Recap | 02 March 2026
- 22 hours ago
- 8 min read
US and Israel wage war against Iran
Iran's retaliation risks regional contagion
Strait of Hormuz becomes strategic chokepoint
France revisits nuclear policies with eye toward European security
Oil and gas prices spike to prompt inflation fears
Defense sector leads stocks' comeback as bid for safety strengthens dollar
Manufacturing activity indices show growth, cost pressures
Prediction markets foster wagers on war
Ukraine-Russia talks on schedule with Donetsk at issue
Pakistan-Afghanistan conflict continues without clear resolution
Canada and India sign agreements as diplomatic tension thaws
China to reveal new strategic focus for 2026-2030
US begins to part with Anthropic despite use in Iran
'Cyber' takes its place alongside kinetic warfare
SCOTUS denies hearing, leaving AI-generated copyright in doubt
Texas primaries offer window into midterm battles
EDWARD VON DER SCHMIDT
Headlines
US and Israel wage war against Iran
The US joined Israel in surprise strikes on Iran that killed Supreme Leader Ayatollah Ali Khamenei and decimated leadership while targeting military and intelligence infrastructure. Without a clear line of succession, Iranian forces responded to intensive bombardment with drone and missile attacks across the Middle East.
US officials cited imminent Israeli action and a likely Iranian counterattack as the basis for intervening without authorization from Congress. The White House stated that its goals are to completely dismantle Iran's nuclear enrichment and ballistic missile programs; President Trump has also floated regime change. Saturday's preemptive strikes were seen as the "last best chance" to accomplish these objectives, according to the president.
US and Israeli leaders have pushed back on any characterization of the operation as another "endless war" but have not signaled a clear timeframe beyond an initial assessment of "four or five weeks". Without committing ground forces, the US is relying on escalating aerial warfare while regional air defense systems contend with Iran's low-cost armaments.
Complicating matters, Iran's retaliation has extended to its neighbors and important shipping and transit corridors.
Sources:
US and Israel pound Iran as Trump signals willingness to talk to new leaders after Khamenei's death (AP; 3/1)
Iran's Supreme Leader Ayatollah Ali Khamenei, who led the Islamic Republic since 1989, is dead at 86 (AP; 3/1)
World leaders react cautiously to US and Israeli strikes, death of Iran Ali Khamenei (AP)
Where things stand after the US and Israeli strikes on Iran (AP)
Israel hits Tehran again after killing Khamenei, leadership council takes over (Reuters; 3/1)
Khamenei killing shatters Iran's order, triggers high-stakes succession race (Reuters; 3/1)
Netanyahu says US-Israeli war on Iran 'not going to take years' (Reuters)
US not veering into a new, endless war, Pentagon says (Reuters)
Trump Vows 'Whatever It Takes' on Iran as Conflict Widens (Bloomberg)
Iranian Drones and Missiles Challenge Stretched U.S. Forces (WSJ)
Trump's Case for War With Iran Faces Growing Scrutiny (WSJ)
Trump Sees Weekslong War Timeline in Iran (WSJ)
See also:
Trump's Iran Strikes Usher In an Era of Unrestrained American Power (Bloomberg)
Iran's retaliation risks regional contagion
The conflict quickly expanded with oil, gas, and other sites struck by Iran in Saudi Arabia, Qatar, the UAE, and elsewhere amid widespread evacuations. Israel began an offensive in Lebanon in response to attacks from Hezbollah as Iran's proxies engaged.
The growing war crippled airline travel and shipping with potential global repercussions. While world leaders have opined carefully, Iran's neighbors are reportedly pushing for deescalation while calling for respect for their sovereignty.
Sources:
As Mideast conflict widens, US says attacks on Iran will last weeks and intensify (AP)
Thousands of flights cancelled as Iran conflict upends global air travel (Reuters; 3/1)
Iran conflict widens to Lebanon, Kuwait mistakenly downs US jets (Reuters)
Trump's Iran War Widens, Forcing Reluctant Allies to Choose (Bloomberg)
Exclusive: UAE and Qatar Urge Allies to Help Trump Find Iran Off-Ramp (Bloomberg)
Gulf Arab States Face Hard Choices as Iran Widens Attacks (Bloomberg)
Gulf States in Race Against Time to Repel Iran's Onslaught (WSJ)
See also:
Britain says it's not at war after a drone strikes its Akrotiri base in Cyrpus (AP)
Strait of Hormuz becomes strategic chokepoint
Critically, the fighting has engulfed the Strait of Hormuz - the passage connecting the Persian Gulf to the sea and a pivotal throughway for oil and gas. Insurance cancellations have compounded shipping disruptions.
