ReportWire

Tag: Military Action

  • U.S., British launch massive retaliatory strike against Houthi rebels in Yemen

    U.S., British launch massive retaliatory strike against Houthi rebels in Yemen

    WASHINGTON — The U.S. and British militaries were bombing more than a dozen sites used by the Iranian-backed Houthis in Yemen on Thursday, in a massive retaliatory strike using warship-launched Tomahawk missiles and fighter jets, several U.S. officials told The Associated Press. The military targets included logistical hubs, air defense systems and weapons storage locations, they said.

    Associated Press journalists in Yemen’s capital, Sanaa, heard four explosions early Friday local time but saw no sign of warplanes. Two residents of Hodieda, Amin Ali Saleh and Hani Ahmed, said they heard five strong explosions. Hodieda lies on the Red Sea and is the largest port city controlled by the Houthis.

    Oil prices
    CL.1,
    +1.99%
    jumped more than 2% immediately after news of the attacks, on fears that a wider Middle East war could imperil oil production and shipments.

    The strikes marked the first U.S. military response to what has been a persistent campaign of drone and missile attacks on commercial ships since the start of the Israel-Hamas. The coordinated military assault comes just a week after the White House and a host of partner nations issued a final warning to the Houthis to cease the attacks or face potential military action. The officials confirmed the strikes on condition of anonymity to discuss military operations.

    The warning appeared to have had at least some short-lived impact, as attacks stopped for several days. On Tuesday, however, the Houthi rebels fired their largest-ever barrage of drones and missiles targeting shipping in the Red Sea, with U.S. and British ships and American fighter jets responding by shooting down 18 drones, two cruise missiles and an anti-ship missile. On Thursday, the Houthis fired an anti-ship ballistic missile into the Gulf of Aden, which was seen by a commercial ship but did not hit the ship.

    The rebels, who have carried out 27 attacks involving dozens of drones and missiles just since Nov. 19, said Thursday that any attack by American forces on its sites in Yemen will spark a fierce military response.

    “The response to any American attack will not only be at the level of the operation that was recently carried out with more than 24 drones and several missiles,” said Abdel Malek al-Houthi, the group’s supreme leader, during an hour-long speech. “It will be greater than that.”

    The Houthis say their assaults are aimed at stopping Israel’s war on Hamas in the Gaza Strip. But their targets increasingly have little or no connection to Israel and imperil a crucial trade route linking Asia and the Middle East with Europe.

    Meanwhile, the U.N. Security Council passed a resolution Wednesday that demanded the Houthis immediately cease the attacks and implicitly condemned their weapons supplier, Iran. It was approved by a vote of 11-0 with four abstentions — by Russia, China, Algeria and Mozambique.

    Britain’s participation in the strikes underscored the Biden administration’s effort to use a broad international coalition to battle the Houthis, rather than appear to be going it alone. More than 20 nations are already participating in a U.S.-led maritime mission to increase ship protection in the Red Sea.

    U.S. officials for weeks had declined to signal when international patience would run out and they would strike back at the Houthis, even as multiple commercial vessels were struck by missiles and drones, prompting companies to look at rerouting their ships.

    On Wednesday, however, U.S. officials again warned of consequences.

    “I’m not going to telegraph or preview anything that might happen,” Secretary of State Antony Blinken told reporters during a stop in Bahrain. He said the U.S. has made clear “that if this continues as it did yesterday, there will be consequences. And I’m going to leave it at that.”

    The Biden administration’s reluctance over the past several months to retaliate reflected political sensitivities and stemmed largely from broader worries about upending the shaky truce in Yemen and triggering a wider conflict in the region. The White House wants to preserve the truce and has been wary of taking action in Yemen that could open up another war front.

    MarketWatch contributed to this report.

    Source link

  • Shale Is Keeping the World Awash With Oil as Conflicts Abound

    Shale Is Keeping the World Awash With Oil as Conflicts Abound

    Updated Jan. 1, 2024 12:05 am ET

    A surprise surge in American oil and gas production and exports is helping to keep the world stocked, blunting the impact of widening conflict in the Middle East that has crimped key shipping lanes. 

    When Iranian-backed Houthi militants began launching missiles and drones at ships crossing the Red Sea near Yemen in October, many feared disruption to the vital shipping lane would drive up energy prices. But oil and gas prices this past month have sunk about 5% and 23%, respectively. 

    Copyright ©2024 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

    Source link

  • When Colorado removed Trump from the ballot, a Supreme Court showdown looked likely. Maine removed all doubt.

    When Colorado removed Trump from the ballot, a Supreme Court showdown looked likely. Maine removed all doubt.

    DENVER (AP) — First, Colorado’s Supreme Court ruled that former President Donald Trump wasn’t eligible to run for his old job in that state. Then, Maine’s secretary of state ruled the same for her state.

    Both decisions are historic. The Colorado court was the first court to apply to a presidential candidate a rarely used constitutional ban against those who “engaged in insurrection.” Maine’s secretary of state was the first top election official to unilaterally strike a presidential candidate from the ballot under that provision.

    What’s next? Can Trump be put back on the ballot?

    Both decisions are on hold while the legal process plays out. That means that Trump remains on the ballot in Colorado and Maine and that his political fate is now in the hands of the U.S. Supreme Court.

    The Maine ruling will likely never take effect on its own. Its central impact is increasing pressure on the nation’s highest court to state clearly whether Trump remains eligible to run for president after the Jan. 6, 2021, attack on the U.S. Capitol.

    What’s the legal issue that could keep Trump off the ballot?

    After the Civil War, the U.S. ratified the 14th Amendment to guarantee rights to former slaves and more. It also included a two-sentence clause called Section 3, designed to keep former Confederates from regaining government power after the war.

    “Section 3 of the 14th Amendment to the U.S. Constitution doesn’t require a criminal conviction to take effect.”

    The measure reads: “No person shall be a Senator or Representative in Congress, or elector of President and Vice-President, or hold any office, civil or military, under the United States, or under any State, who, having previously taken an oath, as a member of Congress, or as an officer of the United States, or as a member of any State legislature, or as an executive or judicial officer of any State, to support the Constitution of the United States, shall have engaged in insurrection or rebellion against the same, or given aid or comfort to the enemies thereof. But Congress may by a vote of two-thirds of each House, remove such disability.”

    Congress did remove that disability from most Confederates in 1872, and the provision fell into disuse. But it was rediscovered after Jan. 6.

    See: Nikki Haley was asked by N.H. voter to name Civil War cause. Slavery was absent from her answer.

    How does this apply to former president Trump exactly?

    Trump is already being prosecuted for the attempt to overturn his 2020 loss that culminated with Jan. 6, but Section 3 doesn’t require a criminal conviction to take effect. Dozens of lawsuits have been filed to disqualify Trump, claiming he engaged in insurrection on Jan. 6 and is no longer qualified to run for office.

    All the suits failed until the Colorado ruling. And dozens of secretaries of state have been asked to remove him from the ballot. All said they didn’t have the authority to do so without a court order — until Maine Secretary of State Shenna Bellows’s decision.

    See: As Colorado court bars Trump from ballot, poll finds 62% of GOP voters would want him as nominee even with more legal woes

    Also: Police investigating ‘incidents’ against Colorado justices after Trump removed from state’s ballot

    The Supreme Court has never ruled on Section 3. It’s likely to do so in considering appeals of the Colorado decision — the state Republican Party has already appealed, and Trump is expected to file his own shortly.

    Bellows’s ruling cannot be appealed straight to the U.S. Supreme Court — it has to be appealed up the judicial chain first, starting with a trial court in Maine.

    The Maine decision does force the high court’s hand, though. It was already highly likely the justices would hear the Colorado case, but Maine removes any doubt.

    Trump lost Colorado in 2020, and he doesn’t need to win it again to garner an Electoral College majority next year. But he won one of Maine’s four Electoral College votes in 2020 by winning the state’s 2nd Congressional District, so Bellows’s decision would have a direct impact on his odds next November.

    Until the high court rules, any state could adopt its own standard on whether Trump, or anyone else, can be on the ballot. That’s the sort of legal chaos the court is supposed to prevent.

    What is Trump’s argument?

    Trump’s lawyers have several arguments against the push to disqualify him. First, it’s not clear Section 3 applies to the president — an early draft mentioned the office, but it was taken out, and the language “an officer of the United States” elsewhere in the Constitution doesn’t mean the president, they contend.

    Second, even if it does apply to the presidency, they say, this is a “political” question best decided by voters, not unelected judges. Third, if judges do want to get involved, the lawyers assert, they’re violating Trump’s rights to a fair legal procedure by flatly ruling he’s ineligible without some sort of fact-finding process like a lengthy criminal trial. Fourth, they argue, Jan. 6 wasn’t an insurrection under the meaning of Section 3 — it was more like a riot. Finally, even if it was an insurrection, they say, Trump wasn’t involved in it — he was merely using his free speech rights.

