Good morning. Andrew here. I just got back from Washington, where everyone is quietly asking an interesting question: If oil prices continue to climb amid the war in Iran, will President Trump seek a quicker end to the conflict? With the midterm elections just months away, will the cost of oil dictate America’s strategy in the Middle East? We go deep on the latest developments and what comes next. (Was this newsletter forwarded to you? Sign up here.)
“If they rise, they rise”Wall Street has so far weathered the Iran war fairly well. U.S. markets have been volatile, but the S&P 500 is just 2 percent off its record. Households and businesses are feeling the aftershocks more acutely, however. That could carry political costs for President Trump ahead of the midterms. Consider:
Trump is not wavering, though. He ran his campaign on promises to bring down prices. Until this week, low gasoline prices have been one bit of data he could point to, even singling it out in last week’s State of the Union address. But his thinking appears to have shifted since he authorized attacks on Iran. Gasoline prices will “drop very rapidly when this is over, and if they rise, they rise,” he told Reuters yesterday. He added: “This is far more important than having gasoline prices go up a little bit.” Still, the administration has a Strait of Hormuz problem. The waterway that borders Iran is a vital route for oil and natural gas exports. Today, the Joint Maritime Information Center, which monitors threat assessments on high-risk shipping routes, said that maritime traffic in the region was essentially paralyzed. Analysts warn that unless trade flows resume soon, the global supply of oil could be severely pinched, triggering big price jumps. Trump has floated a plan to provide safe passage for tankers and to offer government-backed insurance to shipping companies. And yesterday, the market pared some losses after Reuters reported that the Treasury Department was weighing intervening in the oil futures market in an effort to keep a lid on prices. But administration officials have ruled out that plan for now, Bloomberg reported, citing unidentified sources. “Our traders are not taking it seriously,” Tom Price, the head of commodities strategy for Panmure Liberum, a London-based investment bank, said of the possibility of direct intervention in the oil markets. Such a move could backfire, he told DealBook’s Bernhard Warner, because it could destabilize confidence in a market that’s already on edge.
States sue to block President Trump’s new tariffs. A group of two dozen states filed suit to stop Trump from imposing new 10-percent tariffs to replace those struck down last month by the Supreme Court. The states, led by the Democratic attorneys general of Arizona, California and New York, said Trump did not have the power to use Section 122 of the Trade Act of 1974 to “sidestep” the high court. It adds to the legal challenges the administration faces in trying to reinstate a key piece of Trump’s trade policy. Economists believe hiring slumped in February. Ahead of the employment report this morning, forecasters polled by FactSet expect that the U.S. added 70,000 jobs last month, down from 130,000 added in January. The unemployment rate is forecast to have held at 4.3 percent, which, combined with elevated inflation, may keep the Fed from cutting interest rates any time soon. Elsewhere, Oracle is planning thousands of layoffs as it faces a cash crunch caused by its heavy investment in data centers, Bloomberg reports. The S.E.C. drops a case against a crypto partner of the Trump family. The agency settled a lawsuit against Justin Sun, a Chinese-born billionaire accused of market manipulation, for $10 million. (After Trump’s re-election, Sun bought $75 million worth of a cryptocurrency associated with a Trump family business.) The administration has eased up on enforcement actions involving crypto; the president also pardoned Changpeng Zhao, the co-founder of the crypto exchange Binance who was convicted of money-laundering violations. What you need to know about A.I. todayThe Pentagon officially notified Anthropic that it was a “supply chain risk,” a designation that officially limits how much business a company can do with government contractors. (It’s a label usually applied to the likes of Huawei.) Dario Amodei, the A.I. start-up’s C.E.O., wrote in a statement that the company would fight the Defense Department’s move, which he believed wasn’t “legally sound.” Amodei also wrote that the notice suggested other companies couldn’t use Anthropic tools in their military work, a standard that falls short of more sweeping threats made by Defense Secretary Pete Hegseth. He argued that this supported Anthropic’s contention that most of its enterprise customers didn’t need to switch to another A.I. model. Uncertainty descends on potential new rules for A.I. chip exports. The Commerce Department has drafted regulations that would require companies like Nvidia and AMD to get U.S. permission to move advanced processors out of the country, according to Bloomberg. The idea isn’t necessarily to stop any sales of A.I. chips overseas, but to make companies seek Washington’s permission to buy them. But the Commerce Department wrote on social media after Bloomberg’s report was published that it would not return to the “diffusion rule,” a Biden-era regulation that set caps on A.I. chip exports. (Speaking of exports, Nvidia has halted production of H200 chips meant for the Chinese market, according to The Financial Times.) OpenAI backs away from one-stop shopping within ChatGPT. Checkouts for purchases of products found via ChatGPT search would take place in linked apps, instead of inside the chatbot itself, a representative for the A.I. giant told The Information. OpenAI’s initial plan was intended to make ChatGPT a one-stop shop for online commerce, a prospect that threatened to eat into other companies’ businesses. Shares in consumer tech companies, including Booking.com and Expedia, soared on the news. Martin Peers of The Information wrote that the episode reflected OpenAI’s “rather chaotic approach to product development.”
