Iran is turning out to be a more effective enemy than many thought, and U.S. allies are losing their patience with the war

Good morning. In today’s Fortune:

• Iran is a more effective enemy than many thought.

• U.S. allies losing patience with Trump.

• S&P 500 futures are down this morning and the index is back in negative terrority for the year.

• Exclusive: Anthropic investors are split over response to Trump.

• Exclusive: Target’s new CEO admits he’s got an uphill struggle.

• Exclusive: Block CFO explains why the company cut half its staff.

• U.S. tax refunds are up 10%—less than expected.

• Wall Street predicts boffo box office.

• Don’t mention the war!

THE MARKETS

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Ugh.

Asia was broadly up this morning but U.K. and Europe markets faltered prior to lunch. S&P 500 futures were down 0.45% this morning prior to the open in New York. The index fell 0.56% yesterday and is now back in negative territory for the year. Foreign markets have outperformed U.S. stocks year-to-date:

TOP STORIES

IRAN

Iran is turning out to be a more effective enemy than many thought

It’s Day 7 of the war with Iran. The U.S.’s allies in the Gulf are beginning to complain about the collateral damage they are sustaining in the conflict. And Iran has turned out to be surprisingly effective at causing trouble for its attackers. Some Republicans are criticizing President Trump for starting a new war after he promised to end them.

**In **the last 24 hours, Israel conducted more strikes against Hezbollah in Beirut and continues to pound Tehran. Iran launched a new missile attack on Israel. Qatar stopped a drone attack on the U.S.’s largest base in the Middle East. Four suspected Iranian spies were arrested in the U.K. for conducting surveillance on the Jewish community. More than 23,000 flights have been cancelled globally since Iran’s first retaliatory strike, according to Fortune’s Sasha Rogelberg. Iran has now gone six straight days without the internet.

Iran has begun targeting hyperscaler data centers in the Middle East operated by Amazon and Microsoft. “The Iranians view data centres as part of the conflict,” Matt Pearl of the Center for Strategic and International Studies told The Financial Times. “This is one way of having an actual impact on the region.”

Global energy prices continued to rise after an Iranian missile struck the only oil refinery in Bahrain, Fortune’s Jordan Blum says. “The attack showed that Iran is now willing and able to land direct hits on the major energy assets of its Gulf neighbors, putting the safety of the regional infrastructure in further doubt.”

U.S. allies are losing patience with Trump

Qatar’s energy minister warned that the war could “bring down the economies of the world” by causing a complete shutdown of all Gulf energy exporters, driving oil to $150 a barrel. “Everybody that has not called for force majeure we expect will do so in the next few days that this continues. All exporters in the Gulf region will have to call force majeure,” Saad al-Kaabi told The Financial Times.

The business community in Dubai is livid. “Who gave you the authority to drag our region into a war with Iran? And on what basis did you make this dangerous decision?” Khalaf Al Habtoor, a billionaire Dubai hotel owner, said in a post on X. “You have placed the countries of the Gulf Cooperation Council and the Arab countries at the heart of a danger they did not choose.”

Analyst Ed Yardeni is having second thoughts: His team previously thought the conflict would be short. “On Tuesday, we had second thoughts about the length of the war. The Iranian regime had prepared for the war by adopting a chaos strategy, launching missiles and drones not just at U.S. and Israeli targets, but at its neighbors as well. The strategy includes shutting down the Strait of Hormuz to all shipping. By causing all this pain, Iran’s regime hopes that it will pressure its adversaries to negotiate a ceasefire that keeps the regime in power.”

• Trump has lost Tucker Carlson, too.

AI AND NATIONAL SECURITY

Anthropic investors split over Trump response

Investors in Anthropic, which raised $30 billion at a $380 billion valuation and is heading toward an IPO, are split over how the company should respond to the Trump administration’s potentially devastating move to designate it as a “supply-chain risk,” Fortune’s Jessica Mathews writes. She spoke to six of the company’s funders. One, J.D. Russell, of Alpha Funds, said, “I’m disappointed matters of national security implications are being aired in public [but] you have to be realistic that adversaries to the U.S. are pursuing those capabilities with far fewer constraints.”

• Anthropic CEO Dario Amodei has apologized for writing a memo in which he said the White House was targeting the company because it hasn’t “given dictator-style praise” to President Trump. But he’s going to sue the administration anyway.

‘TAR-ZHAY’

Target’s new CEO admits he’s got an uphill struggle ahead

Target’s new CEO, Michael Fiddelke, gave an exclusive interview to Fortune’s Phill Wahba on how he’s going to turn around the struggling retailer. “We just need to be crystal clear on who we are,” he said. “We haven’t, over the last few years, always done the best job.”

JACK’S AX

Block layoffs: Why now, and why so many?

Also exclusive to Fortune: Block CFO Amrita Ahuja explained the logic behind the company’s decision to slash 4,000 jobs, nearly half its workforce, to Sheryl Estrada.

CHART OF THE DAY

U.S. tax refunds are up 10%—less than expected

“Tax refunds in the year to March 3 totaled $124 billion, up only around 10% on 2025 and much less than the 25-to-30% increase we expected for this year’s refund season,” according to Pantheon Macroeconomics. That means their effect on consumer spending will be lower than previously assumed.

HOLLYWOOD

Wall Street goes to the movies

• Box office will be boffo (as long as the talent doesn’t go on strike): Alicia Reese and her colleagues at Wedbush say: “We estimate the 2026 box office up 10% year-over-year at $9.5 billion … The one caveat we have … is that the SAG-AFTRA negotiations are covering significant ground on AI this year … there is a risk that the industry will once again move to strike.”

• Morgan Stanley’s Andrew Sheets rates Schwarzenegger as “outperform”: “Many movies have been made about AI. Among the best is Terminator 2: Judgement Day. Although it was released in 1991, it covers an impressive range of relevant issues: the integration of AI into defense, the risk of AGI, and the importance of (really) advanced semiconductors. If you haven’t watched it, I’d recommend it. Tell your partner, roommate, or boss that it’s for work.”

NUMBER OF THE DAY

5,000

The estimated number of mines Iran is able to deploy in the Strait of Hormuz. Enough to paralyze shipping there, according to James Stavridis, retired U.S. Navy admiral and former supreme allied commander of NATO.

QUICK HITS

• Venture dollars to female founders doubled to a record $73 billion last year—but Anthropic and Scale AI skewed the data by Lily Mae Lazarus

• McDonald’s CEO did a burger taste test that became a cautionary tale for execs. But there’s a silver lining by Rachel Ventresca

• This VC backed CrowdStrike and Anduril. His due diligence starts with your father by Allie Garfinkle

• Economist Eswar Prasad warns a ‘motley group’ of middle powers can’t stop the ‘doom loop’ threatening the global economy by Nicholas Gordon

THE FRONT PAGES TODAY

U.K. police arrest four on suspicion of spying for Iran – Financial Times

U.S. offers India a 30-day waiver for buying Russian oil as Iran war deepens energy supply worries – CNBC

How the ice finally broke under Kristi Noem – Axios

U.S. gas prices, up 11% in a week, pile pressure on Trump – The New York Times

ONE MORE THING

Don’t mention the war!

U.S. House Speaker Mike Johnson said, “We’re not at war right now. We’re four days into a very specific, clear mission.” The best response to that came from The Federalist’s Sean Davis: “It’s not a war unless it comes from the war region of France, otherwise’s it’s just sparkling combat.”

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