    Of course, the lawyers who want to disqualify Trump have arguments, too.

    The main one is that the case is actually very simple: Jan. 6 was an insurrection, Trump incited it, and he’s disqualified.

    Why has this process taken so long?

    The attack of Jan. 6, 2021, occurred nearly three years ago, but the challenges weren’t “ripe,” to use the legal term, until Trump petitioned to get onto state ballots this fall.

    But the length of time also gets at another issue — no one has really wanted to rule on the merits of the case. Most judges have dismissed the lawsuits because of technical issues, including that courts don’t have the authority to tell parties whom to put on their primary ballots. Secretaries of state have dodged, too, usually telling those who ask them to ban Trump that they don’t have the authority to do so unless ordered by a court.

    No one can dodge anymore. Legal experts have cautioned that, if the Supreme Court doesn’t clearly resolve the issue, it could lead to chaos in November — or in January 2025, if Trump wins the election. Imagine, they say, if the high court ducks the issue or says it’s not a decision for the courts to make, and Democrats win a narrow majority in Congress. Would they seat Trump or declare he’s ineligible under Section 3?

    Why was this action taken in Maine?

    Maine has an unusual process in which a secretary of state is required to hold a public hearing on challenges to politicians’ spots on the ballot and then issue a ruling. Multiple groups of Maine voters, including a bipartisan clutch of former state lawmakers, filed such a challenge, triggering Bellows’s decision.

    Bellows is a Democrat and the former head of the Maine chapter of the American Civil Liberties Union. Trump’s attorneys asked her to recuse herself from the case, citing social-media posts calling Jan. 6 an “insurrection” and bemoaning Trump’s acquittal in his impeachment trial over the attack.

    She refused, saying she wasn’t ruling based on personal opinions. But the precedent she sets is notable, critics say. In theory, election officials in every state could decide a candidate is ineligible based on a novel legal theory about Section 3 and end their candidacies.

    Conservatives argue that Section 3 could apply to Vice President Kamala Harris, for example — it was used to block from office even those who donated small sums to individual Confederates. Couldn’t it be used against Harris, they say, because she raised money for those arrested in the unrest after the murder of George Floyd by Minneapolis police in 2020?

    Is this a partisan issue?

    Bellows is a Democrat, and all the justices on the Colorado Supreme Court were appointed by Democrats. Six of the 9 U.S. Supreme Court justices were appointed by Republicans, three by Trump himself.

    But courts don’t always split on predictable partisan lines. The Colorado ruling was 4-3 — so three Democratic appointees disagreed with barring Trump. Several prominent legal conservatives have championed the use of Section 3 against the former president.

    Now we’ll see how the high court handles it.

    Read on:

    Trump’s name can appear on ballot in Michigan, says state’s top court

    Georgia election workers sue Rudy Giuliani again, seek to bar him from repeating lies about them

    Trump’s Republican rivals rally to his defense after Colorado ballot ruling

    Supreme Court to hear case that could undermine obstruction charges against hundreds of Jan. 6 defendants

    Source link

  • Oil prices post first weekly gain in 8 weeks amid ship attacks in Red Sea

    Oil prices post first weekly gain in 8 weeks amid ship attacks in Red Sea

    Oil futures fell on Friday, but finished off the session’s lows to eke out a gain for the week — the first for U.S. and global benchmark crude prices in eight weeks.

    Attacks on ships traveling through the Red Sea, blamed on Yemen’s Houthi rebels, raised the potential for disruptions to the transport of oil and other goods, providing some support for prices.

    Oil saw larger declines early Friday after a Federal Reserve official walked back dovish comments made earlier this week by the Fed Chair Jerome Powell, helping to strengthen the U.S. dollar.

    Price action

    • West Texas Intermediate crude for January
      CL00,
      +0.49%

      CL.1,
      +0.49%

      CLF24,
      +0.49%
      declined by 15 cents, or 0.2%, to settle at $71.43 a barrel on the New York Mercantile Exchange, with prices ending 0.3% higher for the week, according to Dow Jones Market Data.

    • February Brent crude
      BRN00,
      +0.52%

      BRNG24,
      +0.52%      ,
      the global benchmark, fell 6 cents, or nearly 0.1%, to $76.55 a barrel on ICE Futures Europe, settling 0.9% higher for the week.

    • January gasoline
      RBF24,
      -0.16%
      added 0.9% to $2.14 a gallon, up almost 4.3% for the week, while January heating oil
      HOF24,
      +0.20%
      climbed 1.1% to $2.62 a gallon on Nymex, marking a weekly rise of 1.5%.

    • Natural gas for January delivery
      NGF24,
      -0.88%
      gained 4.1% to $2.49 per million British thermal units, but still logged a weekly loss of 3.5%.

    Price support

    Danish shipping company A.P. Moeller-Maersk
    MAERSK.A,
    +7.52%
    said it will pause all of its container shipments through the Red Sea until further notice and detour them around Africa, Reuters and Bloomberg reported Friday, amid rising risks to its fleet posed by Houthi militants.

    The Red Sea is “one of the hot pockets of seaborne crude flows,” accounting for approximately 10% of global volume, said Manish Raj, managing director at Velandera Energy Partners. “Although the attackers lack sophistication … shipping crews are even less sophisticated, making them easy targets.” 

    A potential blockage of the Red Sea route would be “chaotic indeed, but not nearly as detrimental as blockage of [the] Strait of Hormuz near Iran, for which there is no viable alternative,” Raj said.

    Read from the AP: How are Houthi attacks on ships in the Red Sea affecting global trade?

    For now, there is concern over higher insurance costs for these ships, said Phil Flynn, senior market analyst at the Price Futures Group.

    “With ships in the Red Sea continuing to be at high risk, ‘it won’t take that much for the market’ to see oil prices spike if an oil tanker should be hit.”


    — Phil Flynn, Price Futures Group

    Obviously, the risk to oil supply is large, although “so far, most of the attacks have been on cargo ships and not oil-related ships,” Flynn told MarketWatch.

    However, as ships in the Red Sea continue to be at high risk, “it won’t take that much for the market” to see oil prices spike if an oil tanker is hit, Flynn said.

    For the week, both U.S. and global benchmark crude prices posted gains.

    “The combination of lower U.S. inventories, stronger economic data, and improved OPEC compliance [with production cuts] for the month of November were the highlights of the week,” said Peter McNally, global head of sector analysts at Third Bridge.

    “However, there are ongoing seasonal challenges that forced OPEC to sustain production cuts through the first quarter of 2024, so it remains to be seen if they have done enough to prevent inventories from continuing their upward trend,” he said.

    Read The Year Ahead: Why oil may not see a return $100 a barrel in 2024

    Price pressures

    Oil had been trading lower early Friday after New York Federal Reserve President John Williams told CNBC that it is “premature” to discuss whether it is time to cut interest rates. “We aren’t really talking about cutting interest rates right now,” Williams said.

    That ran contrary to Powell’s comments Wednesday that Fed officials were starting to discuss when to cut rates.

    After the euphoria in the U.S. stock market over the Powell “pivot party” on Wednesday, we got a “wake-up call” from Williams when he pushed back on market expectations for a March rate cut, Michael Hewson, chief market analyst at CMC Markets UK, said in market commentary.

    Source link

  • Israel fighter jets begin striking Gaza strip targets again as Hamas truce expires

    Israel fighter jets begin striking Gaza strip targets again as Hamas truce expires

    JERUSALEM (AP) — The Israeli military said Friday that its fighter jets have begun striking Hamas targets in the Gaza Strip, in the clearest sign yet that the war has resumed with full force after a weeklong truce.

    The announcement came 30 minutes after the cease-fire expired at 7 a.m. (0500 GMT) Friday.

    Earlier Friday, Israel accused Hamas of having violated the terms of the cease-fire, including by firing rockets toward Israel from Gaza.

    The temporary truce in the Israel-Hamas war expired Friday morning, without immediate word from mediator Qatar on an extension, raising the possibility of renewed fighting.

    The halt in fighting began a week ago, on Nov. 24. It initially lasted for four days, and then was extended for several days with the help of Qatar and fellow mediator Egypt.

    During the week-long truce, Hamas and other militants in Gaza released more than 100 hostages, most of them Israelis, in return for 240 Palestinians freed from prisons in Israel. Virtually all of those freed were women and children.

    Reaching agreements on swaps appeared to be growing harder as most women and children held in Gaza had already been released.

