Daily Market Report 10-09-2023

Daily Market Report

As of 11:00 A.M. EST


Oil Climbs as Israel Attacks Spur Flight to Safety: Markets Wrap – Bloomberg, 10/9/2023

  • Oil climbed after Hamas’ surprise attack on Israel raised fears of a broader conflict, with investors shunning riskier assets like stocks and buying gold, global bonds and the dollar.
  • US crude futures rose as much as 5.4%, at one point topping $87 a barrel. 
  • Defense company Lockheed Martin and energy producer Exxon Mobil led gains in the S&P 500, while airlines fell. 
  • The S&P 500 fell 0.2%. The Nasdaq 100 fell 0.4%. The Dow Jones Industrial Average fell 0.1%.
  • The haven bid lifted the Swiss franc and the Japanese yen. 
  • The Treasury market is closed for Columbus Day. 
  • The shekel dropped even after the central bank unveiled an unprecedented $45 billion support program.
  • Traders will also wade through a raft of remarks from Federal Reserve officials this week for clues on the outlook for monetary policy. 
  • Fed Bank of Dallas President Lorie Logan said the recent surge in long-term Treasury yields may mean less need for the US central bank to raise its benchmark interest rate again.
  • US stocks reeling from the impact of high bond yields are facing a new threat from an expected slew of profit warnings, triggered by fading US consumer spending trends.
  • The Stoxx Europe 600 was little changed.
  • The Bloomberg Dollar Spot Index was little changed.
  • Gold futures rose 0.8% to $1,859.40 an ounce.

Oil Surges as Israel Conflict Reignites Middle East Volatility – Bloomberg, 10/9/2023

  • Oil prices surged after a shock attack on Israel by Hamas brought renewed instability to the Middle East.
  • More than 1,100 people have died since the fighting between Israel and militant group Hamas broke out over the weekend, in a conflict that has potential repercussions across the wider region. 
  • US crude futures surged as much as 5.4% in New York, at one point topping $87 a barrel.
  • While Israel’s role in global oil supply is negligible, the bloody outbreak threatens to embroil both the US and Iran. 
  • The latter has become a major source of extra crude this year, alleviating otherwise tightening markets. 
  • Increased application of American sanctions on Tehran could constrain those shipments.
  • Any retaliation against Tehran — amid reports that it helped to plan the attacks — could endanger the passage of vessels through the Strait of Hormuz, a vital conduit that transports much of the world’s crude and which the Iranian government previously has threatened to close.

Nelson Peltz Boosts Disney Stake, Seeks Board Seats – Wall Street Journal, 10/9/2023

  • Nelson Peltz is planning a fresh push for board seats at following a relentless slide in the entertainment giant’s shares. 
  • The activist investor’s Trian Fund Management, now one of Disney’s largest investors with a stake valued at upward of $2.5 billion, is expected to request multiple seats—including one for Peltz, according to people familiar with the matter. 
  • If the company says no, Trian could nominate directors that would be voted on at Disney’s annual meeting next spring. 
  • The window for shareholder nominations runs from Dec. 5 through Jan. 4, according to Disney’s proxy materials. 
  • Trian thinks that Disney shares are significantly undervalued today and that the company needs a board that is more focused, aligned with shareholders and accountable, people familiar with the matter said. 

Google announces new generative AI search capabilities for doctors – CNBC, 10/9/2023

  • Google Cloud on Monday announced new artificial intelligence-powered search capabilities that it said will help health-care workers quickly pull accurate clinical information from different types of medical records. 
  • The health-care industry is home to troves of valuable information and data, but it can be challenging for clinicians to find since it’s often stored across multiple systems and formats. 
  • Google Cloud’s new search tool will allow doctors to pull information from clinical notes, scanned documents and electronic health records so it can be accessed in one place. 
  • The company said the new capabilities will ultimately save health-care workers a significant amount of time and energy.
  • For instance, if doctors want to know about a patient’s history, they no longer need to read through their notes, faxes and electronic health records separately. 
  • Instead, they can search questions such as “What medications has this patient taken in the last 12 months?” and see the relevant information in one place.


House GOP Sees Speaker Vote on Track as Israel Adds to Urgency – Bloomberg, 10/9/2023

  • House Republicans predicted Sunday they will have a new speaker in place by mid-week after closed-door debates intended to avoid the messy 15-round process that led to the election of now-deposed Speaker Kevin McCarthy in January.
  • The speaker election took on new urgency this weekend after Hamas militants attacked Israel, killing at least 600 people and prompting calls for more US assistance. 
  • Without a speaker, the House cannot conduct legislative business even with bipartisan support for Israel in the chamber.
  • “As a general proposition, it would be very important to make sure that we have both houses of Congress, on a bipartisan basis, in a place where they can clearly show and express their support for Israel, especially in this hour of need,” Blinken said on NBC’s Meet the Press. 
  • “And so that’s something we want to see, and we hope that that happens quickly.”

