The dramatic increase in India’s purchases of Russian oil since the invasion of Ukraine is “opportunistic and deeply corrosive” of a global effort to isolate the Kremlin and curb Vladimir Putin’s war machine, White House trade adviser Peter Navarro wrote in the Financial Times.
In a strongly worded column, Navarro—long a hawkish voice and now an important force behind Donald Trump’s punitive global tariff—linked India’s trade barriers and what he characterized as its financial support for Russia, depicting dealings that come at the expense of the U.S.
“American consumers buy Indian goods,” he said. “India uses those dollars to buy discounted Russian crude.”
India’s External Affairs Ministry didn’t respond to an email seeking comment on Navarro’s column. The South Asian country has defended its right to buy oil from the cheapest source. The threat of penalties and additional tariffs for buying Russian crude is “unreasonable” and “extremely unfortunate,” Randhir Jaiswal, a foreign ministry spokesperson, said earlier this month.
Historically, India hasn’t been a significant importer of Russian crude, depending more heavily on the Middle East. That changed in 2022, after the invasion of Ukraine and a $60-per-barrel price cap imposed by the Group of Seven nations that aimed to limit the Kremlin’s oil revenue while keeping supplies flowing globally. India’s ability to purchase discounted cargoes was a feature of that mechanism acknowledged by U.S. officials.
Russia accounted for a negligible portion of India’s total imports in 2021, and the country has tended to depend far more heavily on the Middle East. Today, Russia makes up around 37% of imports, according to data analytics firm Kpler.
“This surge has not been driven by domestic oil consumption needs. Rather, what really drives this trade is profiteering by India’s Big Oil lobby,” Navarro said. “In effect, India acts as a global clearinghouse for Russian oil, converting embargoed crude into high-value exports while giving Moscow the dollars it needs.”
He also took a swipe at India’s oil tycoons and their ties to the government. Reliance Industries Ltd., owned by billionaire Mukesh Ambani, has been among the buyers of Russian crude. It has bought cargoes under long-term contracts.
“The proceeds flow to India’s politically connected energy titans, and in turn, into Vladimir Putin’s war chest,” Navarro said.
In the last few weeks, Trump has hit India with a 50% tariff rate—far higher than it placed on regional peers, partly to punish New Delhi for its Russian purchases. The doubling of an original levy comes into effect next week.
“This two-pronged policy will hit India where it hurts—its access to U.S. markets—even as it seeks to cut off the financial lifeline it has extended to Russia’s war effort,” Navarro said. “If India wants to be treated as a strategic partner of the U.S., it needs to start acting like one.”
India is the only major economy to be hit with what Trump calls “secondary tariffs”, though Beijing buys more of Moscow’s crude overall. Trump—eager to slash the U.S.’s trade deficit with India—has floated the possibility of higher levies on China over its Russian purchases, Navarro has downplayed that possibility, suggesting higher levels would hurt the U.S. economy.
Peter Navarro, White House senior counselor for trade and manufacturing, speaks to members of the media outside the White House in Washington, DC, US, on Wednesday, Aug. 6, 2025.
In today’s CEO Daily: Diane Brady tackles the Paramount-Skydance merger–and how it marks a new age in the politics of pop culture.
The big story: Zelenskyy travels to DC.
The markets: Mixed sentiment as investors wait for a deal.
Plus: All the news and watercooler chat from Fortune.
Good morning. My first job in the U.S. included covering Martha Stewart and World Wrestling Entertainment during the dot-com boom. Stewart was a multimedia influencer and doyenne of domesticity; Vince and Linda McMahon had transformed wrestling from a traveling circus of showmen and athletes into a superstar-studded global entertainment phenomenon. Today’s “trad wife” phenomenon or “manosphere” populated by the likes of Joe Rogan are not without precedent. Pop culture always reflects and responds to trends in the political sphere, and vice versa.
What’s unusual, perhaps, is the degree to which the two worlds have become intertwined. It helps that Trump comes from that world, having spent several years in reality TV and most of his adult life as a media celebrity. Along with installing himself as chairman of the Kennedy Center, President Trump personally picked this year’s list of honorees, which includes Kiss and Sylvester Stallone, and will host what he promises to be an ‘anti-woke’ ceremony.
Few CEOs are more attuned to the political winds in Hollywood right now than David Ellison, the new CEO of Paramount following Skydance Media’s merger with Paramount Global earlier this month. To get the deal done, Skydance agreed to “address bias and restore fact-based reporting,” according to FCC Commissioner Brendan Carr, and appoint an ombudsman to address any concerns about bias. Paramount had also reached a $16 million settlement with Trump over a “60 Minutes” interview with Kamala Harris prior to the deal getting done.
In one of his first moves as head of the combined Paramount, Ellison last week announced a $7.7 billion agreement to air Ultimate Fighting Championship events over the next seven years. That’s no doubt a smart business decision and certainly not lost on Ellison that UFC is a Trump-friendly form of entertainment, as well as a “global sports powerhouse.” UFC CEO Dana White said Ellison negotiated an “all-or-nothing” deal. White is close to Trump, who recently said he’d love to stage a UFC match on the White House lawn. (White also recently joined Meta’s board, too.)
Ellison, meanwhile, also struck a multi-year partnership with Taylor Sheridan, the creative mind behind “Yellowstone” and various spinoffs that are popular with conservative audiences.
To grow beyond the $30+ billion it made last year, Paramount will need to appeal to a wide and varied demographic. While its cancellation of “The Late Show with Stephen Colbert” sparked accusations of pro-Trump bias, Paramount’s recent $1.5 billion streaming deal with “South Park” creators Trey Parker and Matt Stone suggests that Ellison understands the power of polarizing entertainment on both sides of the house.
Rose Hammond pushed authorities for years to lower the 55 mph speed limit on a two-lane road that passes her assisted living community, a church, two schools and a busy park that hosts numerous youth sports leagues.
“What are you waiting for, somebody to get killed?” the 85-year-old chided officials in northwest Ohio, complaining that nothing was being done about the motorcycles that race by almost daily.
Amid growing public pressure, Sylvania Township asked county engineers in March to analyze whether Mitchaw Road’s posted speed is too high. The surprising answer: Technically, it’s 5 mph too low.
The reason dates back to studies on rural roads from the 1930s and 1940s that still play an outsized role in the way speed limits are set across the U.S. — even in urban areas.
Born from that research was a widely accepted concept known as the 85% rule, which suggests a road’s posted speed should be tied to the 15th-fastest vehicle out of every 100 traveling it in free-flowing traffic, rounded to the nearest 5 mph increment.
But after decades of closely following the rule, some states — with a nudge from the federal government — are seeking to modify if not replace it when setting guidelines for how local engineers should decide what speed limit to post.
Drivers set the speed
The concept assumes that a road’s safest speed is the one most vehicles travel — neither too high nor too low. If drivers think the speed limit should be raised, they can simply step on the gas and “vote with their feet,” as an old brochure from the Institute of Transportation Engineers once put it.
“The problem with this approach is it creates this feedback loop,” said Jenny O’Connell, director of member programs for the National Association of City Transportation Officials. “People speed, and then the speed limits will be ratcheted up to match that speed.”
The association developed an alternative to the 85% rule known as “City Limits,” which aims to minimize the risk of injuries for all road users by setting the speed limit based on a formula that factors in a street’s activity level and the likelihood of conflicts, such as collisions.
The report points out the 85% rule is based on dated research and that “these historic roads are a far cry from the vibrant streets and arterials that typify city streets today.”
Amid a recent spike in road deaths across the country, the Federal Highway Administration sent a subtle but important message to states that the 85% rule isn’t actually a rule at all and was carrying too much weight in determining local speed limits. In its first update since 2009 to a manual that establishes national guidelines for traffic signs, the agency clarified that communities should also consider such things as how the road is used, the risk to pedestrians, and the frequency of crashes.
Leah Shahum, who directs the Vision Zero Network, a nonprofit advocating for street safety, said she wishes the manual had gone further in downplaying the 85% rule but acknowledges the change has already impacted the way some states set speed limits. Others, however, are still clinging to the simplicity and familiarity of the longstanding approach, she said.
“The 85th percentile should not be the Holy Grail or the Bible, and yet over and over again it is accepted as that,” Shahum said.
Rethinking the need for speed
Under its “20 is Plenty” campaign, the Wisconsin capital of Madison has been changing signs across the city this summer, lowering the speed limit from 25 mph to 20 mph on local residential streets.
When Seattle took a similar step in a pilot program seven years ago, not only did it see a noticeable decline in serious injury crashes but also a 7% drop in the 85th percentile speed, according to the Vision Zero Network.
California embraces the 85% rule even more than most states as its basis for setting speed limits. But legislators have loosened the restrictions on local governments a bit in recent years, allowing them to depart from the guidelines if they can cite a proven safety need. Advocates for pedestrians and bicyclists say the change helps, but is not enough.
“We still have a long way to go in California in terms of putting value on all road users,” said Kendra Ramsey, executive director of the California Bicycle Coalition. “There’s still a very heavy mindset that automobiles are the primary method of travel and they should be given priority and reverence.”
But Jay Beeber, executive director for policy at the National Motorists Association, an advocacy organization for drivers, said following the 85% rule is usually the safest way to minimize the variation in speed between drivers who abide by the posted limit and those who far exceed it.
“It doesn’t really matter what number you put on a sign,” Beeber said. “The average driver drives the nature of the roadway. It would be patently unfair for a government to build a road to encourage people to drive 45 mph, put a 30 mph speed limit on it, and then ticket everyone for doing what they built the road to do.”
80 is the new 55
Fears about oil prices prompted Congress in the 1970s to set a 55 mph national maximum speed limit, which it later relaxed to 65 mph before repealing the law in 1995 and handing the authority to states. Since then, speed limits have kept climbing, with North Dakota this summer becoming the ninth state to allow drivers to go 80 mph on some stretches of highway. There’s even a 40-mile segment in Texas between Austin and San Antonio where 85 mph is allowed.
Although high-speed freeways outside major population centers aren’t the focus of most efforts to ease the 85% rule, a 2019 study from the Insurance Institute for Highway Safety — a research arm funded by auto insurers — illustrates the risks. Every 5 mph increase to a state’s maximum speed limit increases the chance of fatalities by 8.5% on interstate highways and 2.8% on other roads, the study found.
“Maybe back when you were driving a Model T you had a real feel for how fast you were going, but in modern vehicles you don’t have a sense of what 80 mph is. You’re in a cocoon,” said Chuck Farmer, the institute’s vice president for research, who conducted the study.
A town’s attempt at change
If elected officials in Sylvania Township, Ohio, got their way, Mitchaw Road’s posted speed limit would be cut dramatically — from 55 mph to 40 mph or lower. The county’s finding that the 85% rule actually calls for raising it to 60 mph surprised the town’s leaders, but not the engineers who ran the study.