    Source link

  • Hamas releases first group of hostages under truce agreement with Israel

    Hamas releases first group of hostages under truce agreement with Israel

    DEIR AL-BALAH, Gaza Strip (AP) — Hamas released the first batch of hostages under a ceasefire deal that began Friday, including 13 Israelis who have been held in the Gaza Strip since the militant group staged a raid on Israel nearly seven weeks ago, according to officials and media reports.

    Twelve Thai nationals were also released, according to Thai Prime Minister Srettha Thavisin.

    Dozens of Palestinian prisoners are expected to be freed by Israel.

    The ceasefire between Israel and Hamas began Friday, setting the stage for the exchange and allowing sorely needed aid to start flowing into Gaza.

    Don’t miss: A secret line of communication and a pivotal U.S. role: How the hostage-release deal evolved — and nearly fell apart — in final days

    There were no reports of fighting after the truce began. The deal offered some relief for Gaza’s 2.3 million people, who have endured weeks of Israeli bombardment and dwindling supplies of basic necessities, as well as for families in Israel worried about loved ones taken captive during Hamas’s Oct. 7 attack, which triggered the war.

    The truce raised hopes of eventually winding down the conflict, which has flattened vast swaths of Gaza, fueled a surge of violence in the occupied West Bank and stirred fears of a wider conflagration across the Middle East. Israel, however, has said it is determined to resume its massive offensive once the ceasefire ends.

    Under the deal, Gaza’s ruling Hamas group pledged to free at least 50 of the about 240 hostages it and other militants took in the Oct. 7 raid. In exchange, Hamas said Israel would free 150 Palestinian prisoners.

    It was not expected that captive Americans would be among those released late Friday afternoon, but the Biden White House said in a statement that it continued to work to ensure that U.S. nationals, including an Israeli-American girl who turns 4 on Friday, are among the initial 50.

    Both sides agreed to release women and children first, in stages starting Friday, and as planned 13 Israelis were released, according to Israeli media, citing security officials. An Israeli official, meanwhile, confirmed that the Thai captives left Gaza and were en route to a hospital in Israel.

    The official spoke on condition of anonymity because she was not authorized to discuss the releases with the media.

    Israel said the deal calls for the truce to be extended an extra day for every additional 10 hostages freed.

    Early in the day, ambulances were seen arriving at the Hatzerim air base in southern Israel, preparing for the release. Those freed will then be taken to hospitals for assessment and treatment, Israeli officials said.

    See: Ambulances positioned at Israeli military base ahead of Hamas hostage release

    Among the Israeli citizens freed some have a second nationality, according to a Hamas official who spoke on condition of anonymity because he was not authorized to discuss details with the media.

    Israel’s Justice Ministry published a list of 300 Palestinian prisoners eligible for release. Thirty-nine — 24 women, including some convicted of attempted murder for attacks on Israeli forces, and 15 teenagers jailed for offenses like throwing stones — were expected to be freed Friday, Palestinian authorities said.

    On Friday, the truce brought quiet after weeks in which Gaza saw heavy bombardment and artillery fire daily as well as street fighting as ground troops advanced through neighborhoods in the north. The last report of air-raid sirens in Israeli towns near the territory came shortly after the truce took effect.

    Not long after, four tankers with fuel and four with cooking gas entered the Gaza Strip from Egypt, Israel said.

    Israel has agreed to allow the delivery of 130,000 liters, or 34,340 gallons, of fuel per day during the truce — still only a small portion of Gaza’s estimated daily needs of more than 1 million liters.

    For most of the past seven weeks of war, Israel had barred the entry of fuel to Gaza, claiming it could be used by Hamas for military purposes — though it has occasionally allowed small amounts in.

    U.N. aid agencies pushed back against the claim, saying fuel deliveries were closely supervised and urgently needed to avert a humanitarian catastrophe since fuel is required to run generators that power water-treatment facilities, hospitals and other critical infrastructure.

    The Israeli military dropped leaflets over southern Gaza, warning hundreds of thousands of displaced Palestinians who sought refuge there not to return to their homes in the territory’s north, the focus of Israel’s ground offensive.

    Even though Israel warned that it would block such attempts, hundreds of Palestinians could be seen walking north Friday.

    Two were shot and killed by Israeli troops and another 11 were wounded. An Associated Press journalist saw the two bodies and the wounded as they arrived at a hospital.

    Sofian Abu Amer, who had fled Gaza City, said he decided to risk heading north to check on his home.

    “We don’t have enough clothes, food and drinks,” he said. “The situation is disastrous. It’s better for a person to die.”

    The hope is that “momentum” from the deal will lead to an “end to this violence,” said Majed al-Ansari, a spokesman for the Foreign Ministry of Qatar, which served as a mediator along with the United States and Egypt.

    But hours before it came into effect, Israeli Defense Minister Yoav Gallant was quoted telling troops that their respite would be short and that the war would resume with intensity and continue for at least two more months.

    Prime Minister Benjamin Netanyahu has also vowed to continue the war to destroy Hamas’s military capabilities, end its 16-year rule in Gaza and return all the hostages.

    Israel’s northern border with Lebanon was also quiet on Friday, a day after the militant Hezbollah group, an ally of Hamas, carried out the highest number of attacks in one day since fighting there began Oct. 8.

    Hezbollah is not a party to the ceasefire agreement but was widely expected to halt its attacks.

    The war erupted when several thousand Hamas militants stormed into southern Israel, killing at least 1,200 people, mostly civilians, and taking scores of hostages, including babies, women and older adults, as well as soldiers.

    The soldiers will only be released in exchange for all Palestinians imprisoned by Israel, according to the Islamic Jihad militant group, which is reportedly holding about 40 hostages.

    It is not clear how many of the hostages are currently serving in the military or whether the militants also consider reserve soldiers to be “military hostages.”

    According to the Palestinian Prisoners’ Club, an advocacy group, Israel is currently holding 7,200 Palestinians on security charges or convictions, including about 2,000 arrested since the start of the war.

    The Israeli offensive has killed more than 13,300 Palestinians, according to the Health Ministry in Hamas-ruled Gaza, which resumed its detailed count of casualties in Gaza after stopping for weeks because of the health system’s collapse in the north.

    The ministry says some 6,000 people have been reported missing, feared buried under rubble.

    The ministry does not differentiate between civilians and militants in its death tolls. Women and minors have consistently made up around two-thirds of the dead, though the new number was not broken down. The figure does not include updated numbers from hospitals in the north.

    Israel says it has killed thousands of Hamas fighters, without presenting evidence for its count.

    MarketWatch contributed.

    Source link

  • How the Hamas hostage-release deal evolved — and nearly fell apart — in final days

    How the Hamas hostage-release deal evolved — and nearly fell apart — in final days

    WASHINGTON (AP) — The negotiations hardly ran smoothly. But, in the end, persistence paid off.

    Six weeks ago, not long after Hamas killed more than 1,200 people in Israel and took scores of others hostage in a surprise assault, the government of Qatar quietly reached out to the United States to discuss how to secure the release of those who were taken captive by the militant group.

    But…

    Master your money.

    Subscribe to MarketWatch.

    Get this article and all of MarketWatch.

    Access from any device. Anywhere. Anytime.


    Subscribe Now

    Source link

  • How the Biden-Xi meeting in San Francisco could help prevent a world war

    How the Biden-Xi meeting in San Francisco could help prevent a world war

    President Joe Biden will meet with his Chinese counterpart Xi Jinping near San Francisco Wednesday, and hanging over the summit is the threat of war over the island of Taiwan, a conflict that would likely cripple the world economy and plunge the U.S. and its allies into a devastating global conflict.

    Experts are divided on how Biden can best avoid such an outcome, but there is a consensus that a war with China would be extremely costly in economic, political and human terms. China has long seen self-ruled Taiwan as a breakaway province.

    Also read: Biden says his goal for Xi meeting is to get U.S.-China communications back to normal

    “The U.S. Air Force and Navy would have to operate in an environment unlike anything they’ve seen since World War II,” said Mark Cancian, a former Marine Corps colonel, Defense Department official and senior adviser at the Center for Strategic and International Studies.

    Earlier this year, Cancian led a wargame simulation of what would happen if China attempted an amphibious invasion of Taiwan and found that if the U.S. intervened to defend the island, it would likely lead to the loss of dozens of ships, hundreds of aircraft and 15,000 U.S. casualties in just the first month of the war.

    Other experts argue that this is too optimistic a scenario. Lyle Goldstein, director of the Asia Engagement program at the think tank Defense Priorities, criticized the war game in a recent panel discussion as too optimistic in its estimate of the forces China would bring to bear in a Taiwan invasion, arguing that the Chinese would use their coast guard and merchant marine as well as military vessels to invade the island.

