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Oil prices could surge if Israel strikes Iran

Global markets continue to face an uptick in oil prices at the rising possibility of an Israeli strike on Iranian oil fields. Oil prices spiked 10% late last week amid fears Israel would attack Iran’s oil industry and escalated concerns about a broader regional war that could throw global oil markets into chaos.

Part of the rise was due to a comment President Biden made (which he later refuted) that suggested he would support an attack on Iranian oil deposits. Crude oil prices continued to grow 3% yesterday as the market awaited a strike on Iran from Israel.

Why attack Iran? 

Israel has promised revenge against Iran following recent developments in their intensifying conflict as the two countries trade fire across their borders. Here is a timeline of the latest events:

A year ago:

• Israel invaded the Gaza Strip, located in Palestine, exactly one year ago on October 8, 2023.

  • The Israeli government said the invasion was carried out as payback for Hamas' terror strike on Israel on October 7, 2023, in which the terrorist organization killed over 1,200 civilians and took around 250 more hostage.

    • The bombardment and invasion of Gaza has killed an estimated 41,900, according to the Hamas-run Gaza Ministry of Health.

• In response to the Gaza invasion, Hezbollah then began targeting Israel, and ever since October 8, 2023, the two sides have been exchanging attacks which have gotten more intense in recent months.

The last few months:

• An Israeli covert operation escalated the conflict when pagers used by Hezbollah militants were detonated, killing dozens and injuring thousands in Lebanon and Syria.

• Israel has ramped up airstrikes in Lebanon in recent weeks, striking its capital city in an effort to target Hezbollah, which is backed by Iran.

  • Israeli officials believe 30 high-ranking Hezbollah leaders have been killed in the strikes.

  • Over 1030 people have been killed in total, according to the Lebanese Ministry of Public Health.

• Iran then bombarded Israel with missiles last Tuesday in retaliation for Israel's assassination of Hassan Nasrallah, the head of Hezbollah.

They’ve never been friends: The Council on Foreign Relations, an independent think tank based in New York City, says that Hezbollah and Israel have been at odds for many years, dating back to Israel's annexation of southern Lebanon in 1978.

As Israel decides its plan of attack, markets across the world have reflected broad concern that the country will strike Iranian oil fields which have increasingly grown following recent events.

Oil watching

Considering the Middle East harbors over a third of the world’s total oil supply, experts and investors alike are intently looking at Israel’s actions and the lasting effect it could have on global oil markets:

• Analysts estimate that the impact of an Israeli strike on Iran's oil and gas infrastructure may affect 300,000 to 1.5 million barrels of oil.

  • Even though China is the intended recipient of this oil (not the US) stopping the flow would exacerbate global tensions.

• According to research firm ClearView, one of the main concerns is that the conflict could push oil prices above $100 per barrel, as it affects the Strait of Hormuz, a vital route for oil tanker trade.

Looking ahead: At a time when the US oil market has been somewhat calm, gas prices are at the forefront of Americans’ minds amid the looming election in November.

Health

US obesity rates plunge in historic drop

America is getting skinny? We’re in the end times. The rising obesity rate in the US is one thing that has remained constant since WWII, but weight-loss drugs likely started the reversal that could upend the trend.

According to recent statistics from the National Health and Nutrition Examination Survey, the US adult obesity rate ended its lengthy ascent and fell by nearly two percentage points between 2020 and 2023, marking an important turning point in public health.

Pills for breakfast

While there is no confirmed correlation between the rise in usage of weight-loss drugs and the decrease in obesity rate, it appears to be a strong possibility considering many of them flooded the market in 2021.

• According to the Mayo Clinic, almost 13% of Americans have used weight-loss drugs, which may trigger a total body weight loss of 3%–12% greater than changing your lifestyle alone.

• As the Independent reports, the use of these drugs surged in 2021, coinciding with the indicated decline.

As Wegovy/Ozempic, Zepbound, Mounjaro, and other weight-loss drugs have proliferated the market, it has made the anti-obesity side of healthcare very lucrative:

• Ozempic accounted for 27% of net sales for Danish corporation Novo Nordisk in fiscal 2023.

  • According to Bloomberg, the company's market value is higher than that of its native country's economy.

• Also, Zepbound's creator Eli Lilly is more valuable than JPMorgan, ExxonMobil, and Walmart with a market capitalization of approximately $800 billion.

Major victory: Since obesity raises the risk of conditions such as Type 2 diabetes, heart disease, high blood pressure, and several types of cancer, the drop in obesity rates would represent a public health triumph akin to the decline in cigarette smoking, as long as it continues.

