As you already know (and if you don’t, it’s time to put down the video game and reenter the real world), the US is at war with Iran, sparking geopolitical turmoil and roiling energy markets across the world.

Traders are keeping a close eye on the closure of the Strait of Hormuz, the passageway for about 20% of the world’s oil. Oil costs are spiking, raising the price of fuel both on the road and in the skies: Jet fuel prices have risen by roughly $0.48 per gallon over the past week, which is equivalent to a roughly $20 per barrel oil increase.

The situation is likely about to get worse, too: According to JPMorgan, some Middle Eastern oil producing countries are days away from running out of storage space for their oil, which would cause a complete pause on production.

As we discussed yesterday, rising fuel prices result in a slew of downstream consequences, such as affecting the Fed’s next interest rate decision. But for businesses like cruise ships, airlines, and shipping companies, the domino effects are felt far more directly.

Going the extra mile

Airlines are squarely in investors’ crosshairs this week as shareholders fret about the effects of higher fuel prices on these companies’ bottom lines. Nobody has been spared the selloff pain: The US Global Jets ETF, which tracks all the major airlines, is down 12% over the last five days.

But in a note on Tuesday, Citi analysts argued that while higher fuel prices aren't exactly welcome news to any airline, some are more resilient to the shock than others.

According to Citi, airlines with low margins and high fuel expenses (as a percentage of their revenue) are the most sensitive to fuel price volatility. That makes American Airlines, JetBlue Airways, Allegiant, and Frontier Airlines the worst positioned for the moment, Citi analysts wrote. Those stocks fell 5.38%, 9.8%, 8.64%, and 5.13% today, respectively, and all but American have fallen at least 19% in the last five days.

The “winners” include Delta Air Lines and United Airlines, which have higher margins and lower fuel-expense exposure—but that hasn’t stopped investors from punishing both stocks along with the rest of their peers. Maybe once the panic-selling stops, investors will realize companies like these aren’t hurting as badly as the rest of the industry.

Heading out to sea

The same basic logic goes for cruise lines: Royal Caribbean hedges 60% of its fuel costs, which puts it in a better position than rivals Norwegian and Carnival, but all three cruise companies ended the day in the red. And while airlines generally hedge fuel costs better than cruise lines, keep in mind that they also have to deal with cancelled flights, according to JPMorgan—an estimated 11,000 flights have been cancelled across 10 countries in the Middle East over the last week.

Then there’s global shipping companies, which are also being hit hard across the board by rising fuel prices and closed waterways. Global spot rates for chartering supertankers jumped 77% this week, and are roughly 400% higher than they were at the end of December. Higher rates mean higher profits for container shipping companies like Maersk and Hapag-Lloyd, which have cut their bookings across the Middle East. Those companies are down 1.47% and 1.76% today, respectively.

Rising fuel prices might have created a travel nightmare, but while some companies are in for a rude awakening, others are sleeping soundly knowing that they’re better protected from the volatility.—LB

🟢 What’s up

• Berkshire Hathaway rose 2.65% after new CEO Greg Abel bought $15 million of stock and the company resumed share repurchases.
• Broadcom gained 4.79% on strong first-quarter results, with revenue up 29%, driven by surging AI chip sales.
• Tenaya Therapeutics soared 40.92% on a $1.13 billion research partnership with Alnylam Pharmaceuticals to develop heart disease treatments.
• Okta climbed 11.03% after revenue topped expectations, helped by demand for AI security tools.
• Six Flags edged 4.69% higher after it agreed to sell seven amusement parks to EPR Properties for $331 million. Does that mean it’s renaming itself Minus-One Flags?
• Trade Desk advanced 18.36% amid reports it may help sell ads on ChatGPT through a partnership with OpenAI.

What’s down

• Rigetti Computing fell 4.45% after the quantum computing company reported a wider-than-expected quarterly loss and revenue of $1.87 million, missing analyst estimates.
• Victoria’s Secret dropped 12.16% despite beating earnings and revenue expectations, as results failed to meet investors’ elevated expectations.
• StubHub slid 12.39% following a larger-than-expected loss and weak guidance, adding to concerns over potential regulatory scrutiny of ticket resale platforms.
• Ciena declined 12.88% even after beating earnings estimates and raising full-year guidance, as high expectations and supply constraints weighed on sentiment.
• Corning lost 6.97% after Broadcom’s CEO suggested a shift from copper to fiber in AI data centers may take longer than expected.
• Serve Robotics sank 1.63% after short seller The Bear Cave published a report raising concerns about the company’s business model.

What would you do if a bag of cash fell out of the sky at your feet? In Bolivia, that’s not a hypothetical question.