    “The idea that we would have anywhere near the munitions to sink tens of thousands of ships that would be involved is a major fallacy,” he said, adding that a war with China would make the conflicts in Ukraine and Gaza “look like small brushfires.”

    Biden and Xi last met about a year ago in Indonesia, and the U.S. leader at the time told his Chinese counterpart that he objected to China’s “coercive and increasingly aggressive actions” toward Taiwan. Speaking with reporters on Nov. 9, a senior Biden administration official said the U.S. is concerned about “a ramping up of military activities around Taiwan in ways that are unprecedented, that are dangerous, that are provocative.”

    Now see: Taiwan says more than 100 Chinese warplanes flew toward the island in past day

    Economic fallout

    The CSIS report underscores the damage that U.S. armed forces and those of its allies would suffer in a war with China, but the economic fallout would also have a profound affect on Americans at home.

    “It’s almost hard to calculate the just how bad a Chinese invasion of Taiwan would be economically,” said Zack Cooper, a senior fellow at the American Enterprise Institute and former National Security Council official under President George W. Bush.

    Barron’s: China’s clout undimmed as U.S. companies line up to meet Xi Jinping. Why it’s a two-way street.

    He noted that because of Taiwan’s central importance in the supply chain for advanced semiconductors
    SMH,
    it could grind to a halt markets for advanced electronic devices as well as consumer goods like automobiles that increasingly rely on computer chips.

    “I think we’d be looking at a global financial crash that’s more in line with what we’ve seen in World War I and World War II than anything we’ve seen recently,” he said.

    Market observers have latched onto the idea that China’s recent economic woes make it less likely that it will behave aggressively on the global stage.

    “If Chinese consumers have been spooked by COVID lockdowns and a cascading property collapse, imagine how an escalating confrontation might shatter their outlook,” wrote Christopher Smart, managing partner at Arbroath Group, in a recent note.

    But some U.S. policymakers disagree, including Republican Rep. Mike Gallagher of Wisconsin, chairman of the House select committee on competition with China, who said at a recent event that it’s “plausible that as China confronts serious economic and demographic issues, Xi Jinping could get more risk accepting, and could get less predictable and do something very stupid.”

    Biden’s task

    The foreign policy community in Washington is divided over what the best strategy for deterring a Chinese invasion, with some emphasizing restraint and others the need to show strength in the face of a progressively belligerent Xi Jinping.

    “Taiwan is increasingly discussed as being a critical strategic location for the United States that it must defend and can’t allow to fall to China because it will have a domino effect across the region,” said Michael Swaine, a China expert and senior research fellow at the Quincy Institute for Responsible Statecraft.

    He added that this is a departure from the stance the U.S. adopted in 1979 when it established official relations with the People’s Republic of China, which was that it does not seek Taiwanese independence and would not stand in the way of a peaceful reunification.

    Biden has underscored this drift with several statements in recent years that the U.S. would defend Taiwan if China were to try to take it by force, a change from the so-called strategic ambiguity that has guided U.S. policy in the past.

    Swain argues that the Biden administration must do more to foster communication with China on a broad set of issues and take seriously Chinese concerns that the U.S. alliance system in Asia is seeking to contain Chinese growth with military means.

    Others argue that Xi Jinping is a rational actor and U.S. efforts to foster alliances in the region are necessary to show China that a Taiwanese invasion would be costly and potentially threaten the Chinese Communist Party’s rule.

    “There’s a big difference between Xi Jinping and Vladimir Putin,” AEI’s Cooper said. “Most experts don’t see Xi as a risk taker, and we need to be doing everything we can to have the deterrence capability to convince him not to start a conflict.”

    The summit

    It’s unlikely that the public will will see evidence from Wednesday’s meeting of thawing tensions over the Taiwan issue, as the two sides have already said there will be no joint statement issued, Swaine of the Quincy Institute said.

    “They will repeat their talking points on Taiwan and move on,” he said. “But it’s possible we could see them state very clearly their commitment to resuming a crisis communication dialogue” between each country’s militaries, which was cut off following former House Speaker Nancy Pelosi’s visit to Taiwan last year.

    Cooper of AEI said that the reason for the meeting isn’t concrete deliverables, but mutual understanding that can result from a leader-to-leader dialogue.

    “The real value of the Xi meeting is the administration’s ability to interact with him directly and try to understand better how he’s thinking, what information he’s getting,” he said. “It’s not something you’ll see in a statement, it will be done behind closed doors and judging the aftermath will be difficult.”

    Source link

  • Foreign passport holders leaving Gaza for first time since war began

    Foreign passport holders leaving Gaza for first time since war began

    Dozens of foreign passport holders could be seen entering the Rafah crossing from Gaza to Egypt on Wednesday. It appeared to be the first time foreign passport holders have been allowed to leave the besieged territory since the start of the Israel-Hamas war more than three weeks ago.

    Early Wednesday, providers Paltel and Jawwal reported a “complete disruption” of communications and internet services in Gaza, the second major cut in five days. Humanitarian aid agencies have warned that such blackouts severely disrupt their…

    Source link

  • Oil falls, markets hold steady as Israel launches Gaza ground offensive

    Oil falls, markets hold steady as Israel launches Gaza ground offensive

    Oil futures dropped Sunday night as markets saw a calm opening following Israel’s launch of a ground offensive in Gaza that drew implied threats from Iran amid market fears of a wider conflict that could disrupt global crude supplies.

    Oil declined as Israel “seems to be approaching the situation with caution, which has brought a sense of relief that the worst-case scenarios may not materialize,” said Stephen Innes, managing partner at SPI Asset Management, in a note.

    Innes, however, said investors should remember “this is likely to be a long, drawn-out affair with many false dawns.”

    West Texas Intermediate crude for December delivery
    CL00,
    -1.51%

    CL.1,
    -1.51%

    CLZ23,
    -1.51%
    fell 93 cents, or 1%, to $84.61 a barrel on the New York Mercantile Exchange on Sunday night. December Brent crude
    BRNZ23,
    -1.34%    ,
    the global benchmark, was off $1, or 1.1%, at $89.48 a barrel on ICE Futures Europe, dipping back below the $90-a-barrel threshold.

    Oil futures jumped nearly 3% on Friday, but suffered weekly declines, eroding the modest risk premium priced into the market.

    Read: 4 reasons why oil prices have only seen a modest Middle East risk premium

    Israeli solders had moved at least two miles deep into the Gaza Strip as of Sunday, the Wall Street Journal reported, after beginning a delayed ground incursion into the enclave aimed at routing Hamas following its Oct, 7 attack on southern Israel that left more than 1,400 dead and saw more than 200 Israelis taken hostage.

    A sustained bombardment of the densely populated Gaza Strip by Israel has resulted in more than 8,000 casualties, according to Palestinian authorities. Israel has been under pressure by the U.S. and others to minimize civilian casualties.

    U.S. stock-index futures ticked higher, with S&P 500 futures
    ES00,
    +0.32%
    up 0.3%, while futures on the Dow Jones Industrial Average
    YM00,
    +0.20%
    added 68 points, or 0.2%.

    The biggest worry among investors is a conflict that sees Iran become more directly involved. Iranian crude exports have rebounded from lows seen after the Trump administration withdrew the U.S. from a nuclear accord with Tehran and reimposed sanctions in 2018.

    A renewed crackdown on Iran could take up to 1 million barrels a day of crude off the market, while a spiraling conflict could see Tehran threaten transportation chokepoints, particularly the Strait of Hormuz, or otherwise attack infrastructure in the region, while driving up a fear premium.

    Iranian President Ibrahim Raisi, in a post on X written in English, said Saturday that Israel had “crossed the red lines, which may force everyone to take action.”

    U.S. warplanes on Friday struck two locations in eastern Syria, which the Pentagon said were linked to Iran’s Revolutionary Guard Corps, following a string of attacks on U.S. air bases in the region that started last week.

    U.S. stocks are poised to book another round of monthly losses as October draws to an end, though pressure has been attributed largely to a surge in Treasury yields. The S&P 500
    SPX
    last week joined the Nasdaq Composite
    COMP
    in correction territory, while the Dow
    DJIA
    is down more than 2% year to date.

    The rise in yields, which move opposite price, has come as U.S. government debt has failed to attract its usual haven-related buying amid rising Mideast tensions.

    See: Israel-Hamas war sees investors shun most traditional havens, except for these two

    Source link

  • Here’s what the Israel-Hamas war has done to U.S. gasoline and diesel prices

    Here’s what the Israel-Hamas war has done to U.S. gasoline and diesel prices

    Fuel prices, with the cost of gasoline and diesel at the pump both down from a month ago, don’t appear to be fazed by the escalating risks to oil supplies in the Middle East from the Israel-Hamas war, but they are.