Any closure of the Strait or impedance will materially affect the supply of oil, natural gas, and aluminum, especially in transit to Asia.
Sources:
What to know about the Strait of Hormuz, a key passageway essential for global energy supply (AP)
Iran conflict disrupts global shipping as tankers are stranded, damaged (Reuters)
Iran vows to attack any ship trying to pass through Strait of Hormuz (Reuters)
China Calls on All Sides to Protect Ships Transiting Hormuz (Bloomberg)
France revisits nuclear policies with eye toward European security
The suddenness and scope of US interventions and prevailing geopolitical uncertainty have left other countries to reassess their deterrence. Announcing that it would increase its nuclear stockpile and share strategic assets, France bolstered its ties with Germany and is in talks with other European nations.
Comment:
Europe has traditionally relied on NATO for nuclear deterrence, but US preoccupations abroad and disinterest vis-a-vis Russia have forced European leaders to broaden their defensive capabilities.
Sources:
Macron says France will allow temporary deployment of nuclear-armed jets to European allies (AP)
France to boost nuclear arsenal, involve European allies in deterrence (AP)
France and Germany move closer on joint nuclear deterrence (Reuters)
France to Boost Nuclear Arsenal With US Commitments in Doubt (Bloomberg)
France Floats Nuclear Deployment Across Europe (WSJ)
See also:
German Chancellor Merz heads to Washington in shadow of war in Iran (Reuters)
Europe Must Brace for Fallout From Middle East Conflict, EU Chief Says (WSJ)
Markets & Economies
Oil and gas prices spike to prompt inflation fears
Pronounced rallies in crude oil and natural gas followed the outbreak of war with key Middle East facilities going offline (if only temporarily) and disruptions in the Strait of Hormuz poised to constrain supply.
The prospect of significantly higher energy and fuel prices threatens supply-driven inflation, the risk of which outweighed a flight-to-quality dynamic to drive government bond yields higher. Higher gas prices also appear set to exacerbate cost-of-living concerns.
Comment:
Higher fuel and energy costs can drive up prices across the economy. Bondholders demand a greater return to compensate for the reduced purchasing power owing to inflation.
Sources:
Energy prices surge as tanker disruptions and facility shutdowns rattle global supply (AP)
Oil and gas prices surge as Iran war disrupts Middle Eastern output (Reuters; 3/1)
US gasoline crosses $3 per gallon mark in test of Trump's Iran war (Reuters)
Treasuries Sink as Oil Jump Stokes Inflation Fears: Markets Wrap (Bloomberg)
Saudi Arabia's Biggest Oil Refinery Halts After Drone Attack (Bloomberg)
Gas Prices Surge as Qatar Shuts World's Largest LNG Export Plant (Bloomberg)
Oil Holds Gain as Traders Brace for Fresh Attacks in Middle East (Bloomberg)
Attacks in Qatar, Saudi Arabia Drag Energy Sector Into Mideast Conflict (WSJ)
Oil Rallies as U.S.-Iran Conflict Threatens Strait of Hormuz Flows (WSJ)
See also:
US Has No Immediate Plan to Tap Oil Reserve on Iran Concerns (Bloomberg)
Defense sector leads stocks' comeback as bid for safety strengthens dollar
Monday's equity recovery masked intraday volatility and significant dispersion. Defense stocks gained as travel and other exposed sectors languished.
The US dollar strengthened amid heightened perceptions of risk as gold's rally dissipated late.
Sources:
US stocks erase sharp losses, while oil prices leap on worries about Iran war (AP)
Wall Street ends narrowly mixed, trading volatile after air strikes on Iran (Reuters)
From oil spikes to equity swings: How the Mideast conflict is driving markets (Reuters)
Dollar reclaims safe-haven mantle as Iran strikes rattle nerves (Reuters)
Middle East Conflict Lifts Oil; Stocks Rebound From Early Declines (WSJ)
See also:
A Market Frenzy Is Lurking Beneath Those Calm Stock Indices (WSJ)
Manufacturing activity indices show growth, cost pressures
Manufacturing PMI gauges for February showed relatively broad growth coupled with higher input prices.
Comment:
The more resilient economic activity appears and the more inflation stays elevated with a potential oil-driven shock looming, the less likely Fed easing becomes in 2026.