Fed’s Logan Says Higher Yields May Mean Less Need to Raise Rates – Bloomberg, 10/9/2023

  • Federal Reserve Bank of Dallas President Lorie Logan said the recent surge in long-term Treasury yields may mean less need for the US central bank to raise its benchmark interest rate again.
  • “Higher term premiums result in higher term interest rates for the same setting of the fed funds rate, all else equal,” Logan said Monday in remarks prepared for a speech at the National Association for Business Economics meeting in Dallas.
  • “Thus, if term premiums rise, they could do some of the work of cooling the economy for us, leaving less need for additional monetary policy tightening.”
  • Logan said “there is a clear role for increased term premiums in recent yield curve moves,” though “the size and persistence of the contribution are subject to uncertainty.”
  • On the other hand, “to the extent that strength in the economy is behind the increase in long-term interest rates,” the central bank may need to tighten more, Logan said.
  • “Inflation remains too high, the labor market is still very strong, and output, spending and job growth are beating expectations,” Logan said. 
  • “I anticipate that we will need continued restrictive financial conditions to return inflation to 2% in a timely way.”

Fed’s Barr Defends Bank Capital Rule Plan Blasted by Wall Street – Bloomberg, 10/9/2023

  • The US Federal Reserve’s top bank watchdog is defending a sweeping government plan that would significantly boost capital requirements for Wall Street’s biggest banks.
  • Michael Barr, the Fed’s vice chair for supervision, will tell executives at an event hosted by the American Bankers Association that regulators’ July proposal would bolster the US financial system’s safety. 
  • Barr said on Monday that the benefits of the plan would outweigh costs.
  • “The proposal is projected to raise capital for large banks,” he said in remarks prepared for the conference. 
  • “This may result in higher funding costs. But this is only half the story. Capital also enables banks to absorb more losses without risking their ability to repay their creditors.”
  • As proposed, midsize firms such as Regions Financial, KeyCorp and Huntington Bancshares would face the kind of stringent requirements that had been reserved for even larger lenders.
  • “We recognize that the cost of funding for a specific loan would depend on the specific risk weight for that activity, and that there may be other channels by which higher capital requirements could matter,” he said. 
  • “This is an area where commenters can shed light on additional considerations for the cost and benefits of the rule.”


Israel Launches Barrage of Attacks on Gaza – Wall Street Journal, 10/9/2023

  • The Israeli military launched a powerful wave of attacks on Gaza after retaking control of towns in the country’s south from Hamas, as the war between Israeli forces and Islamist militants backed by Iran entered its third day.
  • More than 48 hours after fighters from Hamas, which is designated as a terrorist organization by the U.S., launched a devastating attack from Gaza, the Israeli military said fighting for towns in Israel’s south had largely ceased.
  • However, the military was using aircraft and tanks to force out remaining militants still hiding there or stop other Hamas fighters from entering Israel through breaches in the 40-mile barrier that encloses Gaza.
  • There are no battles right now in the towns,” military spokesman Daniel Hagari said Monday, following hours of clashes in at least four different communities. “It’s possible there are still terrorists in the area.”
  • “We are now conducting waves of powerful attacks,” he said, with dozens of attack aircraft hitting Gaza.
  • Israeli Defense Minister Yoav Gallant ordered a full siege of Gaza, which has already faced years of restrictions on the movement of goods and people. 
  • “There will be no electricity, food or fuel [delivered to Gaza],” he said.

Schumer Confronts Xi on Israel-Hamas Stance in Rare Meeting – Bloomberg, 10/9/2023

  • President Xi Jinping’s first meeting with US congressional leaders in eight years was infused with tension, as the Chinese leader was confronted over his nation’s failure to condemn Hamas’ incursion into Israel.
  • “I urge you and the Chinese people to stand with the Israeli people and condemn the cowardly and vicious attacks upon them,” Senate Majority Leader Chuck Schumer told Xi Monday, hours after he blasted Chinese Foreign Minister Wang Yi for showing “no sympathy or support for Israel during these tough, troubled times.”
  • “We have a thousand reasons to make US-China relations better, and no reason to make them worse,” Xi said.
  • Xi’s decision to meet directly with senators, without Biden administration officials present, could be an attempt to shift sentiment among such leaders, who can also influence business ties. 
  • Schumer later said the delegation spoke with Xi for about 80 minutes, describing the Chinese leader as “engaged.”
  • Speaking at a press conference on Monday evening, Schumer said the US lawmakers urged Beijing to use its influence with Iran “to not allow the conflagration to spread,” adding that Chinese officials agreed to deliver the message to Tehran.