    The decline in fuel prices seen nationally is actually a “bit above what would be ‘normal’ for this time of year,” said Patrick De Haan, head of petroleum analysis at GasBuddy. However, he believes “prices won’t fall as far as they would have had the attacks on Israel not happened.”

    On Friday, the average retail price for a gallon of regular gasoline stood at $3.528, down 5.7 cents from a week ago, while the average retail diesel price was at $4.465 a gallon on Friday, down 7.8 cents from Sept. 30, according to data from GasBuddy.

    U.S. retail gasoline prices have fallen so far this month.


    GasBuddy

    “Geopolitical risk is now heightened, changing the calculus” for the fuel market, said Brian Milne, product manager, editor and analyst at DTN.

    ‘Seasonal component’

    In considering retail gasoline prices during the fourth quarter, the “seasonal component is less pronounced than in years past,” said Milne. Demand for gasoline tends to fall following the summer travel season. Combined with a “strong slate of refinery maintenance,” which led to less fuel supply on the market, the rise in crude oil prices has slowed the decline in fuel prices, said Milne.

    If not for the heightened geopolitical risk in the Middle East, he said he might have expected to see gasoline prices decline by another 30 cents to 40 cents per gallon into late December because of lower demand.

    Retail gas prices may fall another 20 cents a gallon or more, depending on the location within the U.S., if we avoid broader hostilities in the Middle East, said Milne.

    However, if a conflict breaks out beyond Israel and the Gaza Strip, gasoline prices are likely to move sharply higher because of a spike in crude costs, he said.

    For its part, oil has seen volatile trading following the Hamas attack on Israel on Oct. 7, with futures prices for U.S. benchmark West Texas Intermediate crude
    CLZ23,
    -0.42%

    CL.1,
    -0.39%
    higher for the week, but lower for the month.

    California prices ‘plummet’

    For now, California, which typically is among the states that pays the most per-gallon for gasoline partly due to taxes on the fuel, is seeing prices “plummet” — down nearly 60 cents in the last three weeks, said GasBuddy’s De Haan.

    “The West Coast is certainly seeing a much larger decline than is ‘normal’ and it’s due to the refinery situation now improving drastically,” as well as California’s RVP waiver, he said.

    The California Air Resources Board allowed gasoline sold or supplied for use in California that exceeds the RVP, or Reid Vapor Pressure, limits through the end of Oct. 31, marking an early transition for the state from the lower RVP gas used in the summer to help cut gasoline emissions to the higher RVP gas used in the winter.

    On Friday, the average price for a gallon of regular gasoline in California sold for $5.476, GasBuddy data show. That’s down 16.7 cents in just the last week.

    Gas price outlook

    De Haan said he does not expect to see a spike in gas prices nationally at this point, and there’s still room for prices to fall — just not as much following the Hamas attack on Israel.

    “If we get to November and Iran gets involved in the situation, then we certainly could see gas prices impacted in some way as the current drops will likely be fully passed on by then, giving stations no ‘room’ to absorb higher prices reflected by a potential rise in oil,” said De Haan.

    Still, falling demand, as well as “seasonality in general,” are what are pushing prices down, “enhanced by refinery improvements in areas” that saw price surges, he said.

    Prices may even fall further after refinery maintenance season wraps up in mid-November, and refiners have to find places to put even more gasoline output, said De Haan.

    He’s comfortable with the gasoline price forecasts GasBuddy issued in December of last year, which predicted a monthly national average for the fuel of $3.53 for October — matching the current price. The forecast also called for an average of $3.36 a gallon for November and $3.17 for December.

    GasBuddy doesn’t have a forecast for 2024 yet, but prices may look similar to this year, as long as the situation in the Middle East doesn’t further crumble,” said De Haan.

    View on diesel

    Diesel, however, is another story.

    Price for that fuel have dropped by 85.5 cents a gallon from a year ago to Friday’s $4.465 level, GasBuddy data show.

    U.S. retail diesel prices are sharply lower than a year ago.


    GasBuddy

    While down from a year ago, diesel prices are currently at a “very high level historically” because global supply is low, said DTN’s Milne.

    At this time in 2022 diesel fuel inventory was even tighter than it is now, and Europe was heading into winter without Russian natural gas after it was cutoff following the invasion of Ukraine, he said.

    That led to a spike in natural-gas prices and prices for gasoil, a European heating oil, also surged, lifting heating oil and diesel prices globally, explained Milne.

    Like gasoline, diesel prices could move “sharply higher if the war in Israel expands, and oil flow is put at greater risk,” he said.

    De Haan, meanwhile, said diesel prices could climb closer to $5 a gallon if there’s a “squeeze,” with relief then [coming] in the spring/summer” seasons.

    Source link

  • Biden will travel to Israel Wednesday amid rising concern conflict will spread

    Biden will travel to Israel Wednesday amid rising concern conflict will spread

    TEL AVIV, Israel — President Joe Biden will travel to Israel and on to Jordan Wednesday to meet with both Israeli and Arab leadership, as concerns increase that the raging Israel-Hamas war could expand into a larger regional conflict.

    U.S. Secretary of State Antony Blinken announced Biden’s travel to Israel as the humanitarian situation in the Gaza Strip grows more dire and as Israel prepares for a possible ground attack on the 141-square-mile territory to root out Hamas militants responsible for what U.S. and Israeli officials say was the most lethal assault against Jews since the Holocaust.

    Biden is looking to send the strongest message yet that the U.S. is behind Israel. His Democratic administration has pledged military support, sending U.S. carriers and aid to the region. Officials have said they would ask Congress for upward of $2 billion in additional aid for both Israel and Ukraine, which is fighting Russia’s invasion.

    It’s a chance for Biden to burnish his national security credentials to U.S. voters with the 2024 election just over a year away. It’s also an opportunity to demonstrate that he’s making good on his campaign promise of exercising American leadership after four years of former President Donald Trump’s “America First” foreign policy.

    But Biden’s presence could be seen as a provocative move by Hamas’ chief sponsor, Iran, or potentially viewed as tone-deaf by Arab nations as civilian casualties mount in Gaza. Blinken has already been traveling around the Mideast this past week trying to prevent the war with Hamas from igniting a broader regional conflict.

    Blinken made the announcement early Tuesday after more than seven hours of talks with Israeli Prime Minister Benjamin Netanyahu and other top Israeli officials.

    “He is coming here at a critical moment for Israel, for the region and for the world,” Blinken said.

    Shortly after in Washington, White House National Security Council spokesman John Kirby announced that Biden would also go to Jordan to meet with King Abdullah II, Egyptian President Abdel Fattah el-Sissi and Palestinian President Mahmoud Abbas.

    “We’ve been crystal clear about the need for humanitarian aid to be able to continue to flow into Gaza,” Kirby said. “That has been a consistent call by President Biden and certainly by this entire administration.”

    Truckloads of aid idled Monday at Egypt’s border with Gaza, barred from entry, as residents and humanitarian groups pleaded for water, food and fuel for dying generators, saying the tiny Palestinian territory sealed off by Israel after last week’s rampage by Hamas was near total collapse.

    Biden had been scheduled to travel to Pueblo, Colorado, on Monday but decided to postpone the visit so he could consult with his aides and speak with fellow leaders about the unfolding situation in the Middle East.

    The announcements came after Biden consulted with a trio of world leaders and his own national security team on Monday amid growing global concern about the humanitarian crisis unfolding in the Gaza Strip and fears that the Israel-Hamas war could metastasize into a broader regional conflict.

    Biden spoke by phone with Egypt’s el-Sissi, Iraqi Prime Minister Mohammed Shia al-Sudani and German Chancellor Olaf Scholz about the fallout from Hamas militants’ surprise attacks on Israel that left 1,400 dead and retaliatory strikes that have killed at least 2,778 Palestinians.

    European Union leaders will hold an emergency summit on Tuesday as concern mounts that the war between Israel and Hamas could fuel tensions in Europe and bring more refugees in search of sanctuary.

    Biden’s call with the Egyptian leader came one day after el-Sissi met with Blinken in Cairo. Egypt’s state-run media said el-Sissi told Blinken that Israel’s Gaza operation has exceeded “the right of self-defense” and turned into “a collective punishment.”

    Kirby declined to comment on el-Sissi’s concerns about how Israel is conducting the war.

    “The humanitarian situation was high on the list of the discussion with President el-Sissi,” Kirby said.

    Iran’s foreign minister warned Monday that “preemptive action is possible” if Israel moves closer to its looming ground offensive in the Gaza Strip.

    Iran is a chief financial sponsor of Hamas militants in Gaza and Hezbollah in Lebanon. The comments by Hossein Amirabdollahian follow a pattern of escalating rhetoric from Iran.