“If we don’t make decisions based on data, it’s very difficult to make good decisions,” Lucas County Engineer Mike Pniewski said.
For now, the speed limit will remain as it is. That’s because Ohio law sets maximum speeds for 15 different types of roadways, regardless of what the 85% rule suggests.
And Ohio’s guidelines are evolving. The state now gives more consideration to roadway context and allows cities to reduce speed limits based on the lower standard of the 50th percentile speed when there’s a large presence of pedestrians and bicyclists. Authorities there recently hired a consultant to consider additional modifications based on what other states are doing.
“States have very slowly started to move away from the 85th percentile as being kind of the gold standard for decision-making,” said Michelle May, who manages Ohio’s highway safety program. “People are traveling and living differently than they did 40 years ago, and we want to put safety more at the focus.”
It’s unclear whether any of these changes will ultimately impact the posted speed on Mitchaw Road. After years of futile calls and emails to state, county and township officials, Hammond says she isn’t holding her breath.
Wall Street is heading into a pivotal week, with stocks riding high on expectations that the Federal Reserve will cut rates next month and signs that tariffs aren’t weighing on the economy as much as feared, so far. But minutes from the Fed’s last meeting, Jerome Powell’s Jackson Hole speech, and retail earnings will put the market’s views to the test.
U.S. stock futures pointed higher on Sunday evening ahead of a critical stretch for markets as investors brace for fresh clues on rate cuts and tariffs.
Futures tied to the Dow Jones Industrial Average rose 48 points, or 0.11%. S&P 500 futures were up 0.12%, and Nasdaq futures added 0.18%.
The yield on the 10-year Treasury was flat at 4.322%. The U.S. dollar was down 0.07% against the euro but up 0.07% against the yen.
Gold fell 0.25% to $3,374.10 per ounce. U.S. oil prices dropped 0.27% to $62.63 per barrel, and Brent crude fell 0.41% to $65.58.
Energy markets will also be in focus this week amid continued diplomacy to end Russia’s war on Ukraine as harsher U.S. sanctions on Moscow could target its oil exports, though President Donald Trump refrained from announcing any fresh penalties after ceasefire talks Friday failed to produce a deal.
Stocks have notched two consecutive weekly gains, with the S&P 500 hitting a fresh all-time high last week. That’s as corporate earnings have continued to come in strong and as the latest inflation readings were mixed but still haven’t set off panic about the effect of tariffs.
With the labor market also looking weaker, Wall Street overwhelmingly sees the inflation data giving the Federal Reserve a green light to resume rate cuts next month, further fueling market optimism.
But those views will be tested this week. On Wednesday, the Fed will release minutes from its policy meeting in July, when central bankers kept rates steady though two officials dissented. The details should show how much debate occurred and to what extent other policymakers were leaning a certain way.
Then the main attraction will take place on Friday, when Fed Chair Jerome Powell will deliver a speech at a gathering in Jackson Hole, Wyo. The annual event previously has served as an opportunity for policymakers to tease forthcoming rate moves.
Last year, Powell signaled a pivot to cuts, saying “the time has come for policy to adjust” and that “my confidence has grown that inflation is on a sustainable path back to 2%.” But he may not drop big hints this year, potentially setting up Wall Street for major disappointment.
Meanwhile, earnings season is winding down, but the coming week will feature several top retailers. Home Depot reports Tuesday, with Lowe’s and Target due on Wednesday. Walmart will put out its numbers on Thursday.
Their quarterly updates will provide new insights into how much tariffs are affecting prices and who is picking up the extra costs. The precise impact of tariffs on inflation remains somewhat of a mystery.
While companies may be absorbing much of the tariff costs for now, it’s not clear how much longer they can keep it up and how much consumers will be able to shoulder later.
If the retail giants keep eating tariff costs, that will show up on the bottom line and in their guidance. Citi doesn’t expect consumers to get hit with big price hikes in the future, even as more levies are expected to roll out.
“Softer demand means firms will have difficulty passing tariff costs on to consumers,” chief US economist Andrew Hollenhorst said in a note. “While some firms might still attempt to slowly increase prices in coming months, the experience so far suggests these increases will be modest in size. This should reduce concerns about upside risk to inflation and increase concerns that decreased profit margins will cause firms to pullback on hiring.”
Air Canada said it suspended plans to restart operations on Sunday after the union representing 10,000 flight attendants said it will defy a return to work order. The strike was already affecting about 130,000 travelers around the world per day during the peak summer travel season.
Canada’s largest airline now says it will resume flights Monday evening. Air Canada said in a statement that the union “illegally directed its flight attendant members to defy a direction from the Canadian Industrial Relations Board.”
“Our members are not going back to work,” Canadian Union of Public Employees national president Mark Hancock said outside Toronto’s Pearson International Airport. “We are saying no.”
Hancock ripped up a copy of the back-to-work order outside the airport’s departures terminal where union members were picketing Sunday morning. He said they won’t return Tuesday either.
The federal government didn’t immediately provide comment on the union refusing to return to work.
Hancock said the “whole process has been unfair” and said the union will challenge what it called an unconstitutional order.
Less than 12 hours after workers walked off the job, Federal Jobs Minister Patty Hajdu ordered the 10,000 flight attendants back to work, saying now is not the time to take risks with the economy and noting the unprecedented tariffs the U.S. has imposed on Canada. Hajdu referred the work stoppage to the Canada Industrial Relations Board.
The airline said the CIRB has extended the term of the existing collective agreement until a new one is determined by the arbitrator.
The shutdown of Canada’s largest airline early Saturday was impacting about 130,000 people a day. Air Canada operates around 700 flights per day.
Tourist Mel Durston from southern England was trying to make the most of sightseeing in Canada. But she said she doesn’t have a way to continue her journey.
“We wanted to go see the Rockies, but we might not get there because of this,” Durston said. “We might have to head straight back.”
James Hart and Zahara Virani were visiting Toronto from Calgary, Alberta for what they thought would be a fun weekend. But they ended up paying $2,600 Canadian ($1,880) to fly with another airline on a later day after their Air Canada flight got canceled.
“It’s a little frustrating and stressful, but at the same time, I don’t blame the flight attendants at all,” Virani said. “What they’re asking for is not unreasonable whatsoever.”
Flight attendants walked off the job around 1 a.m. EDT on Saturday. Around the same time, Air Canada said it would begin locking flight attendants out of airports.
The bitter contract fight escalated Friday as the union turned down Air Canada’s prior request to enter into government-directed arbitration, which allows a third-party mediator to decide the terms of a new contract.
Last year, the government forced the country’s two major railroads into arbitration with their labor union during a work stoppage. The union for the rail workers is suing, arguing the government is removing a union’s leverage in negotiations.
Hajdu maintained that her Liberal government is not anti-union, saying it is clear the two sides are at an impasse.
Passengers whose flights are impacted will be eligible to request a full refund on the airline’s website or mobile app, according to Air Canada.
The airline said it would also offer alternative travel options through other Canadian and foreign airlines when possible. Still, it warned that it could not guarantee immediate rebooking because flights on other airlines are already full “due to the summer travel peak.”
Air Canada and CUPE have been in contract talks for about eight months, but they have yet to reach a tentative deal. Both sides have said they remain far apart on the issue of pay and the unpaid work flight attendants do when planes aren’t in the air.
The airline’s latest offer included a 38% increase in total compensation, including benefits and pensions, over four years, that it said “would have made our flight attendants the best compensated in Canada.”
But the union pushed back, saying the proposed 8% raise in the first year didn’t go far enough because of inflation.
Wall Street overwhelmingly expects the Federal Reserve to cut rates next month, and Chairman Jerome Powell’s speech on Friday will give him a chance to hint at which direction policymakers are headed. But some analysts don’t think a September rate cut is in the bag, and even some that do expect a cut are doubtful that Powell will tease it at Jackson Hole.
All eyes will turn to Federal Reserve Chairman Jerome Powell on Friday, when he is scheduled to deliver a highly anticipated speech at a central bank conference in Jackson Hole, Wyo.
The annual event previously has served as an opportunity for policymakers to tease forthcoming rate moves. Last year, Powell signaled a pivot to cuts, saying “the time has come for policy to adjust” and that “my confidence has grown that inflation is on a sustainable path back to 2%.”
Wall Street overwhelmingly expects the Fed to resume rate cuts in September, after holding off for months as President Donald Trump’s tariffs ripple through the economy. That’s as Trump and the White House have put immense pressure on the Fed to ease while a more dovish governor was named to the board of governors.
But Powell may not drop big hints this year.
For one thing, some analysts don’t think a September rate cut is in the bag because inflation remains above the Fed’s 2% target and is ticking higher as tariffs put upward pressure on prices.
Meanwhile, economists are debating whether deteriorating jobs data are due to weak demand for workers or weak supply. If the problem is supply, then rate cuts would worsen inflation.
“Tariffs are feeding through unevenly and will continue to push inflation higher in the coming months,” wrote Michael Pearce, deputy chief U.S. economist at Oxford Economics, in a note on Friday. “It will be difficult for policymakers to tease out one-off tariff effects from longer-lasting inflationary pressures.”
For now, he thinks the Fed will remain on hold until December, but a weak August jobs report would change his view.
Market veteran Ed Yardeni has maintained a “none-and-done” forecast for this year, saying the Fed will hold off on cuts due to still-elevated inflation and the continued resilience of the U.S. economy.
As for the Jackson Hole speech, a note from Yardeni Research on Sunday predicted Powell would keep his cards close to his vest.
“Odds are that he will be more of an owl—waiting and watching—than either a hawk or a dove,” it said. “In other words, he’ll say that a Fed rate cut is possible at the September meeting, but the Fed’s decisions are data-dependent.”
Bank of America has similarly been skeptical about rate cuts this year and pointed out that Powell suggested in July he would be comfortable with low job gains as long as the unemployment rate stays in a tight range.
That scenario now looks like it’s becoming reality, and BofA said Powell’s Jackson Hole speech will give him a chance to “walk the talk.”
“If Powell wants to lean against a September cut, he could say that the policy stance remains appropriate given the data at hand. We note that this phrasing would allow him to retain the optionality of cutting if the August jobs report is very weak,” the bank said in a note Wednesday. “Of course, he might also telegraph a cut by saying it is appropriate to move to a less restrictive policy stance.”
Wall Street has so thoroughly priced in a September cut that any sign investors may have to wait longer would not only be a severe letdown—it would feel like a rate hike.
Preston Caldwell, chief US economist at Morningstar, wrote Tuesday that given how long the market has been expecting a reduction, “postponing cuts much further would constitute an effective tightening of monetary policy at this stage.”
‘We don’t think Powell can firmly guide toward easing’
But even some economists who do think the Fed will cut next month are doubtful that Powell will tip his hand on Friday.
JPMorgan said the tension in the Fed’s dual mandate between fighting inflation and maximizing employment now favors the latter.
