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Good morning. <\/strong>Will the attacks on Iran accelerate the push to decentralize global companies? This year\u2019s Edelman Trust Barometer referenced the rise of the \u201cpoly-national\u201d<\/a>\u2014a corporate structure that invests in long-term local relationships, compartmentalizing everything from talent to supply chains in individual countries. To stay ahead in a world that\u2019s shifted from globalization to national interests, the argument goes<\/a>, companies must \u201coperate as a network of businesses with a U.S. center, but a local face.\u201d<\/p>\n It\u2019s a variation of a strategy long deployed by consumer-facing global giants like Coca-Cola<\/a> and Procter & Gamble, which prioritize global experience<\/a> in their leaders and connect strong regional operations. HSBC regionalized its operations<\/a> at the start of last year, splitting its operations between \u201cEastern Markets\u201d and \u201cWestern Markets.\u201d And years of heightened tensions and tariff wars with China have long forced companies to alter what Singapore Prime Minister Lawrence Wong called the \u201cinvented in California; made in China\u201d<\/a> strategy that helped firms like Apple<\/a> so profitably scale.<\/p>\n There are other forces disrupting the model of a centralized company. I spoke yesterday with Christina Kosmowski, CEO of LogicMonitor, which monitors customers\u2019 tech systems from data centers to the cloud. She is having more conversations with CEOs about doubling down on a regional strategy to build resilience. \u201cWhen your systems go down, you can\u2019t operate,\u201d says Kosmowski. \u201cThe time frame to react is just within seconds, instead of hours and days.\u201d<\/p>\n To be sure, decentralization comes with risks, not least of which is the duplication of systems, costs, and functions that get streamlined in an efficient corporate structure. As Novartis<\/a> CEO Vas Narasimhan said to me last year<\/a>, \u201cto navigate complexity in the external world, you have to radically take out complexity internally.\u201d That means creating a leaner and simpler organization<\/a> where everyone knows who is responsible for what. It\u2019s possible to have that alongside autonomous and agile regional operations, of course,\u00a0but it requires leaders whose teams are aligned on what efforts are localized\u2014and what stays the same.<\/p>\n Contact CEO Daily via Diane Brady at diane.brady@fortune.com<\/a><\/em><\/p>\n All eyes on oil prices<\/b><\/p>\n Oil prices rose a muted 6%<\/span><\/a> as the Strait of Hormuz\u2014<\/span>the world’s biggest chokepoint for energy flows<\/span><\/a>\u2014essentially shut down. Oil markets are holding steady for now, but an average of 20 million barrels of oil flow through the strait daily, representing roughly 20% of global petroleum consumption. Analysts warn that calm won’t last if tankers aren’t moving again by week’s end.<\/span><\/p>\n Iran\u2019s cyberattack capability\u00a0<\/b><\/p>\n CEOs worried about cyber attacks have good cause for concern. Iran ranks among the world’s most capable cyber powers outside the major players (the U.S., China, Russia), and AI is raising the stakes, <\/span>Fortune<\/span><\/i>\u2019s Sharon Goldman reports<\/span><\/a>. \u201cIt would be surprising if they weren\u2019t using AI to advance their offensive cyber capabilities,\u201d says <\/span>Bob Kolasky, senior vice president of critical infrastructure at AI supply-chain company Exiger.<\/span><\/p>\n A $210 billion war<\/b><\/p>\n Four days into the joint U.S.-Israeli military campaign against Iran, <\/span>the fiscal reckoning is starting to take shape<\/span><\/a>. Penn Wharton Budget Model puts the likely direct cost of the conflict to U.S. taxpayers at $65 billion, with total economic impact potentially reaching $210 billion.<\/span>\u00a0<\/p>\n S&P 500<\/b> futures are down 1.87% this morning. The last session closed flat. The <\/span>STOXX Europe 600<\/b> was down 3.30% in early trading. <\/span>The U.K.\u2019s FTSE 100<\/b> was down 2.95% in early trading.<\/span> Japan\u2019s Nikkei 225 <\/b>was down 3.06%.<\/span> China\u2019s CSI 300 <\/b>was down 1.54%. <\/span>Hong Kong\u2019s Hang Seng<\/b> was down 1.12%. <\/span>South Korea\u2019s KOSPI <\/b>was down 7.24%.<\/span> India\u2019s markets <\/b>are closed today.<\/span> Bitcoin<\/b> was up to $67K.<\/span><\/p>\n Tech giants see a cure for cancer in AI. But Eli Lilly\u2019s CEO finds it \u2018not particularly good\u2019 at solving biology or chemistry problems<\/span><\/a> by Jake Angelo<\/span><\/p>\n Anthropic\u2019s Claude overtakes ChatGPT in App Store as users boycott over OpenAI\u2019s $200 million Pentagon contract<\/span><\/a> by Marco Quiroz-Gutierrez<\/span><\/p>\n\nTop leadership news<\/h3>\n
The markets<\/h3>\n
Around the watercooler<\/h3>\n