    “Leaders of the resistance will not allow the Zionist regime to do whatever it wants in Gaza and then go after other resistance groups after it’s done with Gaza,” he told state television. “Therefore any preemptive action is possible in the coming hours.”

    Kirby said the U.S. has not seen any signs that Iran might try to get directly involved in the Israel-Hamas conflict.

    White House officials have said that U.S. intelligence shows that Iran has been broadly aware that Hamas had been preparing for a possible strike against Israel. But the U.S. says it has yet to uncover evidence of direct Iranian involvement in the Oct. 7 attack.

    Israel is also preparing for the potential of a new front opening on its northern border with Lebanon, where it has exchanged fire repeatedly with the Iranian-backed Hezbollah group. The military ordered residents of 28 Israeli communities near the border to evacuate.

    Air raid sirens interrupted Blinken’s meetings with Israeli officials on three different occasions Monday, including twice as he huddled with Netanyahu and his war cabinet.

    In Washington, Biden was briefed in the Oval Office by their national security team on the situation on the ground in Israel and Gaza. White House chief of staff Jeff Zients joined the briefing led by national security adviser Jake Sullivan, Director of National Intelligence Avril Haines and Central Intelligence Agency Director Bill Burns, according to the White House.

    Blinken was in Israel on Monday for his second visit in less than a week for talks with Israeli leaders. He has been crisscrossing the Middle East with stops in Jordan, Bahrain, Qatar, Egypt, Saudi Arabia and the United Arab Emirates.

    Blinken, in talks Monday with Netanyahu and other Israeli officials, carried back some of the feedback he received from Arab leaders. He also “underlined his firm support for Israel’s right to defend itself from Hamas’ terrorism and reaffirmed U.S. determination to provide the Israeli government with what it needs to protect its citizens,” State Department spokesman Matthew Miller said in a statement.

    White House officials said Biden’s talks with Arab leaders in Amman will largely focus on humanitarian concerns for Gaza’s 2.3 million people. He’ll also make clear that Hamas does not stand for the Palestinian people’s right to dignity and self-determination.

    Still, White House officials bristled about whether Biden would ask Netanyahu and Israel officials to show restraint or set any conditions on any new U.S. military aid that could be in the pipeline.

    “We are not putting conditions on the military assistance that we are providing to Israel,” Kirby said. “They have a right to defend themselves. They have a right to go after this terrorist threat.”

    Source link

  • Biden to ask Congress for ‘urgent action’ to help Israel after ‘sheer evil’ Hamas attacks

    Biden to ask Congress for ‘urgent action’ to help Israel after ‘sheer evil’ Hamas attacks

    President Joe Biden on Tuesday said he would ask Congress to take “urgent action” to aid Israel after what he called “sheer evil” attacks by Hamas.

    “When Congress returns we’re going to ask them to take urgent action to fund the security requirements of our partners,” the president said from the White House. He said the U.S. is already surging extra military aid including ammunition to replenish Israel’s Iron Dome defense system.

    Source link

  • 1970s-style stagflation may be at risk of repeating itself, Deutsche Bank warns

    1970s-style stagflation may be at risk of repeating itself, Deutsche Bank warns

    A major Wall Street bank is warning about the risk that inflation expectations could become unanchored in a fashion similar to the 1970s stagflation era.

    Weekend attacks on Israel by Hamas illustrate how geopolitical risks can suddenly return — adding to the surprise shocks of the current decade, such as the COVID-19 pandemic and Russia’s invasion of Ukraine, said macro strategist Henry Allen and research analyst Cassidy Ainsworth-Grace of Frankfurt-based Deutsche Bank
    DB,
    -1.40%    .

    Read: Questions emerge over how Israeli intelligence missed Hamas attack

    Oil prices settled more than 4% higher on Monday as traders weighed the impact of the war in the Middle East on crude supplies. The spike in energy prices is adding to the growing list of similarities to the 1970s era — which also includes consistently above-target inflation across major economies and repeated optimism about how quickly it would fall; strikes by workers; and even increasing chances that this winter will be dominated by the El Niño weather pattern, similar to what took place in 1971 and which is historically tied to higher commodity prices, according to Deutsche Bank.

    Inflation remains above central banks’ targets in every G-7 country — the U.S., Canada, France, Germany, Italy, Japan, and the United Kingdom. How long it will remain high is one of the most important questions facing financial markets, and a destabilization of expectations would make it even harder for policy makers to restore price stability.

    “So given inflation is still above its pre-pandemic levels, it is important not to get complacent about its path,” Allen and Ainsworth-Grace wrote in a note released on Monday. “After all, if there is another shock and inflation remains above target into a third or even a fourth year, it is increasingly difficult to imagine that long-term expectations will repeatedly stay lower than actual inflation.”

    History indicates that the last mile of inflation is often the hardest. One of the key lessons of the 1970s was that inflation failed to return to previous levels after the first oil shock of 1973 and U.S. recession of 1973-1975, and went even higher following a second oil shock in 1979. Now that inflation has been above target for the last two years, “a fresh inflationary spike could well lead expectations to become unanchored,” according to the Deutsche Bank note.


    Source: Bloomberg, Deutsche Bank

    For now, the public’s inflation expectations, as measured by a New York Fed survey of consumers in August, remain largely stable, though still above the Federal Reserve’s 2% target.

    The current period differs from the 1970s era in a number of ways, the Deutsche Bank team also points out. Long-term inflation expectations remain “impressively” well-anchored, commodity prices have fallen substantially from their peaks over the past 12 to 18 months, and supply-chain disruptions that emerged during the pandemic have “broadly healed.” In addition, the U.S. is less energy intensive than in the past and less susceptible to damage from a 1970s-style energy shock.

    Even so, “it is vitally important to avoid complacency,” Allen and Ainsworth-Grace wrote. “Indeed, with the benefit of hindsight, one of the mistakes of the 1970s was that policy was eased up too early, which contributed to a resurgence in inflation.”

    Risk-off sentiment prevailed in financial markets during the early part of Monday, before stocks turned higher during the New York afternoon. All three major U.S. stock indexes
    DJIA

    SPX

    COMP
    finished higher in a volatile session. Trading in U.S. government-debt futures reflected greater demand and gold rallied as a flight to safety took hold. The cash market for Treasurys was closed for Columbus Day and Indigenous Peoples Day.

    Source link

  • Will Israel-Gaza war sink stocks and shake the global economy? Watch oil prices.

    Will Israel-Gaza war sink stocks and shake the global economy? Watch oil prices.

    Wall Street on Monday shook off a bout of selling sparked by the Israel-Gaza war.

    That’s in keeping with the historical tendency of investors to look past geopolitical conflict and human tragedy, but it isn’t necessarily the last word. That last word will likely belong to oil traders.

    “Oil rallied today yet remains below the near-term peak from last month. If oil prices rise higher for longer, the global economy could feel a resurgence of inflation during a period when investors are hoping inflation is clearly decelerating,” said Jeffrey Roach, chief economist for LPL Financial, in emailed comments.

    Roach also noted that, in general, markets tend to have difficulty pricing the difference between a temporary shock and a permanent shock.

    For now, however, the jump in oil prices isn’t signaling a permanent shock. Sure, Brent crude
    BRN00,
    +0.11%    ,
    the global benchmark, jumped 4.2% on Monday to end at $88.15 a barrel, while West Texas Intermediate crude
    CL.1,
    +0.07%

    CL00,
    +0.07%
    surged $3.59, or 4.3% to $86.38 a barrel — the biggest one-day jump for both grades since April 3.

    See: Here’s what Israel-Gaza war means for oil prices as fighting continues

    The jump was impressive, but it comes after a big pullback last week that saw both WTI and Brent retreat from 2023 highs near $100 a barrel.

    So if crude can manage to close above those highs — $93.68 a barrel for WTI — investors across other markets will likely take notice.

    What would it take to drive crude back toward the highs? The focus is on Iran.

    The Wall Street Journal on Sunday reported that Iranian security officials helped plan the attack by Hamas. The Israeli military has said there is no concrete evidence of Iranian involvement, according to news reports.

    A direct role by Iran, a longtime ally of Hamas, would raise the threat of a broader conflict.

    Some analysts have put Iranian crude production at more than 3 million barrels a day and exports above 2 million barrels a day — the highest levels since the Trump administration pulled the U.S. out of the Iranian nuclear accord in 2018, according to the Wall Street Journal. Sales fell to around 400,000 barrels a day in 2020 as the U.S. reimposed sanctions.

    “If Israel discovers that Iran played a role in Hamas’ attack, it could retaliate militarily. At the very least, any warming of relations between Iran and the West is now on hold and this will limit incremental oil supply,” said Nicholas Colas, co-founder of DataTrek Research, in a Monday note.