Economy

Job growth in September points to a strong economy

Fingers crossed for a soft landing. The latest indication that the economy is doing solid came with the September jobs report, which came out on Friday and exceeded economists’ expectations by over 100,000 jobs.

The jobs count was better than almost everyone was expecting and joined the handful of fingers pointing to a “very plausible” economic soft landing—a scenario where inflation cools without setting off a recession—which is exceedingly rare.

The jobs report

Wall Street was predicting around 150,000 jobs to be added last month, but the report defied expectations with over 254,000 jobs being added to the market, the most in six months. It marks the most recent sign that the Fed is on its way to a soft landing.

• The industries with the most employment growth were food and beverage services (69,000), healthcare (45,000), government (31,000), and social assistance (27,000).

Along with the report were a number of good, well, numbers. The Bureau of Labor Statistics said:

• The unemployment rate trickled down to 4.1% from 4.2%.

• The underemployment rate (part-time workers who want to be working more) fell for the first time in around a year.

• Hourly earnings increased 0.4% from last year.

Additionally, the US created 159,000 jobs in August, according to the revised jobs data, up from the 142,000 positions initially reported last month. The report also gave more confidence that the job market isn’t slowing and offered a sigh of relief for Fed Chair Jerome Powell and other Fed officials who want exactly that.

See the report in full here.

How’d we get here?

In order to prevent inflation from rising further, Jerome Powell cut interest rates for the first time in four years, announcing a massive half-percentage-point reduction last month.

• He made the cut because he was concerned that, in the absence of drastic measures, the situation may worsen given this year's rising unemployment rate.

• The jobs report from September now indicates that the Fed is less likely to make significant cuts during its upcoming meetings (particularly in November).

Friday saw a sharp increase in Treasury yield rates, with the average 30-year fixed mortgage rate rising by 27 basis points to 6.53%. Both are very susceptible to any factor that may influence the Fed's rate decisions and given the strong employment picture, the Fed may not need to lower rates as sharply as was first anticipated.

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Grab Bag

Jumpman sues NASCAR in antitrust lawsuit

Yes, that Jumpman (I don’t know what other one you’d be thinking of). Last week, two teams, including Michael Jordan's 23XI Racing, sued NASCAR and its CEO, Jim France, for using “anticompetitive and exclusionary practices.”

How do you restrict competition in NASCAR?

According to Michael Jordan, through the charter system.

The charter system is a franchise-like arrangement in which NASCAR ensures that teams' cars compete in every race and receive a share of the money from television arrangements.

• Both 23XI and Front Row Motorsports rejected the charter renewal for the upcoming season in September, claiming that it did not give teams a fair share of money.

The suit alleges that the France family, who own NASCAR, purchased racetracks and coerced teams to sign exclusivity agreements to crush competition in the sport. The family also coerced teams to sign the agreements going into the new season, or else their charters would be voided.

• The deal was reportedly signed under pressure from NASCAR by at least four teams.

Follow up: The NASCAR suit follows other lawsuits aimed at major professional sports leagues, such as the NFL (who are always getting sued) and the NBA.

Spirit Airlines is running out of fuel

And by fuel I mean money. According to the Wall Street Journal, Spirit Airlines is considering filing for bankruptcy, however, Chapter 11 is not likely to happen anytime soon.

Spirit has $1.1 billion in secured bonds that are due in a year and have an Oct. 21 deadline for refinancing or extension. So it’s safe to say they won’t be filing bankruptcy soon, but they do have to get their finances in order (to put it mildly).

Down the runway

While the end may seem imminent for the budget airline that constantly bombards you with hidden fees, Spirit's story doesn't necessarily stop here.

It might follow in the footsteps of other airlines Scandinavian Airlines and Delta, who both filed for bankruptcy in the past but later made a full recovery, by possibly restructuring its $3.3 billion debt load.

It’s been quite the year for Spirit: Due to antitrust concerns, a federal judge in January blocked a $3.8 billion merger with JetBlue. Spirit has proceeded to dismiss over 185 pilots, halt part of its fleet as a result of an engine recall, and cancel many flights that were scheduled to liftoff in the coming months.

• Following news of the potential bankruptcy, Spirit's stock fell dramatically and is now down almost 90% year to date.

Headwind: In August, Spirit recorded its 11th straight quarterly loss, showing the airline has struggled to comeback from its pandemic woes, unlike many of its competitors.

Fast Facts

Cranium Code: A new law aims to give Californians explicit rights to their own “neural data”, which is anