Banking, payments services disrupted after Amazon UAE data centers hit in drone strikes

 Drone strikes on the Amazon Web Services data centers in the United Arab Emirates have caused a widespread outage across the apps, banking services, and financial platforms. AWS reported that two facilities in UAE and one in Bahrain were damaged from the events, leading to power disruptions that forced systems offline. Several companies that rely on AWS infrastructure have experienced service interruptions, including payment platforms Alaan and Hubby, and banks such as the Abu Dhabi Commercial Bank. 

The strike comes amid escalating tensions following the United States and Israeli attacks on Iran over the weekend. These events triggered retaliatory actions across the Middle East. While AWS continues to push for recovery efforts, the incident highlights how geopolitical conflict can disrupt digital infrastructure and services worldwide. 

Inflation Fears Rise as Manufacturing Costs Spike in February

In early March, data showed a surprising jump in manufacturing prices in the United States, raising concerns about inflation staying higher than expected. According to the February report from the Institute for Supply Management (ISM), the Prices Paid Index—a key measure of how much manufacturers are paying for raw materials—surged to a reading of 70.5, far above January’s level and economist forecasts. This indicates that factories are seeing significantly higher input costs, which can eventually trickle down to consumer prices and push inflation up. At the same time, the overall manufacturing sector still showed modest growth, but the rapidly rising costs have sparked uncertainty in markets and among policymakers. If inflation remains strong, the Federal Reserve might feel pressure to keep interest rates higher for longer, which could slow other parts of the economy like housing or investment.

https://markets.chroniclejournal.com/chroniclejournal/article/marketminute-2026-3-2-inflation-alarm-ism-manufacturing-prices-index-surges-to-705-as-tariffs-bite-into-second-month-of-growth

Is AI Really Boosting Overall Productivity in The Economy?

    Artificial intelligence is often talked about as the next big thing that will boost the U.S. economy. Productivity simply means how much workers produce per hour, and it is one of the main reasons wages and living standards rise over time. Recent data from the U.S. Bureau of Labor Statistics shows productivity has improved in the past year, but the increases have not been steady. While some companies are clearly using AI to work faster and cut costs, there is not yet clear proof that AI has permanently raised productivity across the whole economy.

If AI truly improves productivity in a lasting way, the economy could grow faster without causing inflation, which would be a major benefit. Groups like the International Monetary Fund and the McKinsey Global Institute say AI has the potential to increase output over time, but they also explain that big technological changes usually take years to fully show up in national data. For now, AI looks promising, but the large, long term productivity boom many investors expect has not clearly appeared in the numbers yet.

Sources:

U.S. Bureau of Labor Statistics – Labor Productivity and Costs
https://www.bls.gov/lpc/

McKinsey Global Institute – The Economic Potential of Generative AI
https://www.mckinsey.com/mgi/our-research/the-economic-potential-of-generative-ai-the-next-productivity-frontier

Iran Closes the Strait of Hormuz

Iran has closed the Strait of Hormuz, sending shockwaves across global energy markets. Many countries will be affected, but the most pain will be felt in Asian countries. The strait is vital for oil trade, with roughly 13 million barrels per day passing through it in 2025. Oil prices have already significantly increased, and this development could make matters worse. Some specific countries that will be affected are China, Japan, South Korea, and other countries in Southeast Asia. It's the expectation that they'll see inflation first, and shortages second. However, China has a good amount of reserves to weather the storm for a while, but the uncertainty around this circumstance could cause economic hardship for any country caught in the crossfire of this war.

https://www.cnbc.com/2026/03/03/strait-of-hormuz-closure-which-countries-will-be-hit-the-most.html 

Core whole sales prices increases by 0.8%, much more than expected.

       In January, there was hopes that the inflation would ease, however that was not the case. The PPI adjusted to a 0.8% after a gain of 0.6% in December. The headline PPI rose 0.5%, going above the forecast of 0.3% than in the prior month. During 2025, wholesale prices increases to 3.6%, which is beyond the Federal reserves 2% inflation goals. This tells us that inflation is still a factor in our economy. With regards to service prices, this is the main factor that drove the increase of wholesale prices, an 0.8% monthly rise was the highest since July of 2025. Goods fell by 0.3%, but core goods rose to 0.7%. 

        President Donald Trump believes inflation has been controlled. The pressures indicated by the PPI will cause the Fed to become cautious while weighing the pending moves on interest rates. Until the summer, the Fed will stay on the sidelines as expected by the market, though Trump has pushed for lower rates. However, economists are worried that Trump's tariffs will push for higher inflation, but is expected to be temporary by the Fed officials. 

https://www.cnbc.com/2026/02/27/ppi-january-2026-.html

Difficult Month for Amazon: Geopolitical Risk Meets Market Uncertainty

In two recent articles, we can see how the effects of uncertainty in the global economy has impacted Amazon. According to CNBC, Amazon has confirmed that drone strikes have damaged three Amazon Web Services (AWS) facilities in the UAE and Bahrain. Around a similar time, TipRanks reported that Amazon stock experienced its worst month since 2022. While these stories may seem separate, they both highlight the risk and uncertainties that large global companies are facing.

