🐂 Tragedy Strikes

Markets

Stocks saw an upward trend yesterday, but there is anticipation of potential market turbulence due to the ongoing conflict in Israel. The news triggered a surge in oil prices as worries about the conflict's potential to disrupt the supply led to a rally. Leading defense corporations, Lockheed Martin and Northrop Grumman, experienced their most successful non-earnings days since 2020.

This Inflation Report Won’t Let the Fed Declare Victory

The latest data for September indicates a pause in the recent efforts to reduce inflation, highlighting the ongoing challenges in completely eliminating price pressures.

On a positive note, there has been a significant deceleration in price increases compared to the 40-year highs observed last year, especially when considering a measure of underlying or "core" inflation that excludes the volatile food and energy price components.

The downside is that, following a significant deceleration in core inflation earlier in the summer, these prices experienced a slightly faster increase last month.

The most recent inflation figures underscore the concern that, without further economic deceleration, inflation could potentially stabilize around 3%. While this is considerably lower than the alarming rates that prompted a series of swift rate hikes by the Federal Reserve last year, it still exceeds the central bank's 2% inflation target.

According to the Labor Department's report on Thursday, the consumer-price index increased by 3.7% year-on-year, remaining consistent with the August figure but significantly lower than the 9.1% recorded in June 2022. Core prices rose by 4.1% year-on-year, a slight reduction from the 4.3% in August. In September, there was a 0.3% month-on-month increase in core prices for the second consecutive report, following smaller gains in June and July.

International

Israel forms unity government and Gaza crisis worsens

Israel has established an emergency government, emphasizing unity in response to a national crisis. Israeli Prime Minister Benjamin Netanyahu collaborated with the opposition party to create an emergency government and a "war management cabinet" that will remain in place until the conflict with Hamas is resolved. This government will focus solely on legislation related to the ongoing conflict, suggesting that Netanyahu's contentious judicial overhaul plans, which have divided Israeli society, will be temporarily halted.

The humanitarian situation in Gaza has significantly deteriorated as Israel carried out airstrikes and imposed a "complete siege" on the territory. This has pushed the already impoverished enclave toward a humanitarian crisis. Over 260,000 Gazan residents have fled their homes, seeking refuge in hotels or UN schools. Critical supplies, including water, are running low due to Israel's restrictions, and Gaza's sole power plant has run out of fuel. The U.S. engaged in discussions with Israel and Egypt to facilitate the exit of civilians from Gaza and the delivery of life-saving aid. However, Egypt reportedly rejected a proposal to establish safe corridors into its territory.

The hostage situation in the Gaza Strip has become a matter of global concern, with Hamas abducting 150 individuals and bringing them back to Gaza. The scale of this situation is unprecedented, causing anguish for families worldwide awaiting news about their loved ones. Notably, 14 Thai citizens were among those kidnapped by Hamas militants, with approximately 30,000 Thai nationals constituting the majority of Israel's agricultural workforce.

Hedge fund CEO Bill Ackman's call to identify Harvard students who blamed Israel for the violence in a letter has sparked controversy. Ackman sought to avoid hiring these students inadvertently. The letter, signed by 34 student groups, exclusively blamed Israel for the conflict and faced criticism, including from prominent Harvard alumni like former President Larry Summers. At least five student groups have since withdrawn their support for the letter. Summers expressed his view that Ackman's call for a blacklist is excessive, and there have been instances of personal information of individuals associated with clubs that endorsed the letter being posted online.

The European Union has issued a warning to Meta, instructing the company to address misinformation related to the war on its social media platforms within 24 hours. Allowing content associated with the terrorist group Hamas to circulate on the platform was deemed a violation of the EU's content moderation law. A similar warning was given to Elon Musk's company, X, the previous day.

Politics

Steve Scalise is the GOP pick for House speaker

The current second-ranking Republican in the House managed to secure the backing of his party in a closed-door vote, defeating Judiciary Committee Chair Jim Jordan with a vote of 113 to 99. This makes him the Republican nominee to potentially replace the recently removed Speaker of the House, Kevin McCarthy. However, the path to obtaining the necessary 217 votes to secure the position remains uncertain, as some Republicans still back Jim Jordan. Meanwhile, Democrats are expected to nominate and vote for their leader, Hakeem Jeffries. Until a new speaker is elected, Congress cannot progress with its legislative agenda, including providing aid to Israel.

M&A Deal

Exxon to acquire Pioneer

The protesters will likely need a substantial supply of tomato soup as Exxon Mobil, one of the world's largest oil companies, recently revealed its plans to acquire Pioneer Natural Resources, a Texas-based shale company, in an all-stock transaction valued at approximately $60 billion. This acquisition is scheduled to be finalized in 2024.

This move by Exxon represents a clear vote of confidence in the future of the U.S. oil industry, despite ongoing efforts by the White House to reduce emissions and promote climate-friendly energy. It also goes against the International Energy Agency's projections of a decline in fossil fuel demand by 2030. In addition to significantly increasing Exxon's daily production of oil and gas, this deal will offer several key advantages, including:

1. Granting Exxon access to one of the world's largest inventories of untapped oil, comprising nearly 1.5 million acres in the Permian Basin, which is North America's primary source of crude oil.

2. Enhancing U.S. energy security, as per Exxon's perspective. JPMorgan Chase anticipates that 45% of Exxon's oil will originate from the United States.

Zooming out from this development, after facing challenges during the pandemic, Exxon is now prepared to invest the substantial profits it garnered when oil prices surged following Russia's invasion of Ukraine. This merger represents the largest oil and gas deal since Exxon's acquisition of Mobil in 1999 and could potentially stimulate further consolidation within the industry.

Tech

All the kids love Apple

Generation Z seems to prioritize avoiding ridicule in their group chats over the appeal of foldable phones. According to a survey conducted by investment bank Piper Sandler, 87% of the 9,193 teens surveyed owned an iPhone, and a striking 88% expressed their intention to make their next phone an iPhone, underscoring Apple's dominant position in the tech market.

Apple also emerged as a leader in various other technology segments:

1. It claimed the top spot as the preferred watch brand among teens hailing from more affluent households, surpassing well-established names like Casio and Rolex, particularly among those with an average annual income of $109,670.

2. In the realm of digital payments, Apple Pay stood out as the favored payment app, with 42% of teens reporting its use within the last month, compared to 27% using Cash App.

However, within the Apple ecosystem, there appears to be a less fertile corner, represented by Apple Music, which doesn't seem to receive as much attention as other Apple products. Instead, Spotify takes the lead as the most popular music streaming platform, with 70% of survey respondents having used it in the last six months.

In addition to their tech preferences, the survey highlighted some of the teens' favorite brands and eateries. Chick-fil-A ranked as their preferred restaurant, while Nike held the top position as their favored footwear and clothing brand. Amazon also garnered significant favor, with over half of the respondents designating it as their preferred e-commerce site.