Iran Helped Plot Attack on Israel Over Several Weeks – Wall Street Journal, 10/9/2023

  • Iranian security officials helped plan Hamas’s Saturday surprise attack on Israel and gave the green light for the assault at a meeting in Beirut last Monday, according to senior members of Hamas and Hezbollah, another Iran-backed militant group.
  • Officers of Iran’s Islamic Revolutionary Guard Corps had worked with Hamas since August to devise the air, land and sea incursions—the most significant breach of Israel’s borders since the 1973 Yom Kippur War—those people said.
  • Details of the operation were refined during several meetings in Beirut attended by IRGC officers and representatives of four Iran-backed militant groups, including Hamas, which holds power in Gaza, and Hezbollah, a Shiite militant group and political faction in Lebanon, they said.
  • U.S. officials say they haven’t seen evidence of Tehran’s involvement. 
  • A European official and an adviser to the Syrian government, however, gave the same account of Iran’s involvement in the lead-up to the attack as the senior Hamas and Hezbollah members.
  • Asked about the meetings, Mahmoud Mirdawi, a senior Hamas official, said the group planned the attacks on its own. 
  • “This is a Palestinian and Hamas decision,” he said.

U.S. Probe of Russia-Sanctions Busting Focuses on Major Oil Trader – Wall Street Journal, 10/9/2023

  • The Justice Department is conducting a broad effort to crack down on violations of sanctions imposed on Russia’s energy exports and has homed in on the possible activities of a prominent oil trader.
  • The effort includes an investigation of Murtaza Lakhani, founder and chief executive of Mercantile & Maritime Group, a major oil trading and shipping company with head offices in Bahrain and Singapore. 
  • The probe is examining whether Lakhani traded Russian oil in breach of Western sanctions including a U.S.-led price cap, according to people familiar with the matter.
  • Treasury Secretary Janet Yellen said the government was likely to take steps to enforce the price cap, in a sign that the U.S. is readying a broader effort to crack down on suspected evasion of sanctions on Russian oil.

Nine Americans Killed in Attack on Israel, State Department Says – Bloomberg, 10/9/2023

  • At least nine Americans died after the surprise attack by Hamas militants on Israel on Saturday, the US State Department said.
  • Speaking on CNN, State Department spokesman Matthew Miller said the agency is working with the Israeli government to locate a number of other Americans who are missing and that officials expect the death toll to rise.
  • “I can confirm that nine Americans unfortunately have lost their lives as a result of these horrific attacks in the region,” he said. 
  • “We are in close contact with the government of Israel as they continue to conduct security operations to locate missing US citizens, missing Israeli citizens.”

US Airlines Pull Back From Israel Flights After War Breaks Out – Bloomberg, 10/9/2023

  • The three major US airlines halted flights with Israel after it was attacked by Hamas over the weekend, while some Middle Eastern and European carriers continued to give passengers an exit route from the developing war.
  • Delta Air Lines, United Airlines Holdings and American Airlines Group canceled services to Tel Aviv, as did European counterparts Deutsche Lufthansa, Air France-KLM and budget specialist Wizz Air Holdings.
  • “Operators are advised to exercise caution,” the Federal Aviation Administration said in a notice telling US airlines to review the security situation before resuming operations. 
  • “Delays are expected, operators should calculate fuel accordingly.”
  • In all, airlines suspended fewer than half of all flights to Tel Aviv as of Sunday, based on data from Flightradar24.com. 
  • El Al Israel Airlines, the nation’s flag carrier, along with regional carriers Turkish Airlines and its local rival Pegasus Hava, continued to offer flights, giving passengers options to leave. 
  • British Airways and Dubai’s Emirates and FlyDubai were among the airlines still flying to Tel Aviv on Monday. 

Factmonster – TODAY in HISTORY

  • Religious dissident and Rhode Island founder, Roger Williams, was banished from the Massachusetts Bay Colony. – 1635
  • For the first time the public was admitted to the Washington Monument. – 1888
  • Aviator Laura Ingalls became the first woman to make a solo transcontinental flight across the United States. – 1930
  • Soviet scientist Andrei Sakharov was awarded the Nobel Peace Prize for his work to end the nuclear arms race. – 1975

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