Biden’s diplomatic task gets harder
President Biden landed in Israel on Wednesday for a high-wire diplomatic mission that is facing new challenges by the minute. A deadly blast on Tuesday at a Gaza hospital left Israelis and Palestinians trading blame, and led Jordan to cancel a meeting with Biden and Arab leaders meant to help tamp down tensions in the region.
All that threatens to become what investors have feared: a rapid escalation of violence that could roil markets, upsetting a fragile global economy. Adding to the tension: Iran on Wednesday called for members of the Organization of Islamic Cooperation to impose an oil embargo on Israel.
The latest developments: Biden met with Benjamin Netanyahu in a show of support for efforts to eliminate Hamas; aides have said that Biden would ask the Israeli prime minister “tough questions” about the country’s airstrikes on an expected ground invasion of Gaza. Before departing for Israel, Biden said he was “outraged and deeply saddened” by the blast at Ahli Arab Hospital. Palestinians blamed an Israeli airstrike, and Israelis cited an errant rocket fired by an armed Palestinian faction. Neither side’s account could be independently verified, and the cause of the blast and its death toll remained unclear.
The chances of fighting breaking out across more of the Middle East are growing. Israeli forces are clashing with Iranian-backed Hezbollah forces based in southern Lebanon.
Investors appear to be growing anxious. The top benchmarks for crude, Brent and West Texas Intermediate, climbed nearly 3 percent on Wednesday, as markets worried about rapidly tightening oil supplies.
Up even higher are defense stocks, which had already been climbing as the war in Ukraine drags on — and rose even more as Washington began sending arms to Israel after the Oct. 7 Hamas attacks in Israel. A significant portion of the $100 billion in assistance for Israel and Ukraine that Biden may ask Congress for would include funding for additional defensive measures, according to Bloomberg.
Markets have ticked lower. S&P 500 futures were down more than 0.4 percent, and gold, considered a safe-haven asset, was gaining Wednesday morning. “The risks of an escalation have risen,” Jane Foley, the head of foreign-exchange strategy at Rabobank, told Bloomberg, but added, “there have been little signs of panic in the market.”
In related news: The elite law firm Davis Polk rescinded job offers for students whom it believed led organizations that signed statements blaming Israel for the Hamas attacks — but said it was reconsidering some of those decisions. The billionaire Ron Lauder threatened to stop donating to the University of Pennsylvania over concerns about the school’s stance on antisemitism. And Representative Mike Waltz, Republican of Florida, called on Bill Gates to ban Hamas members from using Four Seasons hotels, which the Microsoft co-founder controls through his investment firm.
Save the date: The DealBook Summit will be on Nov. 29. Vice President Kamala Harris, Kevin McCarthy, the former House speaker, and Elon Musk, C.E.O. of Tesla and C.T.O. of X, are among the interviewees. You can apply to attend here.
HERE’S WHAT’S HAPPENING
U.S. consumers keep on buying, stoking new inflation worries. Data published on Tuesday showed that retail spending in September rose 0.7 percent from a month earlier, more than expected. That could weigh on Fed policymakers considering whether to raise interest rates again. Across the Atlantic, inflation in Britain held steady last month, as rising fuel prices offset a fall in food costs.
X tests charging some new users $1 a year. The company said that the fee, which will start in the Philippines and New Zealand and be required for new users to post to the platform, was another effort to combat bot activity. The company has been searching for new sources of revenue amid a drop in advertising.
Lloyd’s of London warns of catastrophic damage from a payments system hack. The insurer estimated that a “hypothetical but plausible” attack could cost the global economy about $3.5 trillion, with the U.S. alone suffering a $1.1 trillion hit. It’s the latest warning from the insurance industry about damage from hacks.
Tucker Carlson raises $15 million for his new media venture. The former Fox News host secured backing from Omeed Malik, a former Bank of America executive turned financier for right-leaning businesses. Carlson’s company will focus on online video subscriptions, and is expected to seek hundreds of millions more in additional investments.
House tumult reignites shutdown concerns
As the chaos of a leaderless House rolls into another week, Wall Street is contending with the worst-case scenario: a government shutdown next month that could hit the economy and markets and deal a blow to allies in Israel and Ukraine.
