Morning Reads
- Fragile Global Economy Faces New Crisis in Israel-Gaza War
- Israel War: Military Builds Forces Near Gaza as US Sends Aid
- Bank of Israel Interventions Reverse Shekel Selloff
- Bank of England to Review How It Stress Tests Banks
- China Mulls New Stimulus, Higher Deficit to Meet Growth Goal
- Country Garden Caves to Debts as China’s Real Estate Crisis Worsens
- IMF Warns of Stubborn Inflation and Weaker Global Growth in 2024
- U.S. Dysfunction Clouds Economic Diplomacy Efforts
- Worst US Bond Selloff Since 1787 Marks End of Free-Money Era
- Americans Have Saved Hundreds of Billions More Than Previously Thought
- Binance Founder’s $1 Billion Plan to Save Crypto Quietly Fizzled Out
- South Korean Chip Makers Get U.S. Waivers From China Export Rules
- General Motors Workers in Canada Walk Out After Contract Talks Fail
- Has Bob Iger Lost the Magic?
- Why Nelson Peltz Grew Impatient With Disney’s Turnaround Efforts
- Consumers Are Less Interested in Brands Taking Stances on Sociopolitical Issues, Survey Finds
Open Interest Changes
PREMIUM
Prepper
Things are heating up in the Middle East following the brutal weekend attack by Hamas that killed over 900 Israelis and injured 2,800. Overnight, Israel regained control of the Gaza-Israel border, while beefing up retaliatory air strikes that have resulted in thousands of casualties as it imposed a complete siege of the Strip. Over 100 Israeli civilian hostages, including women and children, still remain in Gaza - whom Hamas has threatened to execute with broadcasts of audio and video - as it continues to shoot rockets into Israel that have numbered in the thousands in recent days.
Incoming: "The horrors that Hamas has committed have not been witnessed since the hours of ISIS," Israeli Prime Minister Bibi Netanyahu declared in a nationally televised address. "What we will do to our enemies in the coming days will reverberate with them for generations." The Israeli military has already activated 300,000 reservists in a massive mobilization, while the Pentagon has warned Iran and Lebanese terror group Hezbollah to "think twice" before opening another front to the war.
Defense stocks surged on Monday as the U.S. began delivering munitions to Israel, with Northrop Grumman (NOC), L3Harris (LHX), Huntington Ingalls (HII), Lockheed Martin (LMT) and General Dynamics (GD) finishing the session as the top five gainers in the S&P 500. The USS Gerald Ford aircraft carrier and accompanying war vessels have also been sent to the eastern Mediterranean, with the U.S. indicating it was prepared to come to Israel's defense and protect its interests in the region. Elsewhere, WTI crude oil (CL1:COM) pared its big gains following a "knee-jerk" surge reaction, but still remains elevated at $86/bbl, while U.S. stock indexes turned higher and Treasuries had their best day since March following the latest policy remarks from the Federal Reserve.
On the move: Israel's currency, the shekel, fell to a seven-year low against the dollar on Monday, prompting the Bank of Israel to sell up to $30B of dollar reserves and $15B through the swaps markets. The move will provide necessary liquidity, as well as support and stabilize the exchange rate, while many economists expect that the local economy can withstand an extended war of more than eight weeks. "It's very different now than back in 1973," said Bob Savage, BNY Mellon's head of Markets Strategy and Insights, referring to the Yom Kippur War and ensuing oil crisis. "There are some notable economic strengths along with political shifts in play. Israel has links to Egypt and to the UAE, along with some significant natural gas reserves now. When you look at Israel's budget situation, it appears to have plenty of room for war spending."
More strikes
The United Auto Workers said employees at Mack Trucks, owned by Volvo (OTCPK:VLVLY), have gone on strike after rejecting a proposed five-year labor contract. Nearly 4,000 union workers at Mack Trucks facilities walked out, bringing the total number of UAW members on strike to over 30,000. In Canada, General Motors (GM) workers also staged a walkout after failing to agree on a contract. Note that Unifor members last month voted to clear Ford's (F) new contract. And Tesla (TSLA), which has been immune to the U.S. strikes, is now facing employee heat in Germany. While U.S. jobs data has not reflected the UAW strike's impact, SA analyst Justin Purohit expects the full effects to be seen in the Q4 reports. (4 comments)
Gatekeepers or no?
The European Commission is seeking information as to whether a group of Microsoft's (MSFT) services and Apple's (AAPL) iMessage messaging system should comply with the continent's Digital Markets Act. Questionnaires were sent out earlier this month to rate the importance of the services compared to competitors. The European Commission last month announced its first list of "gatekeepers," six tech companies that are subject to the tough new rule - including Apple, Microsoft, Alphabet (GOOG, GOOGL), Amazon (AMZN) and Meta (META). Apple and Microsoft argued that iMessage, Bing, Edge and Microsoft advertising should not be qualified as gatekeepers. (10 comments)
Cash crunch
Country Garden (OTCPK:CTRYF) warned it may not meet all of its offshore debt obligations and could be in for debt restructuring, as its liquidity position will remain "very tight in the short- to medium-term." Its Hong Kong-listed shares dropped 9.5% on the news. China's largest private property developer pointed to "remarkable pressure" on its sales and uncertainty regarding asset disposals. The warning comes at a time when Chinese real estate companies have been floundering under mounting debt, with many defaulting in recent months. While Country Garden has not yet defaulted, any non-payment could push creditors to demand faster payments or pursue enforcement action.
Today's Markets
In Asia, Japan +2.5%. Hong Kong +0.7%. China -0.7%. India +0.9%.
In Europe, at midday, London +1.6%. Paris +1.6%. Frankfurt +1.8%.
Futures at 7:00, Dow +0.3%. S&P +0.2%. Nasdaq +0.3%. Crude -0.5% to $85.96. Gold +0.4% at $1,871.20. Bitcoin +0.3% to $27,606.
Ten-year Treasury Yield -10 bps to 4.68%.
Today's Economic Calendar
6:00 NFIB Small Business Optimism Index
9:30 Fed's Bostic: U.S. Economic Outlook
10:00 Wholesale Inventories (Preliminary)
1:00 PM Results of $46B, 3-Year Note Auction
1:30 PM Fed's Waller: “The Evolution of Monetary Policy”
3:00 PM Fed's Kashkari Speech
6:00 PM Fed's Daly Speech
What else is happening...
IMF raises U.S. growth outlook on stronger-than-expected momentum.
Bank of America's (BAC) long-term securities to weigh on Q3 earnings.
Writers Guild members overwhelmingly approve new labor contract.
PG&E (PCG) could face $45M in penalties for California's Dixie Fire.
WeightWatchers (WW) stock rides the Ozempic wave, closes up 13%.
Truist (TFC) in talks to sell rest of its insurance brokerage unit for $10B.
Joby Aviation (JOBY) on track to launch electric flying taxis in 2025.
Google (GOOG) search deal may be worth $20B annually to Apple.
Unity (U) slips as CEO retires; former IBM exec named interim chief.
Fannie Mae survey: Pessimism in housing market hits new high.