Despite recent inflation data indicating tariffs are filtering into prices more, the disappointing jobs report should tilt the Fed toward cutting rates next month.
“However, with several Fed speakers recently stating that the case for a cut has not been made, and with more employment data to come, we don’t think Powell can firmly guide toward easing at the next meeting,” JPMorgan said in a note Friday.
Citi Research chief US economist Andrew Hollenhorst thinks Powell will hint at a cut, but won’t go beyond that.
The hint could come in the form of a remark that risks to employment and inflation are coming into balance. In July, Powell said if they were in balance, then rates should be more neutral. Given that he called the current rate level “modestly restrictive,” that suggests balanced risks would merit a cut.
Since then, jobs data show the labor market has softened, allowing Powell to say that risks are more balanced and that rate cuts would be appropriate next month if that trend continues, Hollenhorst wrote in a note Friday.
“We expect Chair Powell to confirm market pricing for a return to rate cuts in September, but stop short of explicitly committing to cut at that meeting,” he said. “We do not expect he will comment on the size of the cut, but it is safe to assume the base case at the moment is for a 25bp cut.”
Recent economic data continue to give mixed signals on how much tariffs are affecting prices, leaving Wall Street conflicted on who is paying for what. While companies may be absorbing much of the tariff costs for now, it’s not clear how much longer they can keep it up and how much consumers will be able to shoulder later.
Months after President Donald Trump launched his trade war, economic data continue to give mixed signals on how much tariffs are affecting prices in the U.S.
While the consumer price index has ticked higher, it has also consistently come in below forecasts, though the latest reading on producer prices surprised to the upside.
Certain sectors heavily exposed to tariffs have seen spikes, but July data showed less upward price pressure on some goods prices and more pressure on some services.
“Despite this firmness, the tariff pass-through effect on consumer prices arguably has been less bad than expected so far,” JPMorgan economists led by Michael Feroli said in a note on Friday.
According to the bank, one potential explanation for the muted inflation numbers is that firms are eating the tariff cost at the expense of their profit margins, which are currently wide by historical standards and can accommodate the added costs without harming capital or operating budgets.
Other explanations include the delayed effects of duties on prices as companies draw down pre-tariff inventories, the seasonality of prices as inflation during the summer tends to be softer than in the winter, and tariff costs being passed though more via services rather than goods, JPMorgan added.
Yet another explanation could be that the tariff rates importers are actually paying are far below the headline numbers. A recent Barclays report found that the weighted-average levy in May was just 9% versus the bank’s estimate for 12%.
That’s because demand shifted away from countries with higher tariffs while more than half of U.S. imports that month were duty-free. Despite higher rates on Canada, for example, they don’t apply to goods covered under the U.S.-Mexico-Canada trade agreement.
“The real surprise in the U.S. economy’s resilience lies not in its reaction to tariffs but that the rise in the effective tariff rate has been more modest than commonly thought,” the report said.
To be sure, Barclays said the weighted-average rate has edged up to 10% today and predicted it will eventually settle at around 15%, as more products like pharmaceuticals are expected to get hit with levies and as loopholes close.
Businesses vs. consumers
Citi Research still doesn’t see much evidence of broad-based price pressure from tariffs and attributed the recent uptick in services to one-time anomalies, such as the 5.8% jump in portfolio management fees due to the rally in asset prices.
Citi also doesn’t expect consumers to get hit with big price hikes in the future, even as more levies are expected to roll out.
“Softer demand means firms will have difficulty passing tariff costs on to consumers,” chief US economist Andrew Hollenhorst said in a note. “While some firms might still attempt to slowly increase prices in coming months, the experience so far suggests these increases will be modest in size. This should reduce concerns about upside risk to inflation and increase concerns that decreased profit margins will cause firms to pullback on hiring.”
For businesses, the burden will shrink from 64% down to 8%, while foreign suppliers will see an uptick from 14% to 25% of the tariff impact.
Unraveling the mystery over what tariffs are doing—or not doing—to inflation has major implications for the Federal Reserve, which is trying to balance both sides of its dual mandate.
Tariffs have kept inflation stubbornly above the Fed’s 2% target, causing policymakers to hold off on rate cuts. But weakness in jobs data have raised alarms on employment, fueling demands for easing.
“The evidence so far is that almost all of the costs of tariffs are being born by domestic firms,” Citi’s Hollenhorst wrote. “The lack of pass-through should reduce lingering Fed official inflation concerns and allow for a series of rate cuts beginning in September. If anything markets are underpricing the potential for faster and/or deeper cuts.”
Special U.S. envoy Steve Witkoff said Sunday that Russian leader Vladimir Putin agreed at his summit with President Donald Trump to allow the U.S. and European allies to offer Ukraine a security guarantee resembling NATO’s collective defense mandate as part of an eventual deal to end the 3 1/2-year war.
“We were able to win the following concession: That the United States could offer Article 5-like protection, which is one of the real reasons why Ukraine wants to be in NATO,” he said on CNN’s “State of the Union.” He added that it “was the first time we had ever heard the Russians agree to that.”
European Commission President Ursula von der Leyen, speaking at a news conference in Brussels with Ukrainian President Volodymyr Zelenskyy, said that “we welcome President Trump’s willingness to contribute to Article 5-like security guarantees for Ukraine, and the ‘Coalition of the willing’ — including the European Union — is ready to do its share.”
Witkoff, offering some of the first details of what was discussed at Friday’s summit in Alaska, said the two sides agreeing to “robust security guarantees that I would describe as game-changing.” He added that Russia said that it would make a legislative commitment not to go after any additional territory in Ukraine.
Zelenskyy thanked the United States for recent signals that Washington is willing to support security guarantees for Ukraine, but said the details remained unclear.
“It is important that America agrees to work with Europe to provide security guarantees for Ukraine,” he said. “But there are no details how it will work, and what America’s role will be, Europe’s role will be and what the EU can do, and this is our main task, we need security to work in practice like Article 5 of NATO, and we consider EU accession to be part of the security guarantees.”
Witkoff defended Trump’s decision to abandon his push for Russian to agree to an immediate ceasefire, saying the president had pivoted toward a peace deal because so much progress was made.
“We covered almost all the other issues necessary for a peace deal,” Witkoff said, without elaborating.
“We began to see some moderation in the way they’re thinking about getting to a final peace deal,” he said.
Secretary of State Marco Rubio insisted there would be “additional consequences” as Trump warned before meeting with Putin, if they failed to reach a ceasefire. But Rubio noted that there wasn’t going to be any sort of deal on a truce reached when Ukraine wasn’t at the talks.
“Now, ultimately, if there isn’t a peace agreement, if there isn’t an end of this war, the president’s been clear, there are going to be consequences,” Rubio said on ABC’s “This Week.” “But we’re trying to avoid that. And the way we’re trying to avoid those consequences is with an even better consequence, which is peace, the end of hostilities.”
Rubio, who is also Trump’s national security adviser, said he did not believe issuing new sanctions on Russia would force Putin to accept a ceasefire, noting that the latter isn’t off the table but that “the best way to end this conflict is through a full peace deal.”
“The minute you issue new sanctions, your ability to get them to the table, our ability to get them to table will be severely diminished,” Rubio said on NBC’s “Meet the Press.”
He also said “we’re not at the precipice of a peace agreement” and that getting there would not be easy and would take a lot of work.
“We made progress in the sense that we identified potential areas of agreement, but there remains some big areas of disagreement. So we’re still a long ways off,” Rubio said.
Zelenskyy and Europeans leaders are scheduled to meet Monday with Trump at the White House. They heard from the president after his meeting with Putin.
“I think everybody agreed that we had made progress. Maybe not enough for a peace deal, but we are on the path for the first time,” Witkoff said.
He added: “The fundamental issue, which is some sort of land swap, which is obviously ultimately in the control of the Ukrainians — that could not have been discussed at this meeting” with Putin. “We intend to discuss it on Monday. Hopefully we have some clarity on it and hopefully that ends up in a peace deal very, very soon.”
President Donald Trump meets with Russia's President Vladimir Putin Friday, Aug. 15, 2025, at Joint Base Elmendorf-Richardson, Alaska. At left is Russia's Foreign Minister Sergey Lavrov and second from right is Secretary of State Marco Rubio.
For decades, Miles “Burt” Marshall was the man you went to see in a stretch of upstate New York if you had some money to invest but wanted to keep it local.
Working from an office in the charming village of Hamilton, down the road from Colgate University, Marshall prepared taxes and sold insurance. He also took money for what was sometimes called the “8% Fund,” which guaranteed that much in annual interest no matter what happened with the financial markets.
His clients spread the word to family and friends. Have a retirement nest egg? Let Burt handle it. He’ll invest it in local rental properties and your money will grow faster than in a bank.
Marshall was friendly and folksy. He gave away gift bags with maple syrup, pickles and local honey in jars labeled with cute sayings like, “Don’t be a sap. For proper insurance coverage call Miles B. Marshall.”
“He would tell you about all the other people that invest. Churches invest. Fire companies invest. Doctors invest,” said one client, Christine Corrigan. “So you’d think, ‘Well, they’re smart people. They wouldn’t be doing this if it wasn’t okay to do … Why are you going to be the suspicious one?”
Then it all came crashing down.
Marshall owed almost 1,000 people and organizations about $95 million in principal and interest when he filed for bankruptcy protection two years ago, according to the trustee’s filings.
This summer, the 73-year-old businessman was indicted on charges that his investment business was a Ponzi scheme. He could face prison time if convicted.
Marshall’s lawyers declined to comment.
Total losses by Marshall’s investors fall short of the multibillion-dollar Ponzi scheme masterminded by Bernie Madoff. But they loom large in the small, college town of about 6,400 people and its largely rural surrounding area.
Many investors were Colgate professors, laborers, office workers or retirees. Some lost their life’s savings of tens or hundreds of thousands of dollars. Corrigan and her husband, who own a restaurant 30 miles (48 kilometers) east, were owed about $1.5 million.
Now they’re wondering how someone who seemed so reliable, who held annual parties for his clients and even called them on their birthdays could betray their trust.
“You look at life differently after this happens. It’s like, ‘Who do you trust?’” said Dennis Sullivan, who was owed about $40,000. “It’s sad because of what he’s done to the area.”
A reliable local businessman
Marshall and his wife lived in a brick Victorian, blocks from his office. Aside from insurance and tax preparation, he rented more than 100 properties and ran a self-storage business and a print shop.
His parents had run an insurance and realty business in the area and the Marshall name was respected locally.
Though he quit college, he was a federally enrolled tax professional. To many in the area, he seemed knowledgeable about money and kept a neat office.
“He had French doors and a beautiful carpet and a big desk and he just looked like he was prosperous and reliable,” Corrigan said.
Marshall began taking money from people to buy and maintain rental properties in the 1980s. People got back promissory notes — slips of paper with the dollar amount written in. Withdrawals could be made with 30 days’ notice. People could choose to receive regular interest payments.