The CNBC article explains that these drone strikes impacted data centers in the Middle East that support cloud services in the region. AWS is one of Amazon’s most profitable streams of revenue and plays a huge role in powering businesses that rely on the cloud. Though the majority of updates from war in the Middle East regard oil concerns, the digital infrastructure is also being affected. With the world's economy becoming increasingly dependent on technology and data centers, disruptions to cloud services can have rippling effects across a multitude of industries.

Putting aside the damages of facilities in the Middle East, Amazon’s stock has struggled. According to TipRanks, investors are reacting with caution as Amazon increases their spending on AI and data center expansions. While they are investing into growth, it isn’t certain that these expansions will be sustainable. Having a period of aggressive expansion combined with geopolitical instability could explain why markets are acting nervous. That being said, Amazon is a fundamentally strong company so these issues should only affect them in the short-run.

https://www.cnbc.com/2026/03/02/amazon-says-drone-strikes-damaged-3-facilities-in-uae-and-bahrain.html
https://www.tipranks.com/news/amazon-stock-amzn-sees-its-worst-month-since-2022#google_vignette

What war with Iran means for prices and interest rates

 Last week military actions occurred in the Middle East. U.S. and allied carried out strikes in Iran. This ended up triggering reactions to interest rates and prices. Oil prices shot up and global stocks fell immediately. Economist say these actions won't affect the Federal reserve's upcoming interest rate decisions. Iran's supreme leader was killed in these attacks leading to a chain of events that affect more than just Iran. There has been a large backup of traffic in Iran, it is expected to lead to higher prices in gas for American consumers. It is said to been too early to really know what is going on. There shouldn't be a panic for gas but there not sure yet. Donald Trump said that this last for about 4-5 weeks. 

If the war does end up lasting a period of time American consumers may see skyrocketing energy costs that could push the U.S. economy towards stagflation. Stagflation occurs when inflation is high, slow or negative economic growth, and rising unemployment. This combination is very dangerous for the economy because the policy tools for inflation can worsen unemployment, and policies to reduce unemployment. The U.S. remains strong right now but there are warning signs that are occurring. Oil prices are rising; inflation is higher than the target. Higher gas prices could raise the cost of materials; this would lead to companies having to cut down on materials leading to missing out on more customers. These attacks have multiple impacts that go past military and physical attacks. It effects the economy in so many ways that are often looked past. All of these events have chain reactions that can affect everything.

How does war with Iran affect prices, interest rates, supply chains?

Inflation Progress Could Be Undone by The Middle East Conflict

 Recent comments from President Donald Trump declaring inflation “tamed” have been overshadowed by fresh concerns in global markets as tensions in the Middle East threaten to push prices higher once again. While U.S. inflation has eased from its recent peaks, conflict involving Iran is now spiking oil prices, raising the risk of renewed price pressures for consumers and complicating the Federal Reserve’s path forward. 

Economists caution that even if the immediate impact on U.S. inflation remains modest, sustained geopolitical instability could create “stagflationary” pressures, a combination of slowing growth and rising prices. That would make it harder for the Federal Reserve to justify cutting interest rates later this year, even as policymakers continue to watch inflation trends.

For consumers, the brewing crisis serves as a reminder that global events, particularly those tied to energy production and transport, still have a direct line to prices at the pump and on store shelves. What looks like progress on inflation one week can be threatened by geopolitical volatility the next.

https://www.cnbc.com/2026/03/02/as-trump-declares-inflation-tamed-iran-conflict-threatens-new-price-pressures.html

A Nine Nation War

The war between the U.S. and Iran has turned into a nine nation war. A conflict that began with a single strike has now pulled in the entire region, which includes Saudi Arabia, the UAE, and Kuwait. Also Western allies like the UK. Even the countries that are neutral are finding it impossible as drones and missiles cross into their airspace daily. Even more chaos when Kuwaiti air defenses accidentally shot down three U.S. fighter jets because of radar confusion during a Iranian missile barrage.

https://www.pbs.org/newshour/world/war-in-middle-east-widens-as-israeli-and-u-s-planes-pound-iran-and-tehran-and-its-proxies-hit-back 

Private Credit Fund Underperformance Suggests Potential Stock Market Volatility

Markets have had substantial concerns about the stability and security of private credit funds in recent months. 

Private credit funds are non-bank lenders that lend directly to companies, promising high rates of return to their investors and flexibility for their borrowers. 

Following several major private credit loans that have recently gone into default, markets have begun to question whether private credit firms are wisely allocating their capital. Details on private credit loans are often opaque, and if private credit firms begin experiencing extreme credit losses, their troubles can flow up to banks, as they often borrow from banks themselves, which can destabilize the larger financial system.

The State Street SPDR Blackstone Senior Loan ETF is currently down 4% YTD and is considered a bellwether for the overall performance of the stock market, because the fund has broad exposure to loans across many industries, company sizes, and investment grades, and if its borrowers underperform, the effect will trickle out to the rest of the economy, as described before. The fund often drops below its 200-day moving average before major corrections of the S&P500, and is currently trading 4.87% below the moving average, suggesting potential volatility in the wider stock market in the coming weeks.

Source: https://www.barrons.com/articles/private-credit-stocks-senior-loan-etf-27d5eee5?siteid=yhoof2