What will Israel and Iran do now?
Oil prices are up again this morning after Israel vowed to retaliate against Iran for firing a barrage of ballistic missiles at the country, reviving fears that global energy supplies could be disrupted by full-scale war in the Middle East.
The big question now is how Israel and Iran will respond, and whether those actions would clamp down on oil flows from the region.
A recap: Prime Minister Benjamin Netanyahu said Iran had “made a big mistake tonight” and would “pay for it,” after Tehran fired a wave of missiles at the country that Iran said were aimed at military bases and the headquarters of Mossad. Israel said its air defenses, aided by the U.S. and other allies, had mostly intercepted the attack.
The barrage was in response to the recent assassination of leaders of Hezbollah and Hamas, groups that are backed by Iran.
Brent crude, the international benchmark, was trading above $75 a barrel today, up 3 percent and its highest level in a month. It rose more than 5 percent yesterday after the attack.
Markets are on edge about the risk of another oil shock. The price of crude has been relatively stable over the past year, apart from brief spikes, including after the Oct. 7 Hamas-led attacks on Israel. When Iran fired a well-telegraphed wave of missiles at Israel in April, it didn’t lead to prolonged price increases either. (Saudi Arabia’s oil minister has even reportedly warned that prices could drop to as low as $50 a barrel.)
But this time could be different, given the deeper involvement of Iran in the conflict, Bill Farren-Price, a senior research fellow at the Oxford Institute for Energy Studies, told DealBook. He laid out three scenarios to watch.
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Will Israel hit Iranian oil infrastructure? An attack could damage the Iranian economy and limit the amount of oil the country exports. (Iran produces about two million barrels of crude a day, about 2 percent of global supply.) That could affect China in particular, a huge buyer of Iranian oil.
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Will the West ratchet up its enforcement of Iranian oil sanctions? Strong U.S. support for Israel could lead to a tightening of restrictions that Iran has been able to work around.
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Will Iran attack Israel-aligned interests in the Persian Gulf? Tehran could try to block the Strait of Hormuz or attack ships sailing through the region, snarling the shipments of oil (and upsetting supply chains more broadly).
The research firm ClearView Energy Partners estimates that an attack on Iranian infrastructure could increase them by $13 a barrel, while a Strait of Hormuz closure scenario could raise prices by up to $28 a barrel.
But Farren-Price added that regional politics have changed since the oil crisis that followed the Arab-Israeli war of 1973. “The prospect of a return to the 1960s or 1970s, when all Arab countries were united against Israel, is unlikely,” he said.
HERE’S WHAT’S HAPPENING
Apollo Global Management aims to double in size over the next five years. The investment giant said yesterday that it wanted to increase assets under management to $1.5 trillion by 2029. Perhaps more intriguingly, Apollo said it wanted to originate $275 billion in private lending a year — more than what JPMorgan Chase did last year — within that time frame, underscoring its focus on the red-hot private credit market.
President Biden pushed shipping companies to raise pay to end the ports strike. In a statement, Biden called for a “meaningful increase” in longshoremen’s wages, even after he said he wouldn’t use a federal law to force striking workers back on the job. The demand underscores the tricky balance that the White House and Vice President Kamala Harris must walk: keeping unionized workers happy while limiting the economic damage from a prolonged strike.
Ray Dalio and a big Emirati A.I. company are said to drop an investment partnership. The family office of Dalio, who founded Bridgewater Associates, and G42 scrapped plans to set up an asset management firm in Abu Dhabi, Bloomberg reported. A driving factor in the decision was uncertainty over whether Dalio might use Bridgewater intellectual property in the venture, potentially running afoul of his noncompete agreement with the firm.
The economic heart of the Vance-Walz debate
Heading into last night’s vice-presidential debate, political watchers wondered whether Senator JD Vance and Gov. Tim Walz would slug it out onstage, as their bosses memorably did last month.
The 90-minute event instead turned out to be mostly civil, with little time spent talking about “weird” politicians or “childless cat ladies.” But Walz and Vance spent a surprising amount of time discussing policy.
Here are some of the economic highlights from the debate:
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Inflation: Vance sought to attack Vice President Kamala Harris — more than President Biden — for high consumer prices, the most potent economic weapon in the Republican political arsenal. “I believe that whether you’re rich or poor, you ought to be able to afford a nice meal for your family,” he said. “That’s gotten harder because of Kamala Harris’s policies.”
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Trade: Walz criticized Donald Trump’s plan for across-the-board tariffs calling them a recipe for higher prices for Americans. (Vance later said that the Biden administration actually kept many of Trump’s levies.) Walz also accused Trump of presiding over the largest U.S. trade deficit with China.
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Health care: Vance misleadingly claimed that Trump had tried to “salvage” the Affordable Care Act, when the former president actually tried repeatedly to sink the law commonly known as Obamacare.
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Child care: Walz pushed for a national paid family leave policy, an increasingly prominent Democratic policy proposal. Both men agreed that the nation faced a shortage of child care options.