A Bolivian air force cargo plane crashed at El Alto International Airport last Friday. The plane was carrying newly printed banknotes for the Central Bank of Bolivia, and when it skidded off the runway and into city streets, it not only killed 24 people but scattered 17 million bills worth 423 million bolivianos (about $62 million) around the town.

An estimated 20,000 local citizens rushed out of their homes to pick up the money, only to be beaten back by police using batons and tear gas. Now, Bolivian authorities are searching door to door across the country’s second-largest city for any banknotes they missed. Central bankers have voided all of the serial numbers for the new bills to negate the stolen cash, but that’s created its own set of problems: Local vendors don’t know if the bills customers are paying with are real or if they’re now worthless, bringing commerce to a standstill.

It’s a chaotic scene in one of the poorest countries in South America, which saw inflation rates peak at 25% last July (they’ve since cooled to about 17%, compared to 2.4% here in the US). At least 50 people have been arrested for grabbing the money, when what they should have done is just lay on it like Huell in Breaking Bad and enjoyed the moment.—MR

The world’s second-largest economy is hitting a speed bump.

China lowered its economic growth target for this year to between 4.5% and 5%, its slowest pace since 1991, as weak consumer demand continues to weigh on the country’s economy. Consumption accounts for only 40% of GDP, far below global norms, while manufacturing is also slowing, with PMI falling for two straight months amid US trade tensions.

To address the slowdown, Beijing outlined several priorities in its five-year economic strategy:

• Expanding investment in AI and digitalization
• Boosting domestic consumption, though it remains a secondary focus
• Increasing government spending, with a fiscal deficit target of around 4% of GDP and new financing tools worth roughly $116 billion to support investment
• Increasing military spending by 7% to strengthen national security

BYD’s slump

One victim of the slowdown is BYD, which overtook Tesla as the world’s biggest EV seller last year. But the company reported that vehicle sales fell 41% year over year in February, driven by a 65% drop in domestic deliveries. Shares sank 4.07% today following the announcement.

Part of the decline also stems from what Chinese analysts call “involution,” where excess manufacturing capacity and intense competition force companies into aggressive price wars. With many EV makers chasing the same pool of buyers, margins and growth are under pressure.

To counter this, BYD is shifting its focus outward. Alongside upgrades to its batteries and vehicle lineup, the company plans to expand aggressively overseas, targeting 1.3 million vehicles sold abroad by 2026. That strategy could bring Chinese EV competition more directly into global markets, raising the stakes for Western automakers.

The AI pivot

Other Chinese companies didn’t fare so well today, either: Li Auto fell 2.03%, NIO dropped 2.48%, and Alibaba lost 2.19%.

That makes sense, as investors are reacting to the headlines of slower economic growth. But a closer look shows China’s growth target is relatively pragmatic, with policymakers focusing on fixing structural issues in the economy. The strategy could ultimately provide a tailwind for many of these companies: Boosting domestic spending is good news for companies like Baidu and JD.com, while a focus on AI development should benefit Alibaba, a rising power in the industry.

Speaking of which, investors should keep an eye out for the so-called “AI tigers,” including Zhipu and MiniMax, as Beijing’s AI push creates new growth opportunities. China’s StepFun is also reportedly planning an IPO later this year, which could offer early exposure to the country’s next wave of AI startups.

For now, China’s economy may be hitting the brakes, but it’s also changing lanes. And if the country’s AI push gains traction, investors may soon be talking less about slowing growth, and more about the next wave of innovation.—SY

• SPAC King Chamath Palihapitiya used ‘yo mama’ jokes to defend his terrible track record.
• Sen. Jeff Merkley introduced legislation to ban government officials from trading event contracts on prediction market sites.
• More than 20 states have filed lawsuits over President Trump’s new global tariffs imposed after his Supreme Court loss.
• Nvidia reportedly paused production of its second-most advanced chip, the H200, which was being produced for China’s market.
• Canceled flights amid the war in the Middle East are upending the $11.7 trillion travel industry.
• The job market is giving mixed messages: The latest jobless claim reading plateaued, but bigwigs like Oracle and Morgan Stanley are still conducting mass layoffs.

Economic reports: There aren’t any earnings reports of note tomorrow, but that’s okay, since all eyes will be on the monthly US jobs report anyway.

The Fed’s job is to fight inflation and support employment, and while everyone’s talking about how higher oil prices could lead to higher inflation (and thereby force the Fed to keep interest rates steady), don’t forget about the other half of the central bank’s two-part mission. The US labor market is stuck in a low hire/low fire purgatory, and the consensus is that we’ll see more of the same from tomorrow’s February report: Economists expect unemployment to remain steady at 4.3%, though new jobs added are forecast to fall to 60,000 from 130,000 in January.