Good morning, Andrew here. War fuels volatility, and the reactions are often as sharp as they are unpredictable. Oil prices are spiking this morning — and stocks are sliding — on fears of a prolonged conflict and looming supply shocks. There is also quiet concern that the war’s toll on the Chinese economy could pressure Beijing to intervene. Meanwhile, as supplies from the Middle East grow constrained, Russia is reaping the benefits of higher prices for its own crude. These crosscurrents may seem unexpected — but probably shouldn’t be. We have all of the details below. (Was this newsletter forwarded to you? Sign up here.)
Spillover effectMarkets and businesses remain on edge amid the continuing U.S.-Israeli attacks on Iran, after a record spike in crude oil prices overnight. The fighting threatens even more consequences for the global economy beyond energy markets, as President Trump has indicated that the attacks could continue for some time. Here’s the latest:
Global oil flows are dwindling. Iraq, Kuwait and the United Arab Emirates have cut crude production — and Saudi Arabia has begun doing so, too, Bloomberg reported this morning — as tanker traffic around the Strait of Hormuz, the vital waterway bordering Iran, remains largely paralyzed. Attacks over the weekend struck energy infrastructure (and desalination plants). The bottleneck also threatens to jack up shipping and food prices globally.
How bad could it get? Analysts say prices should fall if the disruptions ease. But Iran has enough drone firepower to inflict economic pain for months, they say. Ed Yardeni, a veteran market strategist, raised the odds for a significant market drop by year-end to 35 percent, from 20 percent. “The U.S. economy and stock market are stuck between Iran and a hard place currently. So is the Fed,” he wrote in a note to investors. The volatility is being felt beyond the energy markets. Many deal makers who had hoped 2026 would continue to see an increase in M.&A. now worry that the war may drive companies to postpone some transactions. (The crisis is adding to existing concerns like jitters in the private credit market.) “We are in a proceed-with-caution environment,” Michael Preston, a partner at the law firm Cleary Gottlieb, told Bloomberg. Trump is rebuffing critics of the war. He wrote on social media yesterday that a “short term” rise “is a very small price to pay for U.S.A., and World, Safety and Peace.” He added, “ONLY FOOLS WOULD THINK DIFFERENTLY!” The stakes for the fighting may yet rise: Axios reports that the U.S. and Israel had discussed sending special forces into Iran to seize the country’s enriched uranium supplies. But the political risks for Trump are growing. Democrats are hoping to use rising oil and gas prices as further proof of an affordability crisis that Republicans are presiding over, before midterm elections in November. (The unexpectedly weak jobs report on Friday doesn’t help Trump, either; nor does the fact that most Americans surveyed in various opinion polls disapprove of the military action.) Bettors on prediction markets like Kalshi now appear to believe that Democrats may take control of Congress, which would probably stymie Trump’s political agenda.
Live Nation is said to be close to settling its antitrust case with the Justice Department. Resolving the federal lawsuit, which accuses the company of illegally monopolizing the live music business, would not require Live Nation to divest its Ticketmaster subsidiary, Bloomberg reports. Shares gained in the premarket as investors hope that a settlement would remove some of the regulatory uncertainty hanging over the company. The partial government shutdown is causing airport chaos. Thousands of travelers were stuck for hours at U.S. airport security checkpoints yesterday as Transportation Security Administration workers, who have gone unpaid because of the lack of a funding deal for the Department of Homeland Security, didn’t show up to work. Artificial intelligence and inflation take center stage this week. Markets will be looking at the release of inflation reports on Wednesday (Consumer Price Index) and Friday (Personal Consumption Expenditures), for signs of consumer spending power before the attack on Iran. Tomorrow, Oracle reports earnings, giving investors a view into whether its huge spend on data centers is paying off. How China could take advantage of Iran in trade talksThe U.S.