranian targets.

Things to watch in the coming days are the details on how this fee will be calculated and paid.

Additionally, the International Maritime Organization said that "it stands firmly against charging fees for passage through the straits used for international navigation." (They have been consistent is this stance, objecting to Iran's proposed fee as well.)

We'll also have to see if the U.S. maintains this fee, if it's reduced, or if it was just a negotiating tactic. We shall see.

Crude oil was up 9% on the news. And that weighed on stocks.

Not much in the way of economic reports yesterday.

But today, all eyes will be on the Consumer Price Index (CPI ? retail inflation) report.

Given that recent increases in inflation were tied to a rise in oil prices, but oil prices have since fallen after the Memorandum of Understanding was signed, the belief is that inflation numbers could be softer today. And that would be welcome news.

But given the new developments in the Middle East and the spike in oil, those soft numbers might be considered old news, if they even come.

The headline number is expected to be down -0.1% m/m vs. last month's 0.5%. The y/y rate is estimated to come in at 3.8% vs. last month's 4.2%. The core rate (ex-food & energy), is forecast to be up 0.2% m/m, with the y/y rate consensus coming in at 2.9%, unchanged from last month's pace. That comes out at 8:30 AM ET.

We'll also get the NFIB Small Business Optimism Index.

Additionally, we'll hear from Fed Chair Kevin Warsh this morning as he gives his first semi-annual testimony before the House Financial Services Committee today.

He'll do it again on Wednesday when he appears before the Senate Banking Committee.

Tomorrow, we'll also get another look at inflation with the Producer Price Index (PPI ? wholesale inflation) report.

This week we'll also start getting earnings from big banks, as this will mark the unofficial start of earnings season. Today we'll hear from Bank of America, JPMorgan Chase, Citigroup, and Goldman Sacks.

Earnings season is always an exciting time since stocks typically go up during earnings season.

We'll see if that can firm up prices after yesterday's volatility.

See you tomorrow,