There were a couple of dramatic moments. The most talked-about exchange of the night was when the Jan. 6, 2021, Capitol attack came up, and Walz asked Vance whether Trump had lost the 2020 election. The senator delivered a meandering answer before saying, “Tim, I’m focused on the future.” Walz said, “That is a damning nonanswer.”
The general takeaway: Vance gave a polished performance that sought to smooth out Trump’s rough edges. Walz, who other Democrats worried might struggle in the debate, was much more muted than in political rallies.
That said, few experts believed the debate would change many minds. The online political betting site PredictIt showed little change in the elections’ odds over the course of the event.
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In other political news: Lina Khan, the chair of the F.T.C., is hitting the campaign trail with Democrats and allies, including Senator Bernie Sanders of Vermont and Representative Ruben Gallego of Arizona. (Punchbowl News notes that Khan isn’t acting as though she believes she’s going to leave Washington, as even some Harris donors hope.)
Nike clears the decks for its new C.E.O.
With Elliott Hill set to take over Nike in two weeks, the struggling sportswear giant is helping him out with a classic corporate move: trying to reset investor expectations.
Nike also reported weak quarterly sales numbers, which could help Hill out by allowing him to claim credit for a turnaround down the road. But the figures still underscore the challenge that led to the ouster of Hill’s predecessor, John Donahoe: Customers aren’t as interested in Nike’s offerings.
Nike withdrew its full-year sales guidance for analysts yesterday, explicitly citing the C.E.O. changeover: “This provides Elliott with the flexibility” to work with employees and devise his own turnaround strategy, Matthew Friend, the company’s C.F.O., told analysts.
He added that the company would postpone an investor day that had been scheduled for next month.
The numbers Nike did release were grim. Revenue fell 10 percent from a year ago to about $11.6 billion, just short of analyst expectations. Net income tumbled 28 percent year-on-year to $1.1 billion.
Nike is still suffering from the consequences of Donahoe’s biggest business decision: leaning into sales of legacy sneaker models such as Dunks and Jordans. Nike saturated the market, eventually sapping the shoes of their desirability and leaving the company with few options when consumers’ tastes changed.
Friend acknowledged the disappointing performance but asked for patience: “A comeback at this scale takes time,” he told analysts. “And while there are some early wins, we have yet to turn the corner.”
A Hail Mary plan to revamp college football
For years, sports executives have mused about creating a “super league” for college football that would put more than 130 of the biggest schools into one competition — and land bigger broadcast deals in the process.
Now, a group of sports executives has actually introduced a plan to do that, but the group will have to overcome a lot of obstacles to make it a reality.
The pitch: College Sports Tomorrow led by Len Perna, the C.E.O. of the executive search firm TurnkeyZRG, and Mark Abbott, a former deputy commissioner of Major League Soccer, yesterday detailed its plan.
The competition will be called the College Student Football League, and would involve two tiers of teams and more competitive matchups, including between teams in the divisions.
Schools are looking for new sports revenue streams. The N.C.A.A. and its top conferences are negotiating a potential $2.8 billion deal to settle an antitrust lawsuit with athletes over how schools have used their names, images and likenesses.
That settlement would allow teams to pay athletes up to $22 million a year, and College Sports Tomorrow says higher broadcast revenues could help fund that.
But the new league would face big hurdles, starting with cooperation on broadcast rights. Each conference negotiates its own deals. The Big Ten’s $7 billion agreement with Fox, NBC and CBS, for example, expires in 2030, but other conferences are locked into contracts that don’t expire for years after that.
College sports are also not covered by a law that gives professional sports an antitrust exemption to pool broadcast rights, which would make it challenging to sell rights for a unified league.
How schools classify players is another obstacle. Whether players should be treated as employees, which would determine how they could collectively bargain with a new league, is still being litigated in multiple venues. Under the proposed plan, the league would lobby for a law to let athletes collectively bargain without becoming employees, to avoid antitrust scrutiny.
But the N.C.A.A. has lobbied Congress for years to pass these sorts of antitrust protections, to no avail.
“Our plan is not perfect,” Jimmy Haslam, an owner of the Cleveland Browns and a member of College Sports Tomorrow, told The Wall Street Journal. “I do think it’s the most comprehensive thing out there.”
THE SPEED READ
Deals
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Boeing is reportedly considering selling at least $10 billion worth of stock to raise cash amid a debilitating strike. (Bloomberg)
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“A Venture Capital Firm Does Something Rare: Give Money Back” (NYT)
Elections, politics and policy
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President Biden is set to sign a bill that would weaken federal environmental reviews for some semiconductor projects that got money via the CHIPS and Science Act. (NYT)
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“Wealthy GOP Candidates Face Rough Homecomings” (WSJ)
Best of the rest
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Charles Schwab named Rick Wurster, its president, as the successor to its C.E.O. of 16 years, Walt Bettinger. (WSJ)
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Sean Combs is set to face a flurry of lawsuits accusing the music mogul of sexual assault, according to a lawyer who says she represents about 120 victims. (NBC News)
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