-Israeli attacks on Iran have unleashed wider geopolitical shock waves that can be felt as far as Beijing. It could have implications for talks between the U.S. and China that are pegged to Trump’s planned meeting with Xi Jinping, the Chinese president, in Beijing in a few weeks, Grady McGregor reports. China wants to preserve its economic ties with the region. China buys 80 percent of Iran’s oil exports, and the two countries signed a 25-year cooperation agreement in 2021. From 2019 to 2024, China invested $89 billion directly into the Middle East, according to the Eurasia Group. Last week, Beijing announced that it would send a mediator to the Middle East to try to ease tensions. It looks increasingly likely that the Trump-Xi meeting will go ahead. American and Chinese officials are expected to meet in Paris this month before the talks. And yesterday Wang Yi, China’s foreign minister, said “the agenda of high-level exchanges is already on the table.” He also said that war in the Middle East “should not have happened.” The fighting may not be all bad news for Beijing. A popular line of thinking among some Chinese analysts is that “regardless of if the Americans win or lose in Iran, China wins,” Andrea Ghiselli, a lecturer in international politics at the University of Exeter, told DealBook. That view is founded in the idea that a distracted U.S. military benefits China. Crucially, it draws U.S. focus away from core Beijing interests like Taiwan. Beijing has also hedged against disruptions to Iranian oil supplies by building substantial oil reserves, creating a dominant renewable energy industry and seeking additional crude from Russia. Trump has shown a willingness to defy Washington consensus on China. He has approved some Nvidia chip sales to the country, helped broker a deal to keep TikTok operating in the U.S. and delayed announcing a package of arms sales to Taiwan. “I think Beijing is more confident than ever in dealing with Trump,” George Chen, a Hong Kong-based partner at the Asia Group, a public policy consulting firm, told DealBook. Chinese officials also understand Trump’s desire for political victories. Analysts say Beijing has most likely prepared a slate of agreements including increased purchases of U.S. agricultural products and Boeing aircraft, as well as other investment deals. Still, some analysts don’t expect major breakthroughs. They add that Trump’s actions in Iran highlight a longstanding constraint on Beijing: uncertainty about his next move. “Surveillance of Americans without judicial oversight and lethal autonomy without human authorization are lines that deserved more deliberation than they got.”— Caitlin Kalinowski, a leader of OpenAI’s robotics team, in announcing her resignation from the company. Her departure comes after a series of employee complaints about the artificial intelligence giant’s deal with the Defense Department, announced shortly after the Pentagon’s negotiations with Anthropic fell apart.
Exclusive: MSNBC’s former chief teams up with Piers MorganRashida Jones spent more than a decade at MSNBC (recently renamed MS Now), including as the channel’s president from 2021 to early 2025. Her next gig: C.E.O. for Uncensored, the YouTube channel of Piers Morgan, Jessica Testa is first to report for DealBook. Jones has been tasked with expanding Morgan’s show into a full-fledged digital network. The role thrusts Jones into the more chaotic world of creators and emerging platforms: a booming landscape of podcasts, newsletters, social media video and livestreaming. And it reveals how seriously Morgan takes this new ecosystem. Uncensored has “the potential to be one of the biggest new media entities in the world,” Morgan said in a statement to DealBook. “Rashida is one of the sharpest minds in media, and her track record of building and transforming businesses speaks for itself.” (She’s unrelated to the actor who shares her name.) The new company expects to close its first round of funding this week, with at least $30 million, according to three sources familiar with the business who spoke on the condition of anonymity because they weren’t authorized to speak publicly. It had a $130 million valuation, not including the new investment. Investors include the Antenna Group, the Reuben Brothers and the Raine Group, which signed on last year as the company’s corporate adviser and led fund-raising negotiations. Morgan, like his new hire, is an expatriate of legacy media. He first found fame in the U.S. on reality television at NBC, then as a cable news host at CNN. He hosted a morning show on British network television from 2015 until 2021, when he departed dramatically — refusing to apologize for on-air criticism of Meghan, the Duchess of Sussex. That episode invigorated Morgan as a free speech advocate and critic of “woke” culture. He took sanctuary at Rupert Murdoch’s News Corp, where “Piers Morgan Uncensored” was initially developed. When his contract ended, he opted to break off, operating the show independently. “I’ve got one big play in me, and I think it’s got to involve ownership,” Morgan said he told Murdoch at the time. (He also joked to the magnate: “‘Don’t worry, you’ll be buying me for $200 million in a few years.’”) Morgan and Jones were introduced through Bradley Singer, one of his agents at WME. While “Piers Morgan Uncensored” is produced primarily in London, Jones will remain based in the U.S. Her focus will be adding more shows in categories like sports, true crime and entertainment. The budding network’s first spinoff, “History Uncensored,” debuted in December and is hosted by Bianca Nobilo, the former CNN anchor. “This is not one show by one creator,” Jones said, “but a network of content.” We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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