Global Market News

Global Equities Make Gains

Global equities made modest gains over the week, holding near-record levels, with the Dow Jones and S&P 500 rising 0.96% and 0.85%, respectively, while the Nasdaq gained 0.80%. The US 10-year Treasury note was little changed, closing the week at 4.08%. The price of a barrel of West Texas Intermediate crude oil dropped several dollars to $68.84 as fears of Israeli attacks on Iranian oil production were calmed. Volatility, as measured by the CBOE Volatility Index, declined on the week, closing Friday at 18.03.

The ECB cuts rates

The European Central Bank (ECB) lowered rates for a third time this year, bringing its deposit rate down another 0.25% to 3.25%. ECB President Christine Lagarde said the “disinflationary process is well on track” but that growth was still somewhat weaker than expected. Particularly manufacturing growth and consumer spending have been sluggish, and the eurozone’s three largest economies – France, Germany, and Italy – contracted simultaneously for the first time this year in the month of September. The weak economic data coming out of the bloc has fueled expectations of another rate cut at the central bank’s December meeting.

International Developments

China’s Massive Military Exercise Increases Tension in Taiwan Strait

A record 153 Chinese warplanes, including fighter jets and drones, were detected flying near Taiwan during a large-scale military exercise. The one-day drills, conducted by China’s People’s Liberation Army, simulated a blockade around Taiwan and involved 111 aircraft crossing the Median Line of the Taiwan Strait, a boundary China no longer recognizes. Taiwan condemned the exercises as an “unreasonable provocation,” deploying its own military assets in response. These drills occurred just days after Taiwan’s President Lai Ching-te reaffirmed the island’s sovereignty, further escalating tensions between Taiwan and Beijing.

Hamas Leader Yahya Sinwar Assassinated by Israeli Forces

Hamas leader Yahya Sinwar was assassinated by Israeli forces this week during a military operation. Sinwar has been a top target for Israel as he was known for orchestrating the deadly October 7, 2023 attacks. President Joe Biden celebrated the assassination of Sinwar, calling it a “good day” for both Israel and the US, emphasizing that Sinwar was a significant obstacle to peace and that his death opens up opportunities for a political settlement in Gaza. However, Sinwar’s death has sparked mixed reactions: while some believe it could lead to the release of Israeli hostages, others argue it may not significantly alter the ongoing conflict.

Canada-India Diplomatic Row Over Assassination of Sikh Leader

The diplomatic dispute between Canada and India escalated as both nations expelled top diplomats over allegations surrounding the 2023 assassination of Sikh activist Hardeep Singh Nijjar in British Columbia. Canada claims that Indian government agents orchestrated the killing, citing evidence linking six Indian officials to the incident, while India denies these accusations and calls them politically motivated. The strained relations, already tense due to New Delhi’s concerns over Sikh separatist groups in Canada, pose a significant challenge to India’s ambitions as a rising global power. Similarly, federal prosecutors in the US have charged a man they identified as an Indian intelligence officer with trying to orchestrate an assassination on US soil. The US has urged India to cooperate in the ongoing investigations, as the situation risks complicating India’s relations with other Western democracies.

US Social & Political Developments

US Army Deploys THAAD, Troops to Israel

The US Army’s decision to deploy a Terminal High Altitude Area Defense (THAAD) battery and approximately 100 soldiers to Israel is part of efforts to bolster air defenses amidst escalating conflicts with Iran-backed Hezbollah and Hamas militants. The system, deployed at the direction of President Biden, will be relocated from the continental US to Israel, where it will complement existing missile defenses following Hezbollah’s recent drone attack on Israeli forces. Army leaders, including Secretary Christine Wormuth, expressed concern about the strain on the Army’s air defense forces, as these high-demand units are already heavily deployed due to ongoing conflicts in Ukraine and the Middle East. Despite the relatively small number of soldiers involved, the deployment adds pressure to an already taxed force, impacting modernization and long-term readiness.

Independent Panel Calls for Secret Service Overhaul

An independent panel released findings calling for an overhaul of Secret Service leadership following the failed assassination attempt on Donald J. Trump on July 13, 2024. The report, commissioned by the Department of Homeland Security, highlighted critical failures, including the absence of “critical thinking” and poor preparation by agents, leading to security lapses at Trump’s rally in Butler, Pennsylvania. The panel, led by former officials like Janet Napolitano and Frances Townsend, recommended bringing in private sector leadership and focusing primarily on protection, shedding the agency’s traditional financial crime investigations. Despite some internal changes, the report emphasized that institutional reforms were needed, as these failures persisted even after similar recommendations were made following a 2014 White House breach.

Corporate/Sector News

SpaceX’s Starship Soars and Achieves Historic Midair Booster Catch

SpaceX successfully launched its Starship mega-rocket from Boca Chica, Texas, marking a major achievement in space travel. The Super Heavy booster separated at 40 miles altitude and was caught midair by the “Mechazilla” launch tower using two giant metal arms in an unprecedented maneuver. This marks the fifth uncrewed test flight for Starship, with the upper stage reaching speeds of 17,000 mph and splashing down in the Indian Ocean after one hour. SpaceX, led by CEO Elon Musk, aims to use Starship for missions to the moon and Mars, with $4 billion in NASA funding for the Artemis 3 mission, though environmental concerns and regulatory delays pose challenges.

Big Tech Investing Big on Nuclear Power

Amazon announced a $500 million investment in small modular nuclear reactors (SMRs), partnering with Dominion Energy and X-energy to accelerate nuclear power’s role in the US energy grid. The collaboration aims to bring over 5 gigawatts of new nuclear power projects online by 2039, marking the largest deployment of SMRs to date. Amazon’s commitment follows similar moves by Microsoft and Google, with Amazon backing a 320-megawatt project in Washington state. This initiative reflects growing energy demands, driven by the rapid expansion of artificial intelligence technologies and the need for sustainable solutions.

Lufthansa Fined $4 Million for Discrimination Against Jewish Passengers

The US Department of Transportation imposed a $4 million fine on Lufthansa, marking the largest penalty ever levied against an airline for civil rights violations, following allegations of discrimination against Jewish passengers traveling in May 2022. The investigation revealed that 128 Jewish passengers were barred from boarding a connecting flight in Frankfurt while en route from New York City to Budapest due to claims of “misbehavior.” However, Lufthansa failed to identify any specific instances of noncompliance. Transportation Secretary Pete Buttigieg emphasized that no one should face discrimination while traveling, highlighting the department’s commitment to investigating such civil rights violations. In response, Lufthansa announced its cooperation with the investigation and initiatives to combat antisemitism, including a training program developed in partnership with the American Jewish Committee.

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This week from BlackSummit

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Geopolitics & the Day After

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The world’s biggest banks have backed a call to triple nuclear energy capacity by 2025

Source: World Economic Forum