Investors turn to the Fed amid Israel-Hamas unrest
The Middle East crisis has sent markets into turmoil, sending oil prices soaring and demand for safe havens such as gold. A day after President Biden’s whirlwind visit to Israel, investors are again focused on their main concern: whether persistently elevated inflation will force central banks to keep interest rates even higher Now.
A major update comes Thursday afternoon Eastern, Fed Chairman Jay Powell is set to speak at the Economic Club of New York. Wall Street will be watching for clues about Powell’s outlook on interest rates and the level needed to bring inflation closer to the Fed’s 2 percent target.
In recent months, inflation has begun to ease, but the going has been tough as hiring remains strong and so do consumers. keep spending,
This has caused fear in the bond markets That Fed policymakers will keep their key lending rate at around 5 percent through next year. The conviction has prompted a massive selloff in Treasuries in recent weeks, sending the yield on the 10-year T-bill to a 16-year high.
Tension is increasing instability in the Middle East, The price of global oil benchmark Brent has risen nearly 7 percent since the Hamas attack on Israel on October 7. Iran called for oil sanctions on Israel on Wednesday, leading to a slight rise in prices.
“The window for diplomatic overreach to avert a broader war in the Middle East appears to be closing,” Helima Croft, commodities strategist at RBC Capital Markets, wrote in an investor note Thursday. He said that there is a danger of crude oil prices increasing further due to that uncertainty.
a wild card: The US on Wednesday eased sanctions against major oil producer Venezuela.
Regional tension remains high. Biden tried to walk a diplomatic tightrope during his visit, emphasizing U.S. support for Israel and its right to defend itself and urging that harm to civilians in Gaza be minimized. Biden has announced $100 million in aid for Palestinians in Gaza and the West Bank, and he has agreed to a deal with Egypt to allow aid into the region.
Tonight, the President will deliver a prime-time address from the Oval Office in which he will ask Congress to greenlight $100 billion in aid for crises in Israel, Ukraine and elsewhere.
Save the date: The DealBook Summit will take place on November 29th. Jensen Huang, head of Nvidia; Leena Khan, FTC Chair; and Disney CEO Bob Iger are among the interviewees. you can Apply to attend here,
What’s going on over here
Jim Jordan lost the endorsement in his bid to become House Speaker. The number of Republicans opposing him in a vote Wednesday increased by two, increasing the odds for the hard-right Ohio congressman. It is unclear when the second vote will take place; While Jordan has promised to keep up the fight, a bipartisan group of legislators is discussing giving Representative Patrick McHenry, the interim speaker, more power to run the chamber on a temporary basis.
OpenAI is reportedly discussing a stock sale at a valuation of $86 billion. Talks are ongoing with ChatGPT’s parent company Sell existing shares of employees This comes a few months after Microsoft invested at a valuation of $29 billion, via a tender offer, according to Bloomberg. At that level, OpenAI would become one of the world’s most valuable privately held start-ups, behind only SpaceX and ByteDance, TikTok parent.
Pfizer has more than doubled the price of Covid drug Paxlovid. pharmaceutical giant increased list price $1,390 for a five-day course of antivirals, up from the $529 the US government currently pays. Although health plans will probably pay less than that, Pfizer’s move is likely to face criticism that the higher price will limit access to the life-saving drug.
Country Garden is said to have missed a crucial loan deadline. Troubled Chinese real estate developer, bondholders told The Financial Times $15.4 million interest not paid It was going to happen at midnight. Earlier in the day, Country Garden denied rumors that two of its top executives had fled China.
Netflix is on a roll
Netflix shares surged 13 percent in premarket trading Thursday after the streaming giant announced surprise third-quarter results, including nine million new subscribers and a nearly 20 percent increase in net income.
The results are a sign that, while many media giants are struggling to make their streaming businesses profitable, the industry’s 800-pound gorilla has found A way to continue prosperity,
What went right for Netflix: The company said a crackdown on password sharing had helped its subscriber base reach a better-than-expected 247 million worldwide. And it reported an 8 percent increase in revenue compared to the same period last year, to $8.5 billion, despite the Hollywood attacks that have nearly brought the US entertainment industry to a standstill.
