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October 12, 2026

Good morning. Andrew here. We’re tracking the fallout from the latest attacks on Saudi Arabia, especially on its main airport — including whether the U.S. will join Saudi retaliatory strikes and whether the violence will deter attendees from this month’s F.I.I. conference. We’re also analyzing the blowback to President Trump’s decision to allow Russian diesel sales.

Also, pay attention to an essay by Satya Nadella of Microsoft published over the weekend about building A.I. systems that prioritize human verification over blind trust. He argues that relying on human oversight is crucial for safety but also says it creates a verification tax — a concept we highlighted on Saturday — that could significantly offset A.I.’s promised productivity gains. (Was this newsletter forwarded to you? Sign up here.)

Saudi Arabia won’t be deterred by Houthi strikes, including on the country’s biggest airport, Prince Abdulaziz bin Salman, the Saudi energy minister, said. Fayez Nureldine/Agence France-Presse — Getty Images

How will Saudi Arabia respond?

Saudi officials were defiant today after a series of devastating attacks by the Iranian-backed Houthi militia of Yemen, whose government Saudi Arabia backs. The violence included strikes over the weekend on the airport in Riyadh, the capital, that have killed at least 14 people.

Government leaders tried to show that it was business as usual, including by going forward with a major energy conference. But the violence raises questions about how the country’s core industries will cope — and what that might mean for global markets.

The latest:

Saudi Arabia risks being further entangled in the war. The military coalition fighting the Houthis said it had intercepted missiles and drones aimed at Saudi Arabia and promised a “decisive” response.

But the assault on Saturday was the single deadliest in more than a decade on Saudi Arabia, and it followed a recent attack on a facility owned by Aramco, the Saudi-controlled oil giant.

“The word ‘fear’ in the Saudi dictionary does not exist,” Prince Abdulaziz bin Salman, the Saudi energy minister, said in a speech opening the World Petroleum Congress.

The country has been determined to show that it will continue both to provide energy security and to proceed with major international events. Those include the headline conference for the Future Investment Initiative Institute, a forum nicknamed “Davos of the Desert” that is scheduled to take place in Riyadh this month and is to feature top global C.E.O.s like Jamie Dimon of JPMorgan Chase and Larry Fink of BlackRock.

But there are still major disruptions:

Amid questions about whether the F.I.I. conference would go on, the institute said yesterday that it would proceed, with “comprehensive security measures” in place at airports and hotels.

The bigger picture: The Houthi attacks have struck at the ambitions of Prince Mohammed bin Salman, Saudi Arabia’s de facto ruler, to remake his country into a hub not only for oil but for business and tourism, too.

It’s unclear what President Trump is willing to do to help Saudi Arabia, a key American ally, to confront the Houthis, who so far have refrained from attacking U.S. ships in the region.

The Justice Department questions TV networks over their coverage of the White House. Federal prosecutors on Friday began investigating whether five networks violated federal antitrust laws by collectively suspending their pooled coverage of President Trump after he barred CNN reporters from the White House. The move is the latest in the administration’s ongoing pressure on the press.

The E.U. caps imports of Chinese hybrid cars. The bloc and China agreed to limit the number of imports to 350,000 cars in the first year of a four-year deal. Brussels has been trying to reduce a trade deficit that exceeds $1.1 billion a day while avoiding a full-blown trade war. The deal still must be approved by E.U. member states.

Elon Musk has backed Republicans with more than $276 million since July. He gave $158 million to the Senate Leadership Fund, a major super PAC, and $76 million to America PAC, which he founded to improve turnout among Republican voters. His contributions make him the largest known donor in the midterms.

A broken ‘energy cease-fire’?

Another conflict is weighing on energy markets as traders gauge the seriousness of President Trump’s declaration of an “energy cease-fire” between Russia and Ukraine.

Trump appeared to hope that a pause in fighting would help lower soaring diesel prices before the midterm elections. But the combatants in the war have not confirmed that there is such a deal, and lawmakers in Washington pushed back.

President Volodymyr Zelensky of Ukraine accused Russia of breaking the cease-fire. At a security conference in Warsaw today, Zelensky said that “Russia launched a targeted strike” on Ukrainian power and gas structures overnight.

That, Zelensky said, came hours after Trump wrote on Truth Social yesterday that “effective immediately there is an ENERGY CEASEFIRE” between Russia and Ukraine. Trump added, “Both parties have agreed. Do not break it!”