Sources:
US manufacturing activity steady, factory gate inflation surges (Reuters)
Asian Manufacturers Show Resilience as Demand Rises (WSJ)
Prediction markets foster wagers on war
Unregulated prediction markets that offer ways to wager on geopolitical outcomes and other events have exploded in popularity, particularly as military conflicts introduce new dimensions of uncertainty.
Source:
Geopolitics Bets Hit a Record on Polymarket as Iran War Escalates (Bloomberg)
Around the World
Ukraine-Russia talks on schedule with Donetsk at issue
Another round of US-brokered talks is still slated to take place at the end of the week, although the venue may be changed from Abu Dhabi. While the countries remain apart on territorial concessions, Ukraine indicated that Russia did not reject proposed US security guarantees, a major component of a durable ceasefire.
Ukraine is also looking to accelerate the process of provisionally joining the European Union but faces resistance from Russia-aligned Hungary.
Sources:
Russia-Ukraine talks planned for Abu Dhabi this week may change venue, Zelenskyy says (AP)
Kyiv says Russia accepted US plan for Ukraine security guarantees (Reuters; 2/28)
Ukraine-Russia peace talks still expected this week, Zelenskiy says (Reuters)
Ukraine to complete preparation in days to start EU accession talks, Zelenskiy says (Reuters)
See also:
Iranian drones buzz across the Persian Gulf after their pivotal use by Russia in Ukraine (AP)
Pakistan-Afghanistan conflict continues without clear resolution
Hostilities along the Pakistan-Afghanistan border continued as Iran's neighbors fought over alleged support of Pakistani militants.
Sources:
Pakistan's president defends ongoing strikes in Afghanistan and urges Kabul to dismantle militants (AP)
Pakistan, Afghanistan show no signs of stepping back as fighting enters fifth day (Reuters)
Canada and India sign agreements as diplomatic tension thaws
Canadian Prime Minister Carney met with Indian Prime Minister Modi to strengthen economic cooperation and finalize a nuclear fuel agreement. Both countries continue to diversify trading partnerships.
Sources:
India and Canada agree to boost economic partnership in a move to reset ties (AP)
Canada, India Strike $1.9 Billion Uranium Supply Agreement as They Firm Ties (WSJ)
China to reveal new strategic focus for 2026-2030
China's National People's Congress will convene on Thursday and debut the country's next 'Five-Year Plan' for 2026-2030, which is expected to tackle its technology ambitions and a shift toward self-sustaining, consumer-led growth.
Sources:
China posed to trim growth ambitions, pursue timid rebalancing efforts (Reuters)
Xi Eyes Consumers to Lead New Era for China's Unbalanced Economy (Bloomberg)
China's 'Two Sessions' to Shed Light on What Lies Ahead for Economy (WSJ)
Odds & Ends
US begins to part with Anthropic despite use in Iran
Federal agencies began to shift away from Anthropic models even as they were used in advance of US strikes on Iran.
Comment:
The dispute demonstrates core tensions that may arise with dual-use technologies.
Sources:
What to know about the clash between the Pentagon and Anthropic over military's AI use (AP; 2/28)
State Department switches to OpenAI chatbot as US agencies start phasing out Anthropic (Reuters)
Anthropic's Pentagon Showdown Is About More Than AI Guardrails (Bloomberg; 2/26)
A 'Fight About Vibes' Drove the Pentagon's Breakup with Anthropic (WSJ)
'Cyber' takes its place alongside kinetic warfare
Internet blackouts, service disruptions, and cyber operations in Iran highlight the growing prominence of digital warfare.
Sources:
Hackers hit Iranian apps, websites after US-Israeli strikes (Reuters; 3/1)
Amazon's AWS reports outage after UAE data center struck by 'objects' (Reuters)
Iranian's Evade Internet Blackout to Share Images of Airstrikes (Bloomberg)
Iranian Hacking Groups Go Dark During US, Israeli Military Strikes (Bloomberg)
SCOTUS denies hearing, leaving AI-generated copyright in doubt
In declining to hear an appeal, the Supreme Court effectively deferred to a lower court ruling that AI-generated art could not be granted copyright because it is not strictly made by a person.
Comment:
In the absence of legal clarity or supportive precedent, AI-generated work may not enjoy intellectual property protections.
Source:
US Supreme Court declines to hear dispute over copyrights for AI-generated material (Reuters)
Texas primaries offer window into midterm battles
Primary elections in Texas on Tuesday will shed light on the competitiveness of a pivotal Senate seat in November.
Source:
US Senate candidates in Texas make final pitches to voters ahead of Tuesday's primary (AP; 3/1)
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