Participants saw the transactions as investments. Marshall has called them loans.
For many years, Marshall made good on his promises to pay interest and process withdrawals. More people took part as word spread. Sullivan recalls how his parents gave Marshall money, then he did, then his fiancee, then his fiancee’s daughter, then his son, and even his snowmobile club.
”Everybody gets snowballed into it,” Sullivan said.
A number of investors lived in other states, but had connections to the area.
The promise of 8% returns was unremarkable in the ’80s, a time of higher interest rates. But it stood out later as rates dropped. Marshall told a bankruptcy proceeding that he assumed appreciation on his real estate would more than cover the debts.
“That’s obviously false now,” he said, according to filings, “but that’s what I always thought.”
Reckoning with more than $90 million in debt
The money stopped flowing by 2023.
Marshall filed for Chapter 11 bankruptcy protection that April, declaring more than $90 million in liabilities and $21.5 million in assets, most of it in real estate.
He explained in a filing that he had been been hospitalized for a “serious heart condition” that required two surgeries, costing him $600,000. As news of his illness spread, there was a run on note holders asking for their money back.
The bankruptcy trustee, Fred Stevens, blamed Marshall’s insolvency on incompetent business practices and borrowing from people at above-market rates. The trustee contended that by 2011, Marshall was using new investment money to pay off previous investors, the hallmark of a Ponzi scheme.
Prosecutors claim Marshall falsely represented the profitability of his real estate business and had his staff generate “transaction summaries” with bogus information about account balances and earned interest.
Money was funneled into his other businesses and he spent hundreds of thousands of investors’ dollars on personal expenses, including airline travel, meals out, groceries and yoga studios, according to prosecutors.
Marshall’s clients feel betrayed.
“We left it there so that it would accumulate. Well, it accumulated in his pocket,” Barbara Baltusnik said of her investment.
The ripple effects of multimillion-dollar losses
Marshall pleaded not guilty in June to charges of grand larceny and securities fraud. He’s accused of stealing more than $50 million.
Marshall’s home and properties were sold as part of bankruptcy proceedings, which continue. People who gave Marshall their money stand to recoup around 5.4 cents on the dollar from the asset sales. Potential claims against financial institutions are being pursued, according to the trustee.
Baltusnik said she and her husband were owed hundreds of thousands of dollars and now she wonders how she will pay doctors’ bills. Sullivan’s mother moved in with him after losing her investment.
In Epworth, Georgia, retiree Carolyn Call will never see money she hoped would help augment her Social Security payments. She found out about Marshall though an uncle who lived in upstate New York.
“I’m just able to pay my bills and keep going,” she said. “Nothing extravagant. No trips. Can’t do anything hardly for the grandkids.”
Foreign investor holdings of Treasuries climbed to a record high in June, showcasing sustained overseas demand for US government debt even as a slump in the dollar stoked concerns about sentiment toward American assets.
Foreign holdings totaled $9.13 trillion for June, up $80.2 billion from May, Treasury Department figures showed Friday. For the first half of the year, foreign holdings went up by $508.1 billion. That was during a period in which one benchmark gauge of the dollar tumbled by almost 11%, the most since 1973.
Britain and Belgium saw the biggest gains in holdings, while India — currently embroiled in a trade battle with the Trump administration — and Ireland posted declines. China’s stockpile was little changed. Holdings are affected by net sales or purchases along with shifts in valuation. The Bloomberg US Treasury index advanced in June, after a selloff the previous month.
Japan, the biggest holder of Treasuries, saw a $12.6 billion rise in its holdings, to $1.15 trillion, while China’s stockpile — now the third larges, behind the UK — ticked up $100 million $756.4 billion. Belgium, whose holdings include Chinese custodial accounts according to market analysts, saw its stockpile go up by $17.9 billion, to $433.4 billion.
Britain’s holdings jumped by $48.7 billion, the most since March 2023, to $858.1 billion.
India’s total dropped by $7.9 billion, to $227.4 billion.
Overseas holdings of Treasuries have been in focus against a backdrop of concern about foreign demand after President Donald Trump slapped tariff increases on the rest of the world. Foreign funds and governments hold over 30% of US Treasuries outstanding.
In 1981, the year Airbus SE announced it would build a new single-aisle jetliner to take on Boeing Co., the 737 ruled the roost.
The US-made narrowbody, already in use for more than a decade, had reshaped the airline industry by making shorter routes cheaper and more profitable to operate. By 1988, when Airbus began producing its upstart A320, Boeing had built a formidable lead by delivering some 1,500 of its cigar-shaped best-seller.
It’s taken the better part of four decades, but Airbus has finally caught up: The A320 series is poised to overtake its US competitor as the most-delivered commercial airliner in history, according to aviation consultancy Cirium. As of early August, Airbus had winnowed the gap to just 20 units, with 12,155 lifetime A320-family shipments, according to the data. That difference is likely to disappear as soon as next month.
“Did anyone back then expect it could become number one – and on such high production volumes?” Max Kingsley-Jones, head of advisory at Cirium Ascend, wrote of the A320 in a recent social-media post. “I certainly didn’t, and nor probably did Airbus.”
The A320’s success mirrors the European planemaker’s decades-long rise from fledgling planemaker to serious contender, and finally Boeing’s better. By the early 2000s, annual deliveries of the A320 and its derivatives had surpassed the 737 family; total orders eclipsed the Boeing jet in 2019. But the 737 stubbornly remained the most-delivered commercial aircraft of all time.
At the outset, Airbus faced an uphill battle. The European planemaker, an assemblage of aerospace manufacturers formed in 1970 with backing from European governments, didn’t yet offer a full aircraft lineup. Infighting hindered everything from product planning to manufacturing, and leadership decisions had to finely balance French and German commercial and political interests.
Yet it was clear even then that Airbus needed a presence in the narrowbody segment to firmly establish itself as Boeing’s top rival. Those aircraft are by far the most widely flown category in commercial aviation, typically connecting city pairs on shorter routes.
Higher fuel costs and the deregulation of the US aviation industry in the late 1970s had given the European planemaker an opening with American airline executives, who clamored for an all-new single-aisle, according to a history of Airbus written by journalist Nicola Clark.
To set the A320 apart, Airbus took some risks. It selected digital fly-by-wire controls that saved weight over traditional hydraulic systems, and gave pilots a side-stick at their right or left hand instead of a centrally mounted yoke. The aircraft also sat higher off the ground than the 737 and came with a choice of two engines, giving customers greater flexibility.
Airbus’s gamble paid off. Today, the A320 and 737 make up nearly half of the global passenger jet fleet in service. And the A320’s success contrasts with strategic blunders like the A380 behemoth that proved short-lived because airlines couldn’t profitably operate the giant plane. Boeing maintained that smaller, nimbler planes like the 787 Dreamliner would have an edge — a prediction that proved right.
Yet the longtime dominance of the two narrowbody aircraft raises questions about the vitality of a duopoly system that favors stability over innovation. Both airplane makers have repeatedly opted for incremental changes that squeeze efficiencies out of their top-selling models, rather than going the more expensive route of designing a replacement aircraft from scratch.
Airbus was first to introduce new engines to its A320, turning the neo variant into a huge hit with airlines seeking to cut their fuel bill. Under pressure, Boeing followed, but its approach proved calamitous. The US planemaker came up with the 737 Max, strapping more powerful engines onto the aircraft’s aging, low-slung frame.
It installed an automated flight-stabilizing feature called MCAS to help manage the higher thrust and balance out the plane. Regulators later found MCAS contributed to two deadly 737 Max crashes that led to a global grounding of the jet for 20 months, starting in 2019.
More recently, Airbus has been bedeviled by issues with the fuel-efficient engines that power the A320neo. High-tech coatings that allow its Pratt & Whitney geared turbofans to run at hotter temperatures have shown flaws, forcing airline customers to send aircraft in for extra maintenance, backing up repair shops and grounding hundreds of jets waiting for inspection and repair.
With both narrowbody families near the end of their evolutionary timeline, analysts and investors have begun asking about what’s next. China, for its part, is seeking to muscle into the market with its Comac C919 model that’s begun operating in the country, but hasn’t so far been certified to fly in Europe or the US.
Boeing Chief Executive Officer Kelly Ortberg said in July that the company is working internally toward a next-generation plane, but is waiting for engine technology and other factors to fall into place, including restoring cash flow after years of setbacks.
“That’s not today and probably not tomorrow,” he said on a July 29 call.
Airbus’s healthier finances give it more flexibility to explore design leaps. CEO Guillaume Faury toyed with rolling out a hydrogen-powered aircraft — potentially with a radical “flying wing” design — in the mid-2030s but has since pushed back the effort to focus on a conventional A320 successor.
The Toulouse, France-based company is considering an open-rotor engine that would save fuel through its architecture rather than the current jet turbines that push the limits of physics to eke out gains.
Speaking at the Paris Air Show in June, Faury called the A320 “quite an old platform” and affirmed plans to launch a successor by the end of this decade, with service entry in the mid-2030s.
“I have a lot of focus on preparing that next-generation of single aisle,” Faury said. “We are very steady and very committed to this.”
Twenty years ago, I published a paper that helped uncover one of the largest corporate scandals in U.S. history. More than 100 public companies were implicated, dozens of executives resigned or faced criminal charges, and billions in earnings had to be restated.
I never intended to be a whistleblower. I was simply doing what academics are trained to do: ask questions, follow the data, and let the evidence speak. But what the evidence revealed was staggering: executives at hundreds of companies were manipulating stock option grant dates to enrich their executives at the expense of shareholders. The practice became known as backdating.
Now, on the 20th anniversary of that research, I see troubling parallels emerging in other corners of the financial world.
A pattern too precise to be chance
My journey into this murky corner of corporate behavior began with a desire to understand how executive compensation influenced firm decisions. While analyzing large datasets of compensation and stock prices, I noticed something peculiar: stock option grants often coincided with recent dips in the company’s share price. Too often.
The pattern was statistically improbable. It was as if executives had a crystal ball, repeatedly receiving options at the most opportune moment. But the truth was more mundane—and more troubling. Companies were retroactively selecting grant dates that coincided with low stock prices, effectively locking in instant, unearned gains. This allowed executives to buy shares at a discount while maintaining the illusion that they had to earn the discount by lifting the stock price.
The simplicity of the scheme
What made the fraud so insidious was its simplicity. Backdating didn’t require complex financial engineering or elaborate cover-ups. It was a quiet manipulation of paperwork—choosing a date in the past when the stock price was low and pretending that was the day the options were granted.
That simplicity likely contributed to its spread. There’s evidence that individuals on multiple boards passed along the practice. But even isolated executives and directors could easily conceive the scheme, much like someone backdating a check to make it appear they paid a bill on time.
Hidden in plain sight
What struck me most was that backdating went unnoticed for at least a decade. It was a silent epidemic of opportunism. The option grant data was public. Thousands of participants were involved. Surely some auditors must have seen isolated traces of the fraud. But no one connected the dots.