Jim Jordan failed in his first bid to win the gavel on Tuesday. The hard-right Ohio Republican fell 17 votes shy. A second vote was postponed to 11 a.m. Eastern on Wednesday, though even his biggest supporters see no clear path to victory. “I don’t know what to think,” James Comer, Republican of Kentucky, said after Tuesday’s vote.
A Plan B (or is it C?) would involve Patrick McHenry, the North Carolina Republican who was named interim speaker after Kevin McCarthy of California was ousted this month.
The temporary post comes with few powers. But some Republicans — mainly those opposed to Jordan — want to empower McHenry to help conduct legislative business until a speaker is named. “We don’t want a government shutdown,” Carlos Giménez, Republican of Florida, told reporters.
The clock is ticking. Unless a deal is reached by Nov. 17, federal agencies will stop operating, causing wide-reaching consequences. Key economic data, including the jobs report and the Consumer Price Index, would probably go unpublished.
Mergers and I.P.O.s would remain in limbo with few or no S.E.C. and Justice Department staff members working to review them. The uncertainty is forcing companies in the I.P.O. pipeline to scramble to file paperwork, or rethink listing plans altogether.
And emergency aid for Israel or Ukraine remains in jeopardy.
A shutdown wouldn’t necessarily plunge the economy into recession. But it could dent growth. Goldman Sachs economists have estimated that a government closure would reduce G.D.P. by roughly 0.2 percentage points for each week it lasts. In an investor note hours after McCarthy was removed, the economists called a shutdown its “base case” scenario.
China’s green shoots
China reported better-than-expected growth on Wednesday, as stimulus measures introduced in recent months started to pay off. But analysts warned that the apparent green shoots may not be enough to offset tougher U.S. sanctions, problems in the country’s troubled property sector, and wider global economic uncertainty.
After a dismal first half, the economy has kicked into a new gear. Third-quarter G.D.P. was up 1.3 percent compared with the previous three months. On a year-on-year basis, the economy grew 4.9 percent, much better than during the days of severe Covid lockdowns in 2022.
Government support has helped. Beijing has unveiled measures in recent months to bolster construction, public infrastructure building, and consumer lending, and “the economy has now started to respond,” George Magnus, an associate at Oxford University’s China Center and a former chief economist at UBS, told DealBook.
Markets were largely unmoved. One reason: concerns about the property sector, which accounted for as much as a quarter of growth over the past decade. Country Garden, one of the country’s biggest developers, could default at any moment after a deadline to pay a dollar-bond coupon passed.
Global headwinds also loom large. The Biden administration announced tighter restrictions on American exports of high-end chips to China on Tuesday, making it harder for Beijing to make advances in technologies such as artificial intelligence. The spy chiefs of the Five Eyes intelligence-sharing alliance urged Silicon Valley to shield its technology from Chinese espionage.
But China is focusing on new friends offsetting the damage. The Chinese leader Xi Jinping hailed relations with Russia, after holding talks with Vladimir Putin, his Russian counterpart, at a Belt and Road Initiative summit Wednesday in Beijing. Xi said trade between the countries has hit a record high and their budding alliance is growing as the tensions with the West show little sign of abating.
Remote work is sticking around
Since May 2020, professors at Stanford University, the Instituto Tecnológico Autónomo de México, and the University of Chicago have been conducting a monthly survey on remote work. The data has suggested that remote or hybrid work has become the new norm, despite efforts by some C.E.O.s to get their employees back to the office.
Roblox, the gaming company, became the latest to say workers need to return at least part of the week or find a job somewhere else.
DealBook picked three of the most interesting findings from the latest survey, published this month:
Remote workers don’t appear to have two jobs. The research found that 62 percent of people had never been on two video calls at the same time, and that most of the people who had only double-booked once. This adds to other evidence that most remote workers don’t have a side hustle despite lots of reporting suggesting otherwise.
Most fully remote workers say their pay doesn’t vary based on location. Some companies like Facebook, Twitter and Microsoft have said that they would pay remote workers less if they choose to live in less expensive areas. But the survey found that just over 50 percent of fully remote respondents who rarely see their co-workers said their pay had been adjusted.
Younger companies are more likely to embrace remote and flexible work. Employees at firms founded after 2017 reported working more often from home than those at older businesses. But over time, that could shift, according to Nicholas Bloom, a Stanford professor and one of the survey’s co-authors. “As these young companies grow and mature, they will turn into tomorrow’s medium and large companies, bringing their remote-friendly practices with them,” Bloom wrote recently for The Times.
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