    It’s a reminder that “while neither Israel nor Gaza are major oil producers, everything that happens geopolitically in the Middle East invariably ends up affecting oil prices,” he said.

    The potential for a broader conflict could lead to a “sharp market correction,” argued Olivier d’Assier, head of applied research, APAC, at Axioma.

    The scale of the conflict, the largest since the Yom Kippur War 50 years ago, renders comparisons with how markets have shaken off past geopolitical incidents, but they may be irrelevant in terms of stress testing, he argued.

    “The closest historical scenarios we could use would be 9/11 and the start of the Ukraine war. But because both took place on Western soil, they might not be adequate,” d’Assier said.

    On Monday, however, remarks by Federal Reserve officials ultimately trumped the rise in crude prices and jitters over the Middle East. Dallas Fed President Lorie Logan and Fed Vice Chair Philip Jefferson both noted the rise in long-term Treasury yields and their role in tightening financial conditions, which investors took as a signal the Fed may not be as likely to further raise interest rates.

    See: An Israel-Hamas war could change what the Fed does about interest rates

    Stocks turned north after a morning dip, with the Dow Jones Industrial Average
    DJIA
    rising nearly 200 points, or 0.6%, while the S&P 500
    SPX
    also advanced 0.6% and the Nasdaq Composite
    COMP
    gained 0.4%.

    For now, market participants appear set to look ahead to economic data later this week, including September consumer-price index and producer-price index readings.

    Source link

  • 1970’s-style stagflation may be at risk of repeating itself, bank warns

    1970’s-style stagflation may be at risk of repeating itself, bank warns

    A major Wall Street bank is warning about the risk that inflation expectations could become unanchored in a fashion similar to the 1970s stagflation era.

    Weekend attacks on Israel by Hamas illustrate how geopolitical risks can suddenly return — adding to the surprise shocks of the current decade, such as the COVID-19 pandemic and Russia’s invasion of Ukraine, said macro strategist Henry Allen and research analyst Cassidy Ainsworth-Grace of Frankfurt-based Deutsche Bank
    DB,
    -1.45%    .

    Read: Questions emerge over how Israeli intelligence missed Hamas attack

    Oil prices jumped by more than 4% on Monday as traders weighed the impact of the war in the Middle East on crude supplies. The spike in energy is adding to the growing list of similarities to the 1970s era — which also includes consistently above-target inflation across major economies and repeated optimism about how quickly it would fall; strikes by workers; and even increasing chances that this winter will be dominated by the El Niño weather pattern, similar to what took place in 1971 and which is historically tied to higher commodity prices, according to Deutsche Bank.

    Inflation remains above central banks’ targets in every Group-of-7 country — the U.S., Canada, France, Germany, Italy, Japan, and the United Kingdom. How long it will remain high is one of the most important questions facing financial markets, and a destabilization of expectations would make it even harder for policy makers to restore price stability.

    “So given inflation is still above its pre-pandemic levels, it is important not to get complacent about its path,” Allen and Ainsworth-Grace wrote in a note released on Monday. “After all, if there is another shock and inflation remains above target into a third or even a fourth year, it is increasingly difficult to imagine that long-term expectations will repeatedly stay lower than actual inflation.”

    History indicates that the last mile of inflation is often the hardest. One of the key lessons of the 1970s was that inflation failed to return to previous levels after the first oil shock of 1973 and U.S. recession of 1973-1975, and went even higher following a second oil shock in 1979. Now that inflation has been above target for the last two years, “a fresh inflationary spike could well lead expectations to become unanchored,” according to the Deutsche Bank note.


    Source: Bloomberg, Deutsche Bank

    For now, the public’s inflation expectations, as measured by a New York Fed survey of consumers in August, remain largely stable, though still above the Federal Reserve’s 2% target.

    The current period differs from the 1970s era in a number of ways, the Deutsche Bank team also points out. Long-term inflation expectations remain “impressively” well-anchored, commodity prices have fallen substantially from their peaks over the past 12 to 18 months, and supply-chain disruptions that emerged during the pandemic have “broadly healed.” In addition, the U.S. is less energy intensive than in the past and less susceptible to damage from a 1970s-style energy shock.

    Even so, “it is vitally important to avoid complacency,” Allen and Ainsworth-Grace wrote. “Indeed, with the benefit of hindsight, one of the mistakes of the 1970s was that policy was eased up too early, which contributed to a resurgence in inflation.”

    Risk-off sentiment prevailed in financial markets on Monday, with all three major U.S. stock indexes
    DJIA

    SPX

    COMP
    down in New York afternoon trading. Trading in U.S. government-debt futures reflected greater demand and gold rallied as a flight to safety took hold. The cash market for Treasurys was closed for Columbus Day and Indigenous Peoples Day.

    Source link

  • U.S. stocks lose ground after Hamas attacks Israel

    U.S. stocks lose ground after Hamas attacks Israel

    U.S. stocks were slightly lower Monday as investors edged away from equities and other assets perceived as risky in favor of traditional havens after a surprise attack by Hamas on Israel over the weekend raised geopolitical alarms.

    What’s happening

    • The Dow Jones Industrial Average
      DJIA
      was down 26 points, or 0.1%, at 33,382.

    • The S&P 500
      SPX
      fell 11 points, or 0.3%, to 4,295.

    • The Nasdaq Composite
      COMP
      was down 102 points, or 0.8%, at 13,329.

    Stocks bounced Friday after a stronger-than-expected September jobs report, allowing the S&P 500 to rise 0.5% for the week and break a streak of four straight weekly declines. The Dow saw a 0.3% weekly decline, while the Nasdaq Composite rose 1.6%.

    What’s driving markets

    The attack by Hamas on Israel raised fears of a broader conflict.

    “Such geopolitical tension is traditionally and unsurprisingly negative on sentiment, with investors likely to be unsettled by the prospect of further uncertainty,” said Richard Hunter, head of markets at Interactive Investor.

    The price of Brent crude
    BRN00,
    +3.80%    ,
    the global energy benchmark, jumped nearly 4% amid concerns oil supplies from the region may be compromised.

    Need to Know: From $150 oil to no impact at all: What the surprise attack on Israel means to markets

    “The shocking attacks in Israel have sent the price of oil soaring, as investors assess the potential for the conflict to disrupt supply in the Middle East, if other countries are drawn in,” said Susannah Streeter, analyst at Hargreaves Lansdown.

    U.S. stock futures dived as bourses in much of Europe and Asia sold off, while traders moved into the perceived havens of gold
    GC00,
    +1.17%    ,
    the U.S. dollar
    DXY
    and government bonds, such as the German bund
    BX:TMBMKDE-10Y.

    See: Gold, U.S. dollar rally as investors flock to havens as Israel-Hamas war escalates

    The U.S. Treasury market is closed on Monday for Columbus Day and Indigenous Peoples’ Day, but futures
    TY00,
    +0.80%
    are trading and these indicate falling benchmark yields.

    “Geopolitical risk doesn’t tend to linger long in markets but there are many second order impacts that could come through in the weeks, months and years ahead from this weekends’ developments,” said Jim Reid, strategist at Deutsche Bank.

    Indeed, traders may find their focus soon switches this week back to monetary and corporate issues. Markets ultimately reacted positively to what on the surface was a strong nonfarm payrolls report published Friday, as traders believed it was not so hot it would move the needle on Fed policy.

    With that in mind, the U.S. producer and consumer prices data for September will be published on Wednesday and Thursday, respectively, with further evidence of easing price pressure required to cement no more rate increases by the Federal Reserve this year.

    Then Friday sees the start proper of the third-quarter company-earnings season, when big banks such as JPMorgan Chase
    JPM,
    -0.69%    ,
    Citigroup
    C,
    -0.97%    ,
    and Wells Fargo
    WFC,
    -0.93%
    present their results.

    Earnings Watch: Q3 earnings are here: S&P 500 heads toward year of profit declines as JPMorgan, and Delta report this week

    Forecasts suggest analysts have become less confident about corporate profitability in recent weeks. Aggregate S&P 500 earnings are expected to decline by 0.3% for the year to Q3 2023, which would mark the fourth consecutive quarter of falling earnings, according to John Butters, senior earnings analyst at FactSet.


    Source: FactSet

    Read: Good for stocks? Why Tom Lee says the attack on Israel could help equities.

    Companies in focus

    Source link

  • Oil prices jump 4% after Hamas attack on Israel

    Oil prices jump 4% after Hamas attack on Israel

    Oil futures opened with strong gains late Sunday as traders reacted to an attack by Hamas on Israel, raising Middle East tensions and stoking worries about the outlook for crude supply.