My research, combined with a timely nudge, eventually prompted the SEC to launch targeted investigations. Journalists followed, including a team at The Wall Street Journal with the time, resources, and incentives to pursue the story. Their work earned the paper its first Pulitzer Prize for Public Service.
Parallels in other scandals
I’ve since seen parallels of backdating in other financial scandals. For example, backdating is not the only fraud that depends on simply picking prices from the past. Bernie Madoff’s infamous Ponzi scheme used fabricated trades based on stale prices. Remarkably, Madoff’s investors accepted these reports for years, despite the implausibility of the returns. Similarly, the mutual fund late-trading scandal allowed favored clients to illegally trade mutual funds late in the evening at stale prices from the end of the trading day.
These cases show how much easier it is to perform well when you can reach back in time and choose a favorable moment to act.
Today, I worry that similar dynamics may be unfolding in private equity. Many funds report valuations based on internal or third-party estimates shortly after acquiring assets. These valuations often appear inflated—sometimes even acknowledged as such by the firms themselves. Yet these funds are increasingly included in pension portfolios, exposing everyday investors to risks—and potentially fraud—they may not fully understand.
The paradox of corporate fraud
That’s the paradox of corporate fraud: it’s both obvious and invisible. The data is often there. The patterns are detectable. But with silent perpetrators, the deception persists.
What gives me hope is that our tools for detecting fraud are more powerful than ever. We have better data, sharper analytical methods, and a growing community of skeptical citizen watchdogs.
Because the next scandal won’t be stopped by regulators alone. It will be stopped by someone who notices a pattern, asks a question, and refuses to look away.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
We all have heard the key rule for saving and investing which is “the earlier, the better,” whether for a dream vacation or planning for retirement. A similar principle applies to workplace benefits: Harnessing the power of compounding can help you reach your financial goals more quickly.
The total rewards your company offers go beyond your salary—your compensation can include everything from healthcare to equity compensation. Remaining at a role longer-term can be more than just a milestone: Tenure may unlock certain features in your workplace benefits, or simply allow workplace investment accounts such as 401(k)s to build and have a greater impact on your overall financial trajectory.
Let’s walk through the power of vesting schedules, classic compounding interest, and how this all comes together in your workplace benefits.
1. Shift your perspective—some workplace benefits are investments that compound over time
While your salary is important, your workplace benefits play a crucial role your overall earnings—they can even be an investment. In fact, our research shows that 90% of employees believe that workplace benefits are essential to meet financial goals.1
For example, your 401(k) contributions grow tax free, and can be invested in a range of funds and assets to fit your risk tolerance and time to retirement. If your employer offers a match, they’ll contribute a dollar-for-dollar amount up to a certain limit—augmenting your initial investment. Over time, you also earn interest on those investments in your 401(k) account – resulting in compounded earnings.
Equity compensation can also be viewed as an investment. The value of your equity awards is directly tied to the company’s performance and stock price. If the company experiences growth, the value of the equity held by employees will likely increase (and vice versa). So, depending on market conditions, company stock has the potential to outpace standard bonuses. Plus, awards may be eligible to earn dividends or dividend equivalents, which can accrue over time. You also have the potential to earn proceeds or diversify your holdings by selling any company stock during open trading windows—just be mindful of tax consequences as well as your overall financial strategy.
2. Check if your workplace benefits are tied to vesting schedules
Each financial benefit that you enroll in has its own unique structure and comes with its own set of guidelines. Some may require you to fulfill a certain period of employment before you are entitled to the full balance (or become “fully vested”). For example, with retirement accounts like 401(k)s, while your own contributions are always yours, you may need to remain at your job for a certain number of years to be able to take home any employer matching contributions. This is usually determined through “cliff vesting” (100% after required years, and none before) or “graded vesting” (keep a certain percentage each year).
Similarly, equity compensation, if you are eligible, offers the potential for you to share in the success of your company. Oftentimes, equity awards follow vesting schedules before you gain ownership of the shares awarded, sometimes tied to performance or time served. Once stock options have vested, after
you leave your job, you might typically have 90 days to exercise, meaning you can purchase the shares at the predetermined price. After that, your shares will go back into your company’s employee option pool.
One popular vesting schedule for equity is over four years, with a one-year cliff: Meaning, equity compensation begins vesting once the recipient has been with the company for one year, and after that year, a portion of their equity compensation will vest each month until the equity is fully vested at four years. Even so, potential growth starts on the award’s grant date—not the date of vesting. So, depending on market conditions, the financial value can be growing even while you wait to vest.
3. Evaluate how your benefits fit into your overall financial picture
No matter where you are in your career, it’s important to understand the role that your workplace benefits play in your overall financial picture. Review your savings, understand the terms of your benefits and have a plan for rolling over or managing any investment-related benefits.
Also, consider the impact on any additional benefits: Our research shows that 9 in 10 employers are now offering financial wellness benefits.1 If you’re enrolled in a student loan repayment plan, you may be expected to repay some or all the assistance if you don’t meet a certain length of employment. And the sandwich generation, caring for aging parents and growing children simultaneously,2 may be enrolled in employer-sponsored childcare and eldercare stipends.
Investing can be complex. If you need help navigating the financial aspects of your workplace benefits. It may be helpful to reference your employer’s educational content, or even potentially connect with a financial coach or advisor. No matter your workplace benefits enrollments, your overall compensation should be able to support your financial goals. Make sure you understand the full picture of what you get from your company, what it’s worth, and how it can build over time to help you reach your goals.
Investing—even through workplace accounts—can be complex. It may be helpful to reference your employer’s educational content, or even potentially connect with a financial coach or advisor.
This material has been prepared for informational purposes only. It does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Morgan Stanley Smith Barney LLC (“Morgan Stanley”) recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a Morgan Stanley Financial Advisor. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.
Employee stock plan solutions are offered by E*TRADE Financial Corporate Services, Inc., Solium Capital LLC, Solium Plan Managers LLC and Morgan Stanley Smith Barney LLC (“MSSB”), which are part of Morgan Stanley at Work.
Morgan Stanley at Work services and stock plan accounts are provided by wholly owned subsidiaries of Morgan Stanley. Morgan Stanley at Work stock plan accounts were previously referred to as Shareworks, StockPlan Connect or E*TRADE stock plan accounts, as applicable.
In connection with stock plan solutions offered by Morgan Stanley at Work, securities products and services are offered by MSSB, Member SIPC. E*TRADE from Morgan Stanley is a registered trademark of MSSB.
All entities are separate but affiliated subsidiaries of Morgan Stanley.
When Morgan Stanley Smith Barney LLC, its affiliates and Morgan Stanley Financial Advisors and Private Wealth Advisors (collectively, “Morgan Stanley”) provide “investment advice” regarding a retirement or welfare benefit plan account, an individual retirement account or a Coverdell education savings account (“Retirement Account”), Morgan Stanley is a “fiduciary” as those terms are defined under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and/or the Internal Revenue Code of 1986 (the “Code”), as applicable. When Morgan Stanley provides investment education, takes orders on an unsolicited basis or otherwise does not provide “investment advice”, Morgan Stanley will not be considered a “fiduciary” under ERISA and/or the Code. For more information regarding Morgan Stanley’s role with respect to a Retirement Account, please visit www.morganstanley.com/disclosures/dol.
The laws, regulations, and rulings addressed by the products, services, and publications offered by Morgan Stanley and its affiliates are subject to various interpretations and frequent change. Morgan Stanley and its affiliates do not warrant these products, services, and publications against different interpretations or subsequent changes of laws, regulations, and rulings. Morgan Stanley and its affiliates do not provide legal, accounting, or tax advice. Always consult your own legal, accounting, and tax advisors.
This material may provide the addresses of, or contain hyperlinks to, websites. Except to the extent to which the material refers to website material of Morgan Stanley Wealth Management, the firm has not reviewed the linked site. Equally, except to the extent to which the material refers to website material of Morgan Stanley Wealth Management, the firm takes no responsibility for, and makes no representations or warranties whatsoever as to, the data and information contained therein. Such address or hyperlink (including addresses or hyperlinks to website material of Morgan Stanley Wealth Management) is provided solely for your convenience and information and the content of the linked site does not in any way form part of this document. Accessing such website or following such link through the material or the website of the firm shall be at your own risk and we shall have no liability arising out of, or in connection with, any such referenced website.
Morgan Stanley Wealth Management is a business of Morgan Stanley Smith Barney LLC.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
The clock is ticking toward September 30, 2025, when one of America’s most vital cybersecurity protections will expire unless Congress acts. The Cybersecurity Information Sharing Act of 2015 (CISA 2015) has quietly become the backbone of our nation’s cyber defense. Without creating any additional regulations, it enabled the rapid sharing of threat intelligence between government and businesses that has prevented countless cyber attacks over the past decade. The Act’s protections have facilitated threat warnings to thousands of organizations just this year. Its potential sunset threatens to unleash a wave of cyberattacks that will devastate the small and medium-sized businesses (SMBs) that form a foundational part of our economy.
As someone who has worked on both sides—first leading public-private partnerships at the FBI and now facilitating industry collaboration—I’ve witnessed firsthand how CISA 2015 transformed our cybersecurity landscape. The law provides crucial liability protections that encourage companies to share threat indicators with the government and each other, while offering antitrust protection for industry-to-industry collaboration. Without these safeguards, the robust information sharing that has made American networks more secure simply stops.
The SMB Crisis Waiting to Happen
The consequences of letting CISA 2015 lapse will fall most heavily on America’s small and medium-sized businesses. Recent data from NetDiligence’s 2024 Cyber Claims Study shows that ransomware cost SMBs an average of $432,000 per attack. These businesses don’t have the cash reserves to weather extended downtime. At most, many can only survive three to four weeks of operational disruption before facing permanent closure.
According to industry analysis, small and medium enterprises represent 98% of cyber insurance claims while accounting for $1.9 billion in total losses, underscoring their vulnerability in today’s threat landscape. CISA 2015’s expiration will significantly weaken the early warning system that has helped businesses stay ahead of emerging threats. Without the government’s ability to share robust intelligence about new attack methods, SMBs become sitting ducks for cybercriminals who specifically target organizations that can’t afford to lose days or weeks.
Healthcare: Where Cybersecurity Becomes Life and Death
The stakes become particularly dire in healthcare, where ransomware attacks don’t just threaten profits—they threaten lives. The University of Minnesota School of Public Health’s experts estimate that ransomware attacks killed 42 to 67 Medicare patients between 2016 and 2021. These numbers represent a horrifying trend: threat actors deliberately target hospitals because they know healthcare systems will pay quickly to avoid putting patients at risk.
If information sharing degrades after CISA 2015’s sunset, hospitals–and all other critical infrastructure–very likely will lose crucial early warnings about ransomware variants and other attack methods. When a hospital’s systems are threatened, rapid information sharing matters. Minutes count in medical emergencies, and delays can be fatal.
