Axios

Israel's relationship with Democrats on Capitol Hill is rapidly deteriorating, with a growing number of lawmakers saying they can no longer support U.S. funding for even the country's defensive weaponry.

Why it matters: Opposing the use of American taxpayer dollars to fund Israel's Iron Dome missile defense system was "seen as insanely fringe four years ago," Rep. Maxwell Frost (D-Fla.) told Axios. No longer.

Both the S&P 500 and the Nasdaq Composite hit new all-time closing highs on Wednesday.

Why it matters: Stocks are soaring on hopes that the Iran war will fade and on signs that Americans are continuing to spend — despite rising prices at the pump and souring sentiment.

As Israel's Security Cabinet convened on Wednesday to discuss a potential ceasefire in Lebanon, a U.S. official told Axios that President Trump would "welcome and be happy with an end of hostilities."

Why it matters: The ceasefire proposal is politically sensitive for Israeli Prime Minister Benjamin Netanyahu. And while the two tracks are officially separate, it could help President Trump reach a peace deal with Iran.

To understand what the global economy will do this year, you have to understand what happens next in the Iran war.

• The outlook for the war and its aftermath, and what that means for the free passage of energy through the Strait of Hormuz, is the global economic outlook.
• That's the uncomfortable reality hanging over the International Monetary Fund and World Bank Group spring meetings this week.

Why it matters: The economic pain is uneven: Poorer countries that import their oil carry the heaviest weight.

• The U.S. — the country that started the conflict — is poised to suffer the least economic damage, by almost every measure.
• Still, a prolonged surge in prices for gasoline, diesel, jet fuel, fertilizer and more would exact a toll in the U.S.

The intrigue: There is little else on the minds of finance ministers, central bankers and other policymakers meeting in D.C. this week but the shock that is rattling their respective economies.

Consider the economic forecast that set the tone for the meetings. The IMF slashed its global growth forecast as it predicted a surge in inflation this year.

What they're saying: "The impact of the war will be uneven," IMF chief economist Pierre-Olivier Gourinchas told reporters on Tuesday.

• Alongside a baseline scenario, the IMF released two other forecasts in the event of a more prolonged conflict: an adverse scenario of a sharper economic slowdown and a more severe scenario that has the global economy flirting with an outright recession.
• But the growth hit for poorer nations would be twice as large as that for richer nations, the IMF said.
• "Every day that passes and every day that we have more disruption in energy, we are drifting closer toward the adverse scenario," Gourinchas said.

Zoom out: "The U.S. isn't vulnerable. It's the Asian countries who are," Treasury Secretary Scott Bessent told reporters when asked about the Strait of Hormuz blockade imposed earlier this week.

• "I can say that the president signaled that it would be a four- to six-week process ... and I think we're close to that," top White House economist Kevin Hassett told Axios.

The bottom line: Even if the U.S. escapes the worst, it still faces higher commodity prices — especially at the pump.

• Will inflation pressures at home eventually force President Trump to seek a quicker end to the war?

Former World Bank president David Malpass told Axios: "It's a clear supply shock — and so that's not just oil and natural gas, but in other products that are coming through the Strait of Hormuz. That takes time for the world to adjust to."

• "But my observation is markets are really good at adjusting to a supply shock."

U.S. and Iranian negotiators made progress in talks on Tuesday, moving closer to a framework agreement to end the war, two U.S. officials said.

Why it matters: The two adversaries — with the assistance of Pakistani, Egyptian and Turkish mediators — have been trying to bridge remaining gaps and reach a deal before the ceasefire expires on April 21.

The U.S. Air Force is developing and deploying refueling adapters for the A-10, giving the beloved-but-aging attack aircraft additional means of staying aloft.

Why it matters: The A-10, often referred to as the Warthog, has played a key role in Operation Epic Fury.

• The warplanes have strafed boats in the Strait of Hormuz and aided the rescue of an F-15E Strike Eagle pilot and weapon-system office deep inside Iran.

The S&P 500 just took a round-trip — the stock benchmark for investors has recovered, and then some, from a war-driven selloff.

Why it matters: It's a split-screen moment: investor enthusiasm happening alongside the biggest energy shock in history, a rise in inflation and warnings about slower economic growth.

The U.S. launched a killer-drone competition in February. It was won, according to public leaderboards, by a small British company with frontline Ukrainian experience and a manufacturing footprint in Atlanta.

Why it matters: Skycutter's stateside success, after flying well under the radar, is a reminder that:

1. Flash does not necessarily signal substance;
2. Innovation exists outside the big-money bubbles of Silicon Valley and Washington;
3. And the Russia-Ukraine war is influencing the battlefield tech of today and tomorrow.

The percentage of Americans holding favorable views of China rose for the third straight year, according to an annual Pew survey, and has nearly doubled since 2023.

• Meanwhile, the share of Americans who view China as an "enemy" has fallen significantly over that time.

Why it matters: Distrust of China hardened into a bipartisan consensus beginning in Trump's first term. It's now softening somewhat during Trump 2.0.