“For now, this is Putin’s answer to Trump,” Zelensky said in an online address, referring to the strikes and to Vladimir Putin, Russia’s autocratic leader.

The context: The declaration, which followed the White House’s lifting of sanctions on imports of Russian diesel, appeared to take Zelensky by surprise.

But it followed weeks of complaints by Trump about Ukraine’s attacks on Russian oil refineries, which have put Moscow under increasing economic pressure. Trump has blamed those strikes for the elevated diesel prices.

Zelensky, facing the prospect of a clampdown on arms from the U.S., said that Ukraine would be “ready to respect an energy cease-fire if Russia is ready to do the same.”

It’s unclear how much Trump’s move will affect fuel prices. The average price of diesel drifted down to $6.28 a gallon in the U.S. after his social media post.

But analysts said that the effect of Russian exports on diesel prices would be minimal at best. The amount that Russia would supply now would be the equivalent of about three-quarters of what the U.S. uses in a day.

Trump is facing pushback even from congressional Republicans. A bipartisan group of seven senators pushed back against Trump’s move to temporarily lift sanctions on Moscow in order to import Russian diesel.

The U.S. “should not provide Putin with a financial lifeline while Russia continues to kill Ukrainian civilians,” the group wrote. “The administration must immediately reverse course.” It said that a 2022 law banned Russian energy imports to the U.S.

A Nobel for work to make economies more stable

The Nobel Memorial Prize in Economic Sciences was just announced, and its winners — two American economists whose work helps guide policies aimed at reducing economic volatility — underscore a key challenge facing central banks.

Who won today: Stanford’s Robert Hall and Columbia’s Michael Woodford, who will split a $1.2 million prize.

Their research focuses on “microeconomic foundations of macroeconomic stabilization,” with Hall studying economic demand and Woodford looking at supply and at companies’ price-setting behavior.

Their work shows how individual households and businesses affect the broader economy — and how they’re influenced by forward-looking pronouncements by governments and central banks, according to the announcement from the Royal Swedish Academy of Sciences, which awards the prize.

From the academy’s citation: The economic models from Hall and Woodford “have been extremely helpful in dealing with the economic downturns that have affected us.”

The caveat: Forward guidance has fallen out of favor in recent years in the face of new supply shocks, The Wall Street Journal notes.

And Kevin Warsh, the Fed chairman, has said he would move away from such tools, potentially risking more economic volatility, at least in the short term.

Orbital data centers’ space-junk problem

SpaceX’s head of artificial intelligence infrastructure, Michael Nicolls, said last week that the company would put data centers in orbit beginning next year as Google, Blue Origin, China and others race to build space-based computing facilities for A.I.

But the breakup of a Soviet-era weather satellite last week underscores a real risk to tech companies’ space plans: growing amounts of “space junk,” Vivienne Walt reports.

SpaceX is moving ahead with its plans. The company intends “to take A.I. compute off of Earth and put it into space,” Nicolls, who leads SpaceX’s Starlink satellite internet network, told a gathering of governments, scientists and investors last week in Turkey.

SpaceX’s orbital data centers are expected to dwarf Starlink, which now operates 60 percent of the world’s active satellites.

A recent “debris-generating event” highlighted the dangers of space junk. LeoLabs, which tracks satellites and orbital debris, said last week that a decades-old satellite appeared to have suffered an incident that “resulted in an estimated tens of fragments that may pose a threat to surrounding spacecraft.”

The growing amount of junk could cause accidents. Analysts fear that a collision in an increasingly crowded low-earth orbit could knock out communications crucial to global finance.

The Organization for Economic Cooperation and Development, which tracks major economies, estimated last month that nearly $200 billion worth of business is exposed to space debris, with risks rising fast.

A lot of close calls: Nicolls said SpaceX conducted a thousand “collision-avoidance maneuvers” a day, about one every 90 seconds. On the chances of a serious incident, he said, “the law of large numbers says if it can happen, it will happen.”

The European Space Agency warned last month that space was overcrowded and that “active debris removal is required.”

Companies are entering the space-cleanup business. Astroscale, a space-servicing company, has a contract with Eutelsat OneWeb, a European broadband service, to move one of its satellites next year to a lower orbit, where it will burn up. Astroscale will use new technology to allow its spacecraft to dock with the satellite.

“The orbital environment is becoming more cluttered and contested,” Andrew Faiola, Astroscale’s commercial vice president, told DealBook.

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