Trump blasts his way into the crypto bill debateThe crypto and banking lobbies have met several times at the White House for weeks seeking a deal on a regulatory framework for digital tokens. Neither side had been willing to bend enough to break the stalemate. But an impatient President Trump made his feelings on the standoff very clear. That could be enough to swing the balance of the talks, Niko Gallogly reports. “The banks are hitting record profits, and we are not going to allow them to undermine our powerful crypto agenda,” President Trump wrote in a Truth Social post Wednesday. “Americans should earn more money on their money,” Trump wrote, reiterating a line often repeated by Brian Armstrong, the C.E.O. of Coinbase. Armstrong torpedoed an earlier version of the legislation in January, shortly before the bill, known as the Clarity Act, headed to a vote in the Senate Banking Committee. The move vexed the Trump administration, which wants to reach a deal before the 2026 midterms. But Armstrong has won back the White House. Trump’s criticism of the banks came shortly after a meeting with the Coinbase C.E.O. And the president’s backing is a major win for the crypto lobby: The odds of the bill passing before the end of the year surged immediately on predictions markets. “The White House stepping into the negotiations and pressing banks to engage constructively has added meaningful momentum,” Summer Mersinger, the C.E.O. of the Blockchain Association, a crypto trade group, told DealBook. Stablecoin showdown: A major sticking point is whether crypto companies can give interest-like rewards to owners of stablecoins, the digital tokens whose value is pegged mostly to the dollar. The stablecoin market has ballooned to more than $300 billion and has become a major revenue source for crypto exchanges and issuers. Stablecoin revenue made up roughly 20 percent of Coinbase’s revenue last year. Banks argue that allowing stablecoins, which are not backed by the F.D.I.C., to pay interest poses a risk to consumers. “If you are going to be holding balances and paying interest, that’s a bank,” Jamie Dimon, JPMorgan Chase’s C.E.O., said in a CNBC interview this week. “You should be regulated like a bank.” A deal is still in play, despite the public brawls. The Republican chairman of the Senate Banking Committee, Tim Scott, is expected to put forward a vote on an updated version of the bill by March 15, a person with knowledge of the matter told DealBook.
Talking A.I. with the C.E.O. of 8amEvery week, we’re asking a leader how he or she uses artificial intelligence. Dru Armstrong, who heads 8am, a maker of scheduling management software for professionals like lawyers and accountants, told DealBook that the company set up a committee to assess which A.I. tools to use. Her answers have been condensed and edited. How do you personally use A.I.? I just finished going through treatment for breast cancer. When you meet with an oncologist, oftentimes you’ve got a very short window to get their opinion on what are pretty life-altering decisions. With generative A.I., you can say, can you lead me to the actual studies? When I had my follow-ups, I would put together an agenda with a series of questions — citing the different trials, trying to understand how those trials apply to me — in the same way I would prep for a board meeting or an important client conversation. What have you told your employees or direct reports about using A.I.? It’s transformational for a fintech business: We expect that our engineers will be twice as productive by the end of this year than they were a year ago. How hard is it to achieve those results? I think the risk is twofold. One, everyone is using these tools to unlock productivity gains and you get left behind because you’re not using them. But you can also spend a ton of money and have very little result, which is super inefficient and frankly distracting. We have a Gen A.I. committee that looks at the proposed tools that different parts of the company want to use. We ask them to test the tools, trial them and experiment. Then there’s a point where things need to stop being experiments and either be fully implemented or gotten rid of. We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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