Economic Ripple Effects
The economic impact extends far beyond individual companies. SMBs make up the vast majority of (99%) businesses in the U.S., and employ nearly half of the private sector’s workforce. According to the U.S. Chamber of Commerce, they’re responsible for 43.5% of our GDP, so their widespread failure would create devastating ripple effects throughout the economy.
More concerning, America’s technological leadership depends on the robust threat intelligence sharing that CISA 2015 enables. Our cybersecurity companies lead the world precisely because they have access to comprehensive threat data that helps them develop superior products and services.
Other countries modeled its cybersecurity information sharing after our system, recognizing that America’s approach gives us a competitive advantage. If we allow this framework to collapse, we’re not just making individual businesses more vulnerable—we’re undermining the foundation of American cybersecurity leadership that other nations seek to emulate.
The Path Forward: Clean Reauthorization Now
There’s bipartisan agreement that CISA 2015 should be reauthorized, with experts from across the political spectrum recognizing its vital importance. DHS Secretary Kristi Noem has urgently called for reauthorization, emphasizing that public-private partnerships have grown stronger because of the information-sharing guidelines established in CISA 2015.
The cleanest path forward is a straightforward reauthorization while Congress works through any technical improvements. The core framework has proven its worth over a decade of operation, facilitating billions of dollars in prevented losses and creating a culture where information sharing is the default rather than the exception.
In an era of political division, cybersecurity remains one of the few areas where Americans across the political spectrum can find common ground. We need to defend against constant attacks coming from the likes of Chinese actors using ransomware during SharePoint vulnerabilities to Iranian groups deploying ransomware as a political weapon to hundreds of criminal ransomware groups operating at any given time.
The solution isn’t more regulation or government overreach. It’s the collaborative approach that CISA 2015 has fostered. As I used to tell businesses when I was at the FBI: we can’t help you if we don’t hear from others, and we can’t help others if we don’t hear from you. This principle of mutual aid and shared defense has made America stronger, and we cannot afford to abandon it now.
Congress must act before September 30. If we allow our cybersecurity information sharing framework to collapse it will devastate small businesses, endanger the sick, and undermine America’s position as the global leader in cybersecurity. The time for action is now, before the attacks that could have been prevented become the disasters we failed to stop.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
Gen Z has become one of the largest consumer bases for luxury Swiss-made watches. Now the Trump administration’s 39% tariff on Switzerland may change price-sensitive consumer behavior. But experts tell Fortune top watchmakers like Rolex and Patek Philippe may not see much of a demand shift as young luxury watch buyers crave the social currency that comes with the brands.
Gen Z’s fascination with luxury watches has been one of the more surprising consumer trends of the last few years. But a steep tariff hike on Switzerland could threaten its market: American youth.
Gen Z—alongside younger millennials—have embraced luxury timepieces as status symbols, posting them on TikTok and Instagram and helping reshape an industry long dominated by older collectors. A recent BCG survey found 54% of Gen Z respondents had increased their spending on luxury watches since 2021, and Sotheby’s estimated nearly a third of its watch sales in 2023 went to buyers 30 and under.
But a new 39% U.S. tariff on Switzerland could make this hobby more expensive, and potentially less attainable for first-time buyers. The duty, imposed during President Donald Trump’s latest round of tariffs, hits the world’s most important market for Swiss watch exports. From January to June, the U.S. overtook Japan and China as the top destination, with $3.17 billion ( 2.56 billion Swiss Francs) worth shipped, according to the Federation of the Swiss Watch Industry.
“Companies cannot realistically absorb the tariff, which means retail prices in the U.S. will rise sharply,” Marcus Altenburg, managing partner at Swiss law firm Goldblum & Partners, told Fortune.
For American buyers, especially younger ones, the math is straightforward: prices are going up, Anish Bhatt, a millennial “watchfluencer” with 1.6 million followers on Instagram told Fortune. While the 39% levy applies to an importer’s cost, not full retail, industry analysts predict a 12%-14% increase in store prices if brands pass on the cost to consumers.
“For many American collectors, the 39% tariff instantly turned new releases from Swiss brands into a luxury few can justify,” Joshua Ganjei, CEO of European Watch Company in Boston, told Fortune. “The pre‑owned market is now the best option for value and immediate availability—no import headaches and no sticker shock.”
That shift to secondhand is already underway, since availability in the primary market is so limited, Bhatt said.
Still, a 2024 report by Watchfinder & Co. found 41% of Gen Z aged 16 to 26 came into possession of a luxury watch the previous year—and individuals in this age bracket who are ready to buy a luxury timepiece said $10,870 would be the starting point for their next purchase. The same report found that Gen Z watch enthusiasts acquired an average of 2.4 first-hand watches and 1.43 pre-owned in 2023, with over half buying for themselves.
Altenburg expects Gen Z and millennial buyers, who tend to be more price‑sensitive than older collectors, to gravitate to domestic pre‑owned and grey‑market sellers to sidestep tariffs. Ganjei said his company has “seen a dramatic increase in purchasing volume over the past few months as U.S. buyers shy away from international sellers.”
On the other hand, watchfluencer Bhatt said younger consumers still crave the “social currency” that comes with a Rolex, Patek Philippe, or Audemars Piguet, even if they pay more to get it.
“They also understand the status that it gives them,” Bhatt said. The social cachet of a Swiss-made watch plays out daily on social media platforms like TikTok, Instagram, and influencer channels, boosting aspirational demand, he said.
Bhatt doesn’t expect demand for the most coveted brands to vanish, but says mid‑tier Swiss names without top brand prestige could see sales slow. The added cost may also push Americans to buy while traveling in Europe—where they can sometimes reclaim value added tax (VAT)—and bring pieces back themselves, potentially avoiding tariffs altogether, Bhatt said.
“It could be that allocation of pieces is shifted toward other territories over time,” he added, “because they see demand increase in Europe or the Middle East and diminish a bit in the U.S.”
For the Swiss industry, the stakes go beyond sticker prices. Altenburg warned that sustained U.S. weakness could pressure employment and supply chains in watchmaking regions, while forcing brands to rethink distribution, pricing, and even corporate structures to blunt the tariff’s impact.
Bhatt thinks marketing to younger generations will also matter more in a cooling market.
“When the market’s high, they rely just on brand value and brand name,” he said. “When the market is low, they need people to understand the rarity and complexity and difficulty in producing these rare watches.”
All said, the tariff probably won’t kill Gen Z’s fascination with luxury watches—but it could redraw the roadmap for how and where they buy them.
The social media posts of vintage Daytonas and Nautiluses are unlikely to disappear. What may change is that, for many young Americans, the product may increasingly be secondhand, and possibly stamped by a boutique in Paris or Milan.
Eric Vaughan, CEO of enterprise-software powerhouse IgniteTech, is unwavering as he reflects on the most radical decision of his decades-long career. In early 2023, convinced that generative AI was an “existential” transformation, Vaughan looked at his team and saw a workforce not fully on board. His ultimate response: He ripped the company down to the studs, replacing nearly 80% of staffwithin a year, according to headcount figures reviewed by Fortune.
Over the course of 2023 and into the first quarter of 2024, Vaughan said IgniteTech replaced hundreds of employees, declining to disclose a specific number. “That was not our goal,” he told Fortune. “It was extremely difficult … But changing minds was harder than adding skills.” It was, by any measure, a brutal reckoning—but Vaughan insists it was necessary, and says he’d do it again.
For Vaughan, the writing on the wall was clear and dramatic. “In early 2023, we saw the light,” he told Fortune in an interview, adding that he believed every tech company was facing a crucial inflection point around adoption of artificial intelligence. “Now I’ve certainly morphed to believe that this is every company, and I mean that literally every company, is facing an existential threat by this transformation.”
Where others saw promise, Vaughan saw urgency—believing that failing to get ahead on AI could doom even the most robust business. He called an all-hands meetingwith his global, remote team. Gone were the comfortable routines and quarterly goals. Instead, his message was direct: Everything would now revolve around AI. “We’re going to give a gift to each of you. And that gift is tremendous investment of time, tools, education, projects … to give you a new skill,” he explained. The company began reimbursing for AI tools and prompt engineering classes, and even brought in outside experts to evangelize.
“Every single Monday was called ‘AI Monday,'” Vaughan said, with his mandate for staff that they could only work on AI. “You couldn’t have customer calls, you couldn’t work on budgets, you had to only work on AI projects.” He said this happened across the board, not just for tech workers, but also for sales, marketing, and everybody at IgniteTech. “That culture needed to be built. That was… that was the key.”
This was a major investment, he added: 20% of payroll was dedicated to a mass-learning initiative, and it failed because of mass resistance, even sabotage. Belief, Vaughan discovered, is a hard thing to manufacture. “In those early days, we did get resistance, we got flat-out, ‘Yeah, I’m not going to do this’ resistance. And so we said goodbye to those people.”
The pushback: Why didn’t they get on board?
Vaughan was surprised to find it was often the technical staff, not marketing or sales, who dug in their heels. They were the “most resistant,” he said, voicing various concerns about what the AI couldn’t do, rather than focusing on what it could. The marketing and salespeople were enthused by the possibilities of working with these new tools, he added.
This friction is borne out by broader research. According to the 2025 enterprise AI adoption report by WRITER, an AI platform that specifically helps enterprise clients with AI integration, one in three workers say they’ve “actively sabotaged” their company’s AI rollout—a number that jumps to 41% of millennial and Gen Z employees. This can take the form of refusing to use AI tools, intentionally generating low-quality outputs, or avoiding training altogether. Many act out due to fears that AI will replace their jobs, while others are frustrated by lackluster AI tools or unclear strategy from leadership.
WRITER’s Chief Strategy Officer Kevin Chung told Fortune the “big eye-opening thing” from this survey was the human element of AI resistance. “This sabotage isn’t because they’re afraid of the technology … It’s more like there’s so much pressure to get it right, and then when you’re handed something that doesn’t work, you get frustrated.” He added that WRITER’s research shows that workers often don’t trust where their organizations are headed. “When you’re handed something that isn’t quite what you want, it’s very frustrating, so the sabotage kicks in, because then people are like, ‘Okay, I’m going to run my own thing. I’m going to go figure it out myself.'” You definitely don’t want this kind of “shadow IT” in an organization, he added.
Vaughan says he didn’t want to force anyone. “You can’t compel people to change, especially if they don’t believe.” He added that belief was really the thing he needed to recruit for. Company leadership ultimately realized they’d have to launch a massive recruiting effort for what became known as “AI Innovation Specialists.” This applied across the board, to sales, finance. marketing, everywhere. Vaughan said this time was “really difficult” as things inside the company were “upside down … We didn’t really quite know where we were or who we were yet.”
