- In today’s CEO Daily: Diane Brady on the Iran war’s immediate aftershocks for business leaders.
- The big leadership story: The Iranian conflict wreaks havoc in the Middle East’s financial hubs.
- The markets: Down as investors come to grips with another Gulf war.
- Plus: All the news and watercooler chat from Fortune.
Good morning. It’s hard to predict the future scope and scale of the U.S.-Israeli attacks on Iran, which began this weekend. The conflict quickly spread to Dubai, Doha, and other parts of the Persian Gulf, and business leaders are preparing for the worst. That means stress-testing contingency plans, communicating with stakeholders, checking supply-chain risk and all the other things that should be second nature to any global operator in a crisis. Some potential impacts for U.S. firms:
Energy Prices – Brent crude prices rose 10% yesterday to around $80 a barrel. If Iran closes off the Strait of Hormuz, where a fifth of the world’s oil passes, mostly bound for Asia, that price could hit $100. And crude remains a key driver of prices at the pump, with the U.S. Energy Information Administration calculating that a $10 increase in crude prices roughly translates to an additional 25 cents per gallon. Cheaper gas has been one area of relief for Americans struggling with a rising cost of living from tariffs, housing and sluggish wage growth.
Security – Iran, already a major source of state-sponsored cyberattacks, is likely to ramp up activity so it’s a good time to review protocols with staff. We’re already seeing signs of cyberwarfare as millions of Iranians got a message on the BadeSaba Calendar app on Saturday, saying help had arrived, with cyber operatives from Iran subsequently shutting down gas stations in Jordan. But physical security is also a top priority. One CEO told me this weekend that he thinks the safest city for expat business leaders in the Middle East right now is Riyadh—the Saudi capital’s airport is still open, though many flights have been cancelled, and it has a much larger military arsenal than neighbors like the United Arab Emirates. Still, he said, U.S. companies are likely to pause travel, expansion and investment plans until fears of a broader conflict are resolved.
Brand America – Bombs have an immediate impact on tourism and trade. In any major conflict, the classic investor reaction is to bid up defense stocks like Lockheed Martin and Northrop Grumman while selling off airlines, hotels, cruise operators and others that might suffer as regional travel is curbed and skittish travelers stay home. In the Gulf wars of 1991 and 2003, international travel to and from the U.S. took a hit and then recovered fairly quickly. But this conflict could accelerate worrying trends; travel to the U.S. dropped 6% last year as global tourism was booming. Ditto for the U.S. dollar. War is likely to boost the dollar’s short-term value as a reserve currency but may accelerate its longer-term decline amid economic concerns and other countries’ desire to reduce their dependence on the currency of a hostile and increasingly rogue trading partner.
Contact CEO Daily via Diane Brady at diane.brady@fortune.com
Top leadership news
War reaches Dubai
Iran’s retaliatory missile strikes on Dubai have shattered its image as a safe, tax-free hub, shutting airports, freezing Gulf airspace, and halting trade through Jebel Ali, the large commercial port. Canceled flights to and from Dubai and throughout the Middle East are hitting Asian airline stocks, which cratered Monday.
‘The 3% Solution’
A rare bipartisan coalition, backed by Ray Dalio, Scott Bessent, major think tanks, and editorial boards, is coalescing around a “3% Solution” to cap U.S. budget deficits at 3% of GDP, though reaching that goal would require painful tax hikes or spending cuts
Your grandparents’ economy
Wealthy baby boomers are propping up U.S. growth by driving consumer spending, funding AI investment, and generating health care jobs, even as they draw down savings and strain labor supply, making the economy more vulnerable to asset shocks and slower long-term growth.
The markets
S&P 500 futures are down 1.04% this morning. The last session closed down 0.43%. The STOXX Europe 600 was down 1.32% in early trading. The U.K.’s FTSE 100 was down 0.68% in early trading. Japan’s Nikkei 225 was down 1.35%. China’s CSI 300 was up 0.38%. Hong Kong’s Hang Seng was down 2.14%. South Korea’s markets are closed today. India’s NIFTY 50 was down 1.24%. Bitcoin was down to $66K.
Around the watercooler
American schools weren’t broken until Silicon Valley used a lie to convince them they were—now reading and math scores are plummeting by Sasha Rogelberg
Japanese companies are paying older workers to sit by a window and do nothing—while Western CEOs demand super-AI productivity just to keep your job by Orianna Rosa Royle
Slack cofounder says workers and CEOs can get stuck doing ‘fake’ work like pre-meetings and slide shows by Emma Burleigh
CEO Daily is compiled and edited by Joey Abrams, Claire Zillman and Lee Clifford.