The company is looking to build on that success, That includes increasing the prices of its ad-free offering in the US, UK and France. (The most expensive, which allows streaming on up to four devices, will increase 15 percent to $23 a month.) It’s the latest example of streaming services increasingly steering consumers toward cheaper — and more profitable — ad-supported plans. going.
But risks lie ahead. Negotiations between the SAG-AFTRA actors union and Hollywood studios are inactive, and yet Pressure from A-list actors As for a return to the bargaining table, it is unclear when negotiations will resume. That could ultimately lead to a drought of content that would hurt Netflix and others — though the company noted Wednesday that it is working to license more programming from other studios after the unexpected success on its years-old “Suits” platform. Was. Show produced by NBCUniversal.
And some analysts warn that price increases could ultimately have adverse effects. “Excessive use of this marketing lever is unsustainable,” Forrester Research’s Mike Proulx wrote in a report.
In other earnings news: Tesla reported a 44 percent decline in quarterly profit as price cuts and factory investments ate into the bottom line. The carmaker’s shares were down 5 percent in premarket trading. And Morgan Stanley Announced a 9 percent decline in earnings due to reduced deal-making activity.
Another crypto fraud case opened in New York
New York State Attorney General Letitia James sued three crypto businesses in a major fraud case. The SEC is also investigating the firms.
The New York lawsuit accuses Gemini Trust, an exchange run by twins Tyler and Cameron Winklevoss; lender Genesis Capital; And Digital Currency Group, Genesis’s bankrupt parent company, is accused of lying to investors as part of a $1 billion fraud scheme.
The companies’ troubles are linked to the collapse of Sam Bankman-Fried’s FTX. His federal fraud trial is in its third week.
The New York suit focuses on a product called Earn, which is offered to users by Gemini in partnership with Genesis. Customers essentially lent their crypto assets to Genesis at a high return rate – up to 8 percent. But after FTX imploded last November, sending digital asset values plunging, Genesis froze Earn accounts, leaving users unable to reclaim hundreds of millions of dollars worth of crypto.
According to the Attorney General, Gemini had long known that Genesis was a risky bet. James said Gemini did not share that information with investors, leaving at least 29,000 New Yorkers and hundreds of thousands of others vulnerable. The lawsuit says Gemini’s internal documents detailing the risks inherent in the Earn product dating back to its launch in 2021 — namely, that it was highly leveraged with limited liquidity.
The lawsuit says Genesis loans were at one point tied to bankrupt crypto hedge fund Alameda Research, which is at the center of the Bankman-Fried fraud case.
Genesis and Digital Currency Group are accused of trying to hide Genesis’ losses from existing and potential investors, (DCG Creditors owed more than $1.7 billionIncluding Genesis.) “This fraud is yet another example of bad actors causing harm throughout the under-regulated cryptocurrency industry,” James said in a statement.
In January, the SEC sued Gemini and Genesis, citing the Earn product for offering unregistered securities.
– The increase in the average net worth of US households from 2019 to 2022, the largest jump on record, according to new fed data, Pandemic-era stimulus payments and rising stock and home prices helped boost household incomes.
The face of Google’s antitrust defense
As Google defends itself in a major antitrust lawsuit, it calls its first witness to make its case that innovation, not restrictive contracts with industry partners, explains its dominance in search.
Google turned to one of its own to chronicle its successes. Vice President of Search Pandu Nayak, who joined the company 19 years ago, walked the court through developments in machine learning and deep learning, and he described improvements in language understanding that have improved search quality.
Those innovations, he argued, were more important than attracting a huge pool of user search queries. In fact, he said, using one-third less data resulted in “no meaningful degradation in search quality.”
This runs contrary to the central issue of the government’s case. The Justice Department argues that Google’s dominance depends on scale, which involves collecting more data from user queries that then feeds the company’s systems better information, attracting more users, etc.
Prosecutors say the company illegally stifled competition by paying Apple and other companies billions of dollars to make its Internet search engine the default on its devices. “When you see Google paying billions and billions and billions, there’s got to be a reason for it,” government economic expert Michael Winston said this week.
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