A couple key hires helped, starting with the person who became IgniteTech’s chief AI officer, Thibault Bridel-Bertomeu. That led to a full reorganization of the company that Vaughan called “somewhat unusual.” Essentially, every division now reports into the AI organization, regardless of domain.
This centralization, Vaughan says, prevented duplication of efforts and maximized knowledge sharing—a common struggle in AI adoption, where WRITER’s survey shows 71% of the C-suite at other companies say AI applications are being created in silos and nearly half report their employees left to “figure generative AI out on their own.”
No pain, no gain?
In exchange for this difficult transformation, IgniteTech reaped extraordinary results. By the end of 2024, the company had launched two patent-pending AI solutions, including a platform for AI-based email automation (Eloquens AI), with a radically rebuilt team.
Financially, IgniteTech remained strong. Vaughan disclosed that the company, which he said is in the nine-figure revenue range, finished 2024 at “near 75% EBITDA”—all while completing a major acquisition, Khoros. “You multiply people … give people the ability to multiply themselves and do things at a pace,” he said, touting the company’s ability to build new customer-ready products in as little as four days—an unthinkable timeline in the old regime.
What does Vaughan’s story say for others? On one level, it’s a case study in the pain and payoff of radical change management. But his ruthless approach arguably addresses many challenges identified in the WRITER survey: lack of strategy and investment, misalignment between IT and business, and the failure to engage champions who can unlock AI’s benefits.
The ‘boy who cried wolf’ problem
To be sure, IgniteTech is far from alone in wrestling with these challenges. Joshua Wöhle is the CEO of Mindstone, a firm similar to WRITER that provides AI upskilling services to workforces, training hundreds of employees monthly at companies including Lufthansa, Hyatt, and NBA teams. He recently discussed the two approaches described by Vaughan—upskilling and mass replacement—in an appearance on BBC Business Today.
Wöhle contrasted the recent examples of Ikea and Klarna, arguing the former’s example shows why it’s better to “reskill” existing employees. Klarna, a Swedish buy-now pay-later firm, drew considerable publicity for a decision to reduce members of its customer support staff in a pivot to AI, only to rehire for the same roles. “We’re near the point where [AI is] more intelligent than most people doing knowledge work. But that’s precisely why augmentation beats automation,” Wöhle wrote on LinkedIn.
A representative for Klarna told Fortune the company did not lay off employees, but has instead adopted several approaches to its customer service, which is managed by outsourced customer-service providers who are paid according to the volume of work required. The launch of an AI customer-service assistant reduced the workload by the equivalent of 700 full-time agents—from roughly 3,000 to 2,300—and the third-party providers redeployed those 700 workers to other clients, according to Klarna. Now that the AI customer service agent is “handling more complex queries than when we launched,” Klarna says, that number has fallen to 2,200. Klarna says its contractor has rehired just two people in a pilot program designed to combine highly trained human support staff with AI to deliver outstanding customer service.
In an interview with Fortune, Wöhle said one client of his has been very blunt with his workers, ordering them to dedicate all Fridays to AI retraining, and if they didn’t report back on any of their work, they were invited to leave the company. He said it can be “kinder” to dismiss workers who are resistant to AI: “The pace of change is so fast that it’s the kinder thing to force people through it.” He added that he used to think that if he got all workers to really love learning, then that could help Mindstone make a real difference, but he discovered after training literally thousands of people that “most people hate learning. They’d avoid it if they can.”
Wöhle attributed much of the AI resistance in the workforce to a “boy who cried wolf” problem from the tech sector, citing NFTs and blockchain as technologies that were billed as revolutionary but “didn’t have the real effect” that tech leaders promised. “You can’t really blame them” for resisting, he said. Most people “get stuck because they think from their work flow first,” he added, and they conclude AI is overhyped because they want AI to fit into their old way of working. “It takes a lot more thinking and a lot more kind of prodding for you to change the way that you work,” but once you do, you see dramatic increases. A human can’t possibly keep five call transcripts in their head while you’re trying to write a proposal to a client, he offers, but AI can.
Ikea echoed Wöhle when reached for comment, saying that its “people-first AI approach focuses on augmentation, not automation.” A spokesperson said Ikea is using AI to automate tasks, not jobs, freeing up time for value-added, human-centric work.
The WRITER report notes that companies with formal AI strategies are far more likely to succeed, and those who heavily invest in AI outperform their peers by a large margin. But, as Vaughan’s experience shows, investment without belief and buy-in can be wasted energy. “The culture needed to be built. Ultimately, we ended up having to go out and recruit and hire people that were already of the same mind. Changing minds was harder than adding skills.”
For Vaughan, there’s no ambiguity. Would he do it again? He doesn’t hesitate: He’d rather endure months of pain and build a new, AI-driven foundation from scratch than let an organization drift into irrelevance. “This is not a tech change. It is a cultural change, and it is a business change.” He said he doesn’t recommend that others follow his lead and swap out 80% of their staff. “I do not recommend that at all. That was not our goal. It was extremely difficult.” But at the end of the day, he added, everybody’s got to be in the same boat, rowing in the same direction. Otherwise, “we don’t get where we’re going.”
If you had told me years ago, as I was arranging storybooks and finger paints in my kindergarten classroom, that I would one day lead cloud and AI transformation initiatives for some of the world’s largest organizations, I might have laughed in disbelief. After all, in the ’90s, “cloud” was just something in the sky that we looked at outside during recess and not the backbone of modern business. Yet, my journey from teaching young children to guiding enterprises through complex technological change has shaped my core belief: the most innovative organizations are those that intentionally cultivate a contagious culture of change.
My early career as a kindergarten teacher was more than a first job; it was a masterclass in leadership, adaptability, and the power of learning environments. In a classroom, every day is different. You learn to expect the unexpected, to adapt on the fly, and to create a space where curiosity and growth are not just encouraged but celebrated. These lessons have profoundly influenced my approach to leadership and organizational transformation in the corporate world.
The power of a contagious culture
When I transitioned from education to consulting, I quickly realized that many organizations struggle not because they lack access to cutting-edge technology, but because they haven’t built the right cultural foundation to support innovation. Technology alone doesn’t drive transformation; people do. And people thrive in environments where learning, experimentation, and adaptation are woven into the fabric of the organization.
That’s why I advocate for what I call a “contagious culture of change.” This is a culture where curiosity is infectious, employees feel safe to ask questions and challenge the status quo, and try new things. It’s a culture that doesn’t just tolerate change, it actively seeks it out and embraces it fully, knowing that every new challenge is an opportunity to learn and grow.
Lessons from the classroom
The parallels between teaching and leading technology transformation are striking. In both settings, success has hinged on creating an environment where people feel empowered to learn. In my classroom, I saw firsthand how children flourish when they are encouraged to explore, make mistakes, and try again. The same is true in the workplace. When leaders foster psychological safety, model vulnerability, and celebrate learning, teams become more resilient, creative, and engaged.
One of the most powerful tools I brought from teaching into my consulting career is the ability to break down complex concepts into digestible, relatable bite-size pieces. Whether I’m helping a client begin their mainframe modernization journey or implement an AI-driven operational efficiency and automation initiative, I approach each conversation with the mindset of an educator: How can I make this accessible? How can I spark curiosity and excitement? How can I create a sense of shared purpose and possibility?
Becoming a talent magnet
Organizations that prioritize a culture of innovation and change don’t just adapt more quickly; they also become magnets for top talent. Today’s workforce is looking for a working environment that’s dynamic, meaningful, and forward-thinking. When employees see their organization as a place where they can learn, grow, and make an impact, they tend to be more engaged, motivated, and loyal.
I’ve learned that the most successful teams are those that embrace broad perspectives and encourage continuous learning. I also recognize that innovation often comes from unexpected places. More companies are actively seeking out individuals with non-traditional backgrounds and people who — like me — may not have started their careers in technology, but who bring unique insights and experiences to the table.
Embracing the modern workforce
The technology landscape is evolving at an unprecedented pace, and so is the definition of talent. A specific degree or career path is no longer a prerequisite for success in tech. In fact, some of the most impactful contributors are those who bring fresh perspectives from outside the traditional mold. My own journey — from the classroom to the boardroom — is a testament to the value of diverse experiences.
Organizations should rethink their talent strategies and build teams that draw from a wide range of educational backgrounds and career experiences. By fostering environments where broad perspectives are valued, organizations can tap into new sources of creativity and innovation.
Why culture matters now more than ever
In today’s dynamic business environment, the ability to innovate and adapt is not just a competitive advantage, it’s a necessity. Organizations that cling to the status quo risk being left behind. But those that invest in building a culture of continuous learning and change are better positioned to thrive, no matter what the future holds.
My journey has taught me that leadership is less about having all the answers, and more about creating conditions where others can learn, grow, and succeed. Whether you’re leading a classroom or a cloud migration, the principles are the same: foster curiosity, embrace change, and never stop learning.
As we look to the future, I’m excited to continue helping organizations harness the power of culture to drive meaningful, lasting transformation. Because at the end of the day, it’s not just about technology, it’s about people, potential and the contagious power of change.
I leave you with a parting quote from Robert Fulgum’s All I Really Need to Know I Learned in Kindergarten: “And it is still true, no matter how old you are — when you go out into the world, it is best to hold hands and stick together.”
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
The Nitro Bar has grown from a $1,500 credit card investment into a $4.5 million coffee company. Its millennial cofounder Audrey Finocchiaro says the secret to success starts with “ignoring the boomers” and using TikTok to build from the ground up.
Like many Gen Zers today, Audrey Finocchiaro and her then-boyfriend, Sam Lancaster, graduated from college a decade ago and were suddenly struck with harsh reality. The millennials had no money and no career direction—taking up serving and bartending jobs at local restaurants to make ends meet while crashing on her parents’ futon.
But they soon hatched a plan to get out of their 9-to-5 jobs: start a business by building a coffee cart with nitrogen-infused cold brew. So they started their own company, The Nitro bar, by maxing out a credit card to get things off the ground.
It was 2016 when the couple leveraged a $1,500 credit limit and scrap wood from Audrey’s parents’ basement to create a “glorified box” that would serve as their prototype. The cofounders packed into the back of Finocchiaro’s Subaru Outback and took off to Providence, Rhode Island. Their first makeshift cart had no electricity, only being able to hold the equipment used to make the cold brew.
To start reeling in customers, the couple would park the cart on city streets and at community events—often unsolicited—to sell their nitrogen-infused cold brew. In those early days, the business brought in $20 to $60 as the couple stood out there for eight hours daily.
Audrey Finocchiaro
At first, they became disheartened, as it was hard to make any profit at all. After weeks of little business, the couple was ready to throw in the towel.
But then Lancaster had an epiphany: he realized that they hadn’t brought the cart to Brown University yet. That fall, when college students flocked back to campus, they struck gold. They realized their key audience was a gaggle of Ivy League kids.
