As Trump rages against his allies, Republicans are asking what the plan is to end the chaos in Iran

Good morning. In today’s Fortune:

- It’s Fed day—expect Powell to keep rates at 3.5%.

- Iran: As Trump rages against his allies, Republicans want to know what the plan is.

- Chaos in the Gulf is producing ‘butterfly effects’ far away.

- Why the U.S. doesn’t have enough minesweepers to open the Strait of Hormuz.

- Prediction markets see the war getting longer.

- Nvidia might pay engineers in AI tokens

- Exclusive: AI isn’t destroying consultants, Capgemini says.

- Exclusive: Hinge CEO on the ‘dating recession.’

THE MARKETS

It’s Fed day—and there will be no surprises

Oil was at $102 this morning and moderating downward after Iraq had made a deal to export oil through Turkey, avoiding the Strait of Hormuz. S&P 500 futures were up 0.5% before the bell after the index closed up 0.25% yesterday. The optimism continued in Asia and Europe: South Korea’s KOSPI was up 5%, Japan’s Nikkei 225 was up 2.87%, Stoxx Europe 600 was up 0.57% in early trading, and the U.K.’s FTSE 100 was up 0.33% midmorning.

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- Powell will hold the line against oil-driven inflation: As UBS’s Paul Donovan told clients this morning, “The Federal Reserve is universally expected to leave policy unchanged. Fed Chair Powell’s press conference excites attention for three reasons. 1. Powell may stay as Fed Chair beyond May, so is a less lame 'lame duck' leader. 2. Markets want to know the Fed’s reaction to oil prices and the war. US retail gasoline prices are almost exactly a dollar (35.5%) above 2026 lows, having risen every day for four weeks. The Fed’s concern is second-round effects. 3. Markets want to understand the Fed’s views of the underlying economy, as investors seem to expect the US to exit the war and energy prices to normalize.”

- If oil stayed above $100 per barrel for a full year, the tax benefits for Americans in the One Big Beautiful Bill Act ($800 per person) “will be fully wiped out" due to inflation, according to Wells Fargo’s estimates.

IRAN

No end in sight, but plenty of 'butterfly effects'

The resignation of Joe Kent, the director of the White House’s National Counterterrorism Center, has focused attention Trump Administration’s strategy for winning, or ending, or exiting the war with Iran. Kent said he resigned because the U.S. should have never been involved in the first place and that Iran “posed no imminent threat to our nation,” according to Fortune’s Catherina Gioino. (Kent also floated a conspiracy theory that the war was all Israel’s fault.) Republicans are becoming more open in their dissent against the war.

The problem is that the U.S. and Israel have two different aims in the conflict, according to Axios. The U.S. is focusing on destroying Iran’s military capabilities but Israel is hunting down and killing as many top-level Tehran regime members as it can find. (Here is a list of the dead.)

The result is chaos, Axios reports: "Israel doesn't hate the chaos. We do. We want stability. Netanyahu? Not so much, especially in Iran. They hate the Iranian government a lot more than we do," a White House official told the site.

- Side note: The U.A.E. actually wants Iran neutralized for good.

The chaos is producing “butterfly effects” across the world, which include unexpected “second-order effects” far from the Strait of Hormuz, according to Deutsche Bank’s George Saravelos. “First, a disruption to chip production in Taiwan given the industry's reliance on Middle East energy production, including helium. Disruptions to the semiconductor supply chain could be highly relevant given the importance of AI in driving equity valuations,” he told clients in a note seen by Fortune. He is also watching “the broader knock-on influence on the credit cycle.”

- Shipping groups have invoked a 19th Century law that allows them to dump their clients’ cargoes at the nearest convenient port, and force the client pay for moving it from there, according to the Financial Times. Containers destined for the Middle East have been dropped at in India, deliveries for Saudi Arabia have been dumped in the UAE.

- Don’t expect the Strait of Hormuz to reopen anytime soon. “It could take several weeks to secure the Strait of Hormuz,” said Bob McNally, president of Rapidan Energy Group told Bloomberg. “Until we’ve neutralized Iran’s layered, asymmetric capabilities — mines, fast attack craft, submarines and drones — we won’t want to put commercial or even escort ships through.”

President Trump is furious that NATO declined to send minesweepers to help the war effort. “WE DO NOT NEED THE HELP OF ANYONE!” he raged on social media last night.

The lack of minesweepers is a problem because four of the U.S. Navy’s anti-mining ships are heading to Philadelphia to be decommissioned, and another four are in Japan, the Wall Street Journal reports.

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