    Price action

    Market drivers

    Oil traders were focused on Iran after a weekend attack on multiple fronts by Hamas militants, who are backed by Tehran. The Wall Street Journal reported that Iranian security officials helped Hamas plan the attack, which has left more than 700 Israelis dead and saw dozens of Israeli citizens and soldiers abducted. Israel pounded Gaza in retaliation, where the death toll was also reported in the hundreds.

    Analysts said that if Iranian involvement is affirmed, it could lead the U.S. to increase enforcement of sanctions on the country’s crude exports, which have moved back toward pre-2018 levels in recent months.

    “Historical analysis suggests that oil prices tend to experience sustained gains after the Middle East crises,” said Stephen Innes, managing director at SPI Asset Management, in a note.

    Oil fell last week, retreating after Brent moved within a few dollars of the $100-a-barrel threshold last month and WTI briefly topped $95 a barrel for the first time in more than a year.

    Some analysts have put Iranian crude production at more than 3 million barrels a day and exports above 2 million barrels a day — the highest levels since the Trump administration pulled the U.S. out of the Iranian nuclear accord in 2018, according to the Wall Street Journal. Sales fell to around 400,000 barrels a day in 2020 as the U.S. reimposed sanctions.

    See: U.S. stock futures tumble after Hamas attack on Israel

    Source link

  • ‘Fear trade’: What Israel-Hamas war means for oil prices and financial markets

    ‘Fear trade’: What Israel-Hamas war means for oil prices and financial markets

    Oil traders on Sunday said crude prices were likely to remain supported in the near term, as investors assessed the fallout from the surprise attack by Hamas on Israel and focused on the role played by Iran and the potential impact on that country’s petroleum exports.

    The conflict may also hold market-moving consequences for talks aimed at normalizing relations between Saudi Arabia and Israel.

    “While in the short term there is no impact directly on supply, it’s obvious how things play out over the next 24 to 48 hours could change that,” Phil Flynn, an analyst at Price Futures Group in Chicago, told MarketWatch.

    Brent crude futures
    BRN00,
    +4.17%    ,
    the global benchmark, and West Texas Intermediate oil futures
    CL00,
    +4.35%

    CL.1,
    +4.35%
    jumped more than 3% when the market opened Sunday night. U.S. stock-index futures
    ES00,
    -0.66%
    traded lower, while traditional havens, including gold
    GC00,
    +0.98%
    and the U.S. dollar
    DXY
    rose.

    Movements in oil prices, meanwhile, will also serve as a gauge for broader market worries around the conflict, analysts said.

    See: Israeli stocks slump in first day of trade since Gaza attack

    Hamas, the Iran-backed, Palestinian militant group that controls the Gaza Strip, staged a sweeping attack on southern Israel early Saturday. News reports put Israeli deaths at more than 700. The Gaza Health Ministry said 413 people, including 78 children and 41 women, were killed in the territory as Israel retaliated, according to the Associated Press. Injuries in Israel and Gaza were both said to be around 2,000.

    Israeli troops on Sunday were engaged in fierce fighting in an effort to retake territory in southern Israel as Hamas launched further barrages of missiles. Israeli citizens and soldiers were captured and are being held hostage in Gaza, according to the Israeli military.

    Read: Israel declares war, approves ‘significant’ steps to retaliate after surprise attack by Hamas

    The Wall Street Journal reported that Iranian security officials helped Hamas plan the attack. U.S. officials said they haven’t seen evidence of Iran’s involvement, the report said.

    “Iran remains a very big wild card and we will be watching how strongly [Israeli] Prime Minister Netanyahu blames Tehran for facilitating these attacks by providing Hamas with weapons and logistical support,” said Helima Croft, head of global commodity strategy at RBC Capital Markets, in a Sunday morning note.

    Iranian crude exports have risen in recent years, indicating the Biden administration has adopted a soft approach to sanctions enforcement, Croft said. Some analysts have put Iranian crude production at more than 3 million barrels a day and exports above 2 million barrels a day — the highest levels since the Trump administration pulled the U.S. out of the Iranian nuclear accord in 2018, according to the Wall Street Journal. Sales fell to around 400,000 barrels a day in 2020 as the U.S. reimposed sanctions.


    RBC Capital Markets

    Hedge-fund manager Pierre Andurand, one of the world’s best energy traders, said in a social-media post that a large price spike for oil isn’t likely in coming days, but emphasized the market focus on Iran.

    “Now, over the last six months we have seen a very large increase in Iranian supply due to weak enforcement of sanctions. As Iran is also behind Hamas’ attacks on Israel, there is a good probability that the U.S. administration will start enforcing those sanctions on Iranian oil exports more tightly,” he wrote. “That would further tighten the oil market. Also the probability that this will lead to direct conflict with Iran is not zero.”

    Meanwhile, the Wall Street Journal late Friday reported that Saudi Arabia had told the White House it would be willing to boost oil production next year if crude prices remained high, as part of an effort aimed at winning goodwill in Congress for a deal that would see the kingdom recognize Israel and in return get a defense agreement with the U.S.

    A Saudi production cut of 1 million barrels a day that was implemented in July and recently extended through the end of the year has been given much of the credit for a rally that took global benchmark Brent crude within a few dollars of the $100-a-barrel threshold before retreating this past week. The U.S. benchmark last week briefly topped $95 a barrel for the first time in 13 months.

    In a statement, Saudi Arabia’s foreign ministry called on both sides to halt the escalation and exercise restraint, but also recalled its “repeated warnings of the dangers of the explosion of the situation as a result of the continued occupation, the deprivation of the Palestinian people of their legitimate rights, and the repetition of systematic provocations against its sanctities.”

    With the Israeli government vowing an unprecedented response, “it is hard to envision how Saudi normalization talks can run on a parallel track to a ferocious military counteroffensive,” said RBC’s Croft.

    Beyond oil, much will depend on the potential for the conflict to widen.

    Stocks have stumbled, retreating from 2023 highs set in late July, as yields on U.S. Treasurys have jumped. The yield on the 30-year Treasury bond
    BX:TMUBMUSD30Y
    rose 23.2 basis points last week to end Friday at 4.941%, its highest since Sept. 20, 2007. The 10-year Treasury note yield
    BX:TMUBMUSD10Y
    topped 4.80% on Oct. 3, its highest since Aug. 8, 2007, and ended the week at 4.783%. Yields and debt prices move opposite each other.

    The U.S. bond market will be closed Monday for the Columbus Day and Indigenous People’s Day holiday, while U.S. stock markets will be open.

    The S&P 500 index
    SPX
    rose 0.5% last week, breaking a streak of four straight weekly declines, while the Dow Jones Industrial Average 
    DJIA
    fell 0.3% and the Nasdaq Composite
    COMP
    gained 1.6%.

    “I think there will be a negative reaction. However, I don’t see a meltdown,” Peter Cardillo, chief market economist at Spartan Capital Securities, told MarketWatch.

    Traditional haven plays, including gold, the dollar and U.S. Treasurys may see a strong move upward, with price gains for Treasurys pulling yields down.

    “Geopolitical crises in the Middle East have usually caused oil prices to rise and stock prices to fall,” said economist Ed Yardeni, president of Yardeni Research Inc., in a note. “More often than not, they’ve also tended to be buying opportunities in the stock market.”

    The broader market reaction will depend on whether the crisis turns out to be a short-term flare-up or “something much bigger, like a war between Israel and Iran,” he said. The latter is unlikely, but tensions between the two are likely to escalate.

    “The price of oil may be a good way to assess the likelihood of a broader conflict,” he said.

    Source link

  • Israeli stocks slump in first day of trade since Gaza attack

    Israeli stocks slump in first day of trade since Gaza attack

    Israeli stocks skidded Sunday, reeling one day after the surprise attack from Gaza.

    The benchmark TA-35 index
    IL:TA35
    fell 7% to 1,703.38 in Sunday morning trade, with every constituent except generic drugmaker Teva Pharmaceutical
    TEVA,
    -7.82%
    lower.

    Several companies saw double-digit losses including Newmed Energy
    NWMD,
    -0.44%    ,
    an oil and gas explorer; Delek Group
    DLEKG,
    -4.04%    ,
    which owns the country’s largest chain of gas stations; and Shikun & Binui
    SKBN,
    -0.10%    ,
    an infrastructure company.

    Israeli soldiers were still battling Hamas fights in the streets of southern Israel on Sunday and has launched retaliation strikes on Gaza.

    Israeli media, citing rescue service officials, said at least 300 people were killed, including 26 soldiers, while in Gaza officials said 313 people had died. An Israeli military official said hundreds of militants had been killed and dozens captured.

    — The Associated Press contributed to this report

    Source link