“‘Dude, you’ll never believe it!’” Finocchiaro tells Fortune, recalling what she reported to her boyfriend over the phone. “We just had a line of people. There were all these students, and I remember that day, I think we made like, $600 which was life-changing for us at the time.”
From that day forward, the couple popped up at Brown University every day, as coffee-chugging undergraduates huddled around their cold brew business. From then on, The Nitro Cart started gaining a following on social media, amassing 500,000 followers, while continuing to pop up at events.
But everything changed in the spring of 2017. When Finocchiaro and Lancaster were set up at a farmers’ market in Providence, they were approached by a pair of investors asking how much money they needed to grow. Finnochairo hadn’t thought the cart would turn into a business with bigger potential until that day.
The couple and investors created a spreadsheet together and calculated what The Nitro Cart could grow into based on a projected number of stands and accounts for wholesale customers. They crunched the numbers and said they needed about $150,000.
“The next day, we got that money, which was crazy,” says Finocchiaro.
Audrey Finocchiaro
Until then, they’d been brewing their cold brew coffee every night in Audrey’s uncle’s diner. But once the funding rolled in, they immediately set up a production facility and pivoted into wholesale, figuring it was the only way to survive the slow winter months. The money disappeared quickly—largely spent buying a $1,200 kegerator (a small refrigerator designed or adapted to hold a keg from which the cold brew could be dispensed) for each of the 60 wholesale accounts they got on board during their first year.
But The Nitro Cart got its second wind when a local bike shop in Providence offered them 200 square feet of space for $400 a month. They jumped on it, funding their first storefront by taking a steep 30% interest loan through Square.
Business skyrocketed after the loan, and now the Rhode Island coffee company brings in$4.5 million a year in revenue. It also has 80 employees working at its three brick-and-mortar coffee shops, production facility, and small coffee trailer. The company’s cold brew is available on tap at more than 50 other locations across Rhode Island and Massachusetts.
How TikTok helped turn a coffee cart into a multimillion-dollar business
With over 500,000 followers on TikTok and 130,000 on Instagram, there’s no question social media has been one of the key factors in The Nitro Bar’s continued success—but it didn’t happen overnight.
“We just threw a ton of things at a wall and kept going until we found something that stuck,” Finocchiaro says. “And for us, that took I think it was seven years until we really started to gain a significant following online.”
But today, she admits building out a following on social media is more important than ever. Her advice for new creators is simple: make a running list of ideas in your notes app, post multiple times a day, and stick to a routine to build momentum.
“I think it’s an incredible time to start a business, because it can cost $0 to start,” Finnochario says. “ You can have no money and start a TikTok or start an Instagram account. That was monumental for us.”
The Nitro Bar’s posts include trends of trying different coffee combinations, hacks on what to order, and sampling their favorite menu items. “How lucky are we to be alive at the same time as blueberry banana lattes,” one of the videos is captioned. It’s racked up 80,000 likes.
Ignoring boomers and friends helped get the business off the ground
Finocchiaro learned quickly who she wanted to share her business ideas with. “Ignore the boomers or your friends in sales,” she explained on TikTok.
“The second you tell someone who isn’t an entrepreneur what you want to do, they start questioning everything—‘Why a coffee shop? There’s already a million of them,’ or ‘If it were that easy, everyone would do it,’” she says.
Instead of letting doubt creep in from people who don’t understand the risks and mindset required to start something from scratch, she advises limiting those conversations altogether and suggests replying that you’re investing in the business for the long game and betting on yourself gives you a higher return.
The millennial founders of The Nitro Bar turned a $1,500 investment into a multimillion-dollar company—thanks to college students and viral TikTok videos.
The AI talent war among major tech companies is escalating, with firms like Meta offering extravagant $100 million signing bonuses to attract top researchers from competitors like OpenAI. But HelloSky has emerged to diversify the recruitment pool, using AI-driven data to map candidates’ real-world impact and uncover hidden talent beyond traditional Silicon Valley networks.
As AI becomes more ubiquitous, the need for the top-tier talent at tech firms becomes even more important—and it’s starting a war among Big Tech, which is simultaneously churning through layoffs and poaching people from each other with eye-popping pay packages. Meta, for example, is dishing out $100 million signing bonuses to woo top OpenAI researchers. Others are scrambling to retain staff with massive bonuses and noncompete agreements.
With such a seemingly small pool of researchers with the savvy to usher in new waves of AI developments, it’s no wonder salaries have gotten so high. That’s why one tech executive said companies will need to stop “recycling” candidates from the same old Silicon Valley and Big Tech talent pools to make innovation happen.
“There’s different biases and filters about people’s pedigree or where they came from. But if you could truly map all of that and just give credit for some people that maybe went through alternate pathways [then you can] truly stack rank,” Alex Bates, founder and CEO of AI executive recruiting platform HelloSky, told Fortune.
(In April, HelloSky announced the close of a $5.5 million oversubscribed seed round from investors like Caldwell Partners, Karmel Capital, True, Hunt Scanlon Ventures as well as prominent angel investors from Google and Cisco Systems).
That’s why Bates developed HelloSky, which consolidates candidate, company, talent, investor, and assessment data into a single GenAI-powered platform to help companies find candidates they might not have otherwise.
Many tech companies pull from previous job descriptions and resume submissions to poach top talent, explained Bates, who also authored Augmented Mindabout the relationship between humans and AI. Meta CEO Mark Zuckerberg even reportedly maintains a literal list of all the top talent he wants to poach for his Superintelligence Labs and has been heavily involved in his own company’s recruiting strategies.
But the AI talent wars will make it more difficult than ever to fill seats with experienced candidates.
“The bet, the hope is they know how to discover the remaining ideas to get to superintelligence—that there are going to be a handful of algorithmic ideas and, you know, medium-sized handful of people who can figure them out,” Altman recently told CNBC.
The ‘moneyball’ for finding top talent
Bates refers to his platform as “moneyball” for unearthing top talent—essentially a “complete map” of real domain experts who may not be well-networked in Silicon Valley.
Using AI, HelloSky can tag different candidates, map connections, and find people who may not have as much of a social media or job board presence, but have the necessary experience to succeed in high-level jobs.
The platform scours not just resumes, but actual code contributions, peer-reviewed research, and even trending open-source projects, prioritizing measurable impact over flashy degrees. That way, companies can find candidates who have demonstrated outsized results in small, scrappy teams or other niche communities, similar to how the Oakland A’s Billy Beane joined forces with Ivy League grad Peter Brand to reinvent traditional baseball scouting, which was depicted in the book and movie Moneyball.
It’s a “big unlock for everything from hiring people, partnering, acquiring whatever, just everyone interested in this space,” Bates said. “There’s a lot of hidden talent globally.”
HelloSky can also sense when certain candidates “embellish” their experience on job platforms or fill in the gaps for people whose online presence is sparse.
“Maybe they said they had a billion-dollar IPO, but [really] they left two years before the IPO. We can surface that,” Bates said. “But also we can give credit to people that maybe didn’t brag sufficiently.” This helps companies find their “diamond in the rough,” he added.
Bates also predicts search firms and internal recruiters will start forcing assessments more on candidates to ensure they’re the right fit for the job.
“If you can really target well and not waste so much time talking to the wrong people, then you can go much deeper into these next-gen behavioral assessment frameworks,” he said. “I think that’ll be the wave of the future.”
It’s an epochal moment as history’s latest general-purpose technology, AI, forms itself into an industry. Much depends on these early days, especially the fate of the industry’s leader by a mile, Open AI. In terms of the last general-purpose technology, the internet, will it become a colossus like Google or be forgotten like AltaVista?
No one can know, but here’s how to think about it.
OpenAI’s domination of the industry is striking. As the creator of ChatGPT, it recently attracted 78% of daily unique visitors to core model websites, with six competitors splitting up the rest, according to a recent 40-page report from J.P. Morgan. Even with that vast lead, the report shows, OpenAI is expanding its margin over its much smaller competitors, including even Gemini, which is part of Google and its giant parent, Alphabet (2024 revenue: $350 billion).
The great question now is whether OpenAI can possibly maintain its wide lead (history would say no) or at least continue as the industry leader. The answer depends heavily on OpenAI’s moat, a Warren Buffett term for any factor that protects the company and cannot be easily breached–think of Coca-Cola’s brand or BNSF Railroad’s economies of scale, to mention two of Buffett’s successful investments. On that count the J.P. Morgan analysts are not optimistic.
Specifically, they acknowledge that while OpenAI has led the industry in innovating its models, that strategy is “an increasingly fragile moat.” Example: The company’s most recent model, GPT-5, included multiple advances yet underwhelmed many users. As competitors inevitably catch up, the analysts conclude, “Model commoditization is an increasingly likely outcome.” With innovations suffering short lives, OpenAI must now become “a more product-focused, diversified organization that can operate at scale while retaining its position” at the top of the industry–skills the company has yet to demonstrate.
Bottom line, OpenAI can maintain its leading rank in the industry, but it won’t be easy, and betting on it could be risky.
Yet a different view suggests OpenAI is much closer to creating a sustainable moat. It comes from Robert Siegel, a management lecturer at Stanford’s Graduate School of Business who is also a venture capitalist and former executive at various companies, many in technology. He argues that OpenAI is already well along the road to achieving a valuable attribute, stickiness: The longer customers use something, the less likely they are to switch to a competitor. In OpenAI’s case, “people will only move to Perplexity or Gemini or other solutions if they get a better result,” he says. Yet that becomes unlikely because AI learns; the more you use a particular AI engine, the more it learns about you and what you want. “If you keep putting questions into ChatGPT, which learns your behaviors better, and you like it, there’s no reason to leave as long as it’s competitive.”
Now combine that logic with OpenAI’s behavior. “It seems like their strategy is to be ubiquitous,” Siegel says, putting ChatGPT in front of as many people as possible so the software can start learning about them before any competitor can get there first. Most famously, OpenAI released ChatGPT 3.5 to the public in 2022 for free, attracting a million users in five days and 100 million in two months. In addition, the company raised much investment early in the game, having been founded in 2015. Thus, Siegel says, OpenAI can “continue to run hard and use capital as a moat so they can do all the things they need to do to be everywhere.”
But Siegel, the J.P. Morgan analysts, and everyone else knows plenty can always go wrong. An obvious threat to OpenAI and most of its competitors is an open-source model such as China’s DeepSeek, which appears to perform well at significantly lower costs. The venture capital that has poured into OpenAI could dry up as hundreds of other AI startups compete for financing. J.P. Morgan and Siegel agree that OpenAI’s complex unconventional governance structure must be reformed; though a recently proposed structure has not been officially disclosed, it is reportedly topped by a nonprofit, which might worry profit-seeking investors.
As for moats, OpenAI is obviously in the best position to build or strengthen one. But looking into the era of AI, the whole concept of the corporate moat may become meaningless. How long will it be, if it hasn’t been done already, before a competitor asks its own AI engine, “How do we defeat OpenAI’s moat?”
Login
