Backchannel talks between U.S. and Iran offer Trump an off-ramp—if he wants it

Good morning. In today’s Fortune:

- There are backchannel talks between U.S. and Iran.

- In the markets, some welcome relief.

- Trump says he wants to ‘take’ Cuba.

- Nvidia’s Jensen Huang crowns himself the ‘token king.’

- Chart: Global equities pummeled by the war.

- Byron Allen is now a streaming mogul—he just took an aggressive stake in Starz.

- Exclusive: How boards lowered the bar for CEO bonuses.

THE MARKETS

Relief rally underway

S&P 500 futures ticked down 0.14% this morning before the open; the index was up 1% yesterday. This morning, indexes in Asia and Europe followed suit, mostly going up. Japan’s Nikkei 225 was flat and China’s CSI 300 sank by 0.73%. Oil was at $104 per barrel.

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- Reality check: The S&P 500 has returned on average 15.5% returns per year over the last 10 years, and that just isn’t sustainable, according to Rob Arnott, founder of Research Affiliates, a firm that oversees strategies for nearly $200 billion in index funds and ETFs. Prepare for measly 3% returns ahead, he tells Fortune’s Shawn Tully.

IRAN

There are backchannel talks between U.S. and Iran

The start of the deal? U.S. envoy Steve Witkoff and Iranian Foreign Minister Abbas Araghchi have “reactivated” contact with each other, according to Axios. The contact seems to be limited and fitful, but the crucial line in Axios’ report is “Iran isn't interested in a temporary ceasefire that would allow the U.S. and Israel to regroup and attack again, but wants guarantees that any peace deal would be permanent.”

It’s an off-ramp, if President Trump wants it. And given that the U.S.’s allies have roundly rebuffed Trump’s call for military help in the Gulf, he may be tempted to take it.

Iran’s military and much of its infrastructure is now in ruins but Tehran’s resistance has confounded Trump, who has publicly stated he thinks Iran should reach a “deal” with him. The problem, according to Fortune’s Nick Lichtenberg, is that Iran is unlike previous opponents that Trump has faced. Its 21-mile-wide chokepoint at the mouth of the Persian Gulf has no CEO to bully, no bondholder to threaten, and no shareholders to absorb the loss. The mullahs are immune to his usual leverage.

Trump, however, is coming under pressure from the bond market. The supply of corporate bond sales—spurred by capex from AI builders—has flooded the market of late, pushing down prices and pushing up interest rates, making it more expensive for the U.S. to service its debt, according to Fortune’s Jason Ma. Analysts at Deutsche Bank said in a note last week that the 10-year yield climbed 6 basis points to 4.16% at session highs.

- Bank of America analyst Tom Curcuruto yesterday raised his estimate of debt issuance from the five large AI hyperscalers to $175 billion this year, up from $140 billion.

- Diesel now costs $5 a gallon in the U.S., on average.

Inconvenient: Trump has pushed back his planned meeting with China’s Xi Jinping because of the war, Fortune’s Angelica Ang reports.

Boots on the ground, maybe: Macquarie analysts Thierry Wizman and Gareth Berry noted that “U.S. amphibious forces (and, possibly, those of allies) were going to the Gulf, presumably to secure Kharg Island and Iran's oil export terminals on it.” If U.S. forces destroyed the terminals, it would stop the 90% of Iran’s crude oil that flows from that port. Alternatively, the U.S. might attempt to seize the island and preserve its capacity for a post-conflict deal, the Macquarie pair say. That would extend the length of the war: “Whereas we may have thought that major hostilities would end at the end of March (a four-week war), the deployment of US Marines means that it may take longer, perhaps by another one or two weeks.”

CUBA?!

Trump wants to ‘take’ Cuba next

Talking to reporters in the Oval Office, Trump said it would be an “honour” if the U.S. ended up “taking Cuba, in some form.” “Whether I free it, take it, I think I could do anything I want with it, if you want to know the truth. They are a very weakened nation right now,” he said. Cuba’s economy has been severely weakened after the U.S. blockaded it from its Venezuelan oil supplies.

AI

Nvidia’s Huang crowns himself ‘token king’

The 63-year-old, silver-haired Nvidia CEO didn't break a sweat as he paced the stage and spoke for a continuous two-and-a-half hours on Monday at the company's GTC developers conference, not even once bringing another exec on-stage to share the burden of presenting all the new products. At one point Huang even raised his hands above his head, fists clenched in a Rocky pose, and proclaimed himself the "token king." I don't think anyone would argue with the claim, Fortune’s Alexei Oreskovic says.

Be careful with those numbers: Huang said he expects $1 trillion in business by the end of 2027. Last year at the conference, Huang said he expected $500 billion through 2026. The update is not the doubling of demand it may sound like: a close look at the c