🐂 The outbreak of war

Markets

Investors are closely monitoring the recent outbreak of conflict in Israel and Gaza, as it has the potential to create instability in worldwide stock markets and oil prices. The extent of the conflict's escalation will determine the level of volatility. Last night, US oil futures experienced a significant surge of up to 5.4%. Additionally, later this week, the consumer price index report will provide an insight into the Federal Reserve's efforts to combat inflation.

U.S., China Both Try to Gain Upper Hand Ahead of Biden-Xi Summit

Despite efforts by the United States and China to mend their relationship in anticipation of an upcoming summit between President Biden and Chinese leader Xi Jinping, both Washington and Beijing are maneuvering to gain an advantageous position.

People familiar with recent discussions on both sides have noted that each government is taking strategic actions to shape the dynamics of their relationship and enter the summit from a position of strength.

In the coming days, the Biden administration is expected to unveil updates to export-control measures that will further limit China's access to advanced semiconductors and chip-making tools, a move outlined in a draft of the updates according to sources. The exact timing of this release has yet to be determined. Beijing has expressed its objections to what it views as persistent "technology bullying" by Washington.

Meanwhile, in anticipation of Xi's planned visit to the United States in November for an Asia-Pacific leaders' summit and meetings with President Biden, the Chinese leader is reportedly planning a trip to Vietnam, as indicated by individuals with insights into Beijing's plans. This visit is aimed at highlighting the strong relationship between China and its neighboring country, particularly following Biden's engagement with Vietnamese leaders in Hanoi last month.

World

Israel at war with Hamas

Israel has entered into a conflict with Hamas following a surprise attack by the terrorist group from Gaza into Israeli territory. This attack occurred on the Jewish Sabbath and during a major holiday. During the attack, militants breached the border fence, entered Israeli towns, and targeted civilians, including those attending an outdoor music festival where 260 people tragically lost their lives. In total, Hamas militants claimed the lives of over 700 Israelis, and more than 100 civilians and soldiers were taken hostage in Gaza, including children, the elderly, and American citizens, according to US and Israeli authorities.

In response, Israeli Prime Minister Benjamin Netanyahu declared war on Hamas and launched airstrikes that resulted in the death of at least 493 Palestinians, including 91 children, according to Palestinian health officials. Israel, in conjunction with Egypt, maintains a blockade of Gaza, and they halted the flow of power, goods, and fuel to the region on Saturday night.

Hamas is an Islamist militant organization designated as a terrorist group by the US and the EU. It took control of Gaza in 2007 following Israel's withdrawal, and the two sides have engaged in several conflicts since then. However, Saturday's attack marked the largest intrusion into Israel since the Yom Kippur War nearly 50 years ago.

International reactions:

President Biden and other Western leaders condemned the terrorist attack by Hamas and affirmed Israel's right to self-defense. The US deployed an aircraft carrier strike group to the Eastern Mediterranean in support of Israel's counteroffensive if needed. Iran expressed support for Hamas, a group it has long supplied with weapons and technology. Iran's Islamic Revolutionary Guard Corps reportedly assisted in planning the attack in August and authorized it last Monday, according to the WSJ. The broader context:

Foreign policy experts have likened Hamas's sophisticated attack on Israel to the country's 9/11 or Pearl Harbor moment, highlighting a significant failure in Israel's intelligence program that will have enduring consequences for its politics and society.

This attack is expected to have far-reaching implications in the Middle East. It is widely believed that Hamas and Iran orchestrated the attack to disrupt a US-led effort to normalize relations between Israel and Saudi Arabia. Israel has established diplomatic and economic ties with several former regional adversaries in recent years. One of these nations, the UAE, criticized Hamas for its "serious and grave escalation."

What comes next? Netanyahu has warned of a "long and challenging war" ahead, likely involving a substantial military response in Gaza and being influenced by the ongoing hostage crisis.

Additional information:

Major airlines, including United, American, and Delta, temporarily suspended flights to and from Tel Aviv. Misinformation circulated on various social media platforms such as X and TikTok during the unfolding of the attack. Security has been increased at Jewish holy sites in cities across the US and Europe.

Politics

Urgency to choose a House speaker grows

Republicans are aiming to elect a new Speaker of the House this week as part of their efforts to bring stability to Congress following Israel's declaration of war against Hamas over the weekend. The absence of a Speaker in the House hinders the passage of legislation, and it also affects the Biden administration's ability to provide additional support to Israel. The role of Speaker Pro Tempore Patrick McHenry in national security meetings remains uncertain. The top two contenders to replace the ousted Kevin McCarthy seem to be Ohio's Jim Jordan, who has received an endorsement from Donald Trump, and Louisiana's Steve Scalise. A vote on this matter is anticipated to occur on Wednesday.

Consumer

Hackers target 23andMe.

A data breach has affected over 7 million 23andMe customers, with hackers specifically targeting individuals of Ashkenazi Jewish ancestry. The compromised data includes users' names, profile pictures, genetic ancestry findings, birthdates, and geographic locations. These hackers are attempting to sell the stolen information, pricing it between $1 and $10 per account, depending on the quantity a buyer wishes to acquire. The breach was executed using a technique known as "credential stuffing," where login credentials obtained from one website are used to gain unauthorized access to other sites in order to access sensitive data. 23andMe has reported the incident to law enforcement and is urging all customers to change their passwords and enable two-factor authentication.

Tech

Technology levels the playing field for deaf players

Gallaudet University, a Washington, DC institution serving students who are deaf or hard of hearing, introduced a unique football helmet during a game on Saturday, revolutionizing communication between players and coaches. This innovative helmet incorporates an augmented reality screen inside, enabling the quarterback to receive play instructions from coaches through a tablet instead of traditional hand signals.

While the NFL permits communication devices in select players' helmets, the NCAA typically does not allow radio equipment in helmets. However, they made an exception for this helmet as a trial, acknowledging its potential to enhance player safety, particularly for deaf athletes who may not hear whistles, thus reducing injury risks.

An NCAA spokesperson expressed anticipation for the results of this new technology, which was developed through a collaboration between AT&T and Gallaudet University.

In their first game using this technology, Division III Gallaudet University secured a victory, defeating Hilbert College with a score of 34–20.

Notably, Gallaudet has a history of football innovation. The university is credited with pioneering the football huddle in 1894 when quarterback Paul Hubbard convened his team in a tight circle formation to relay play calls, out of concern that sign language might be observed by an opposing team.

Retail

Earnings season is back

The kickoff of the earnings season features notable companies such as PepsiCo, Delta, Dominos, and major banks. Investors will be particularly interested in assessing how the recent trend of slowing inflation has impacted companies' ability to boost their profit margins.

PepsiCo's earnings report is of particular significance, with close attention on its snack division, Frito-Lay, which may face challenges due to the growing popularity of weight-loss medications like Wegovy.

Additionally, major banks like JPMorgan are anticipated to announce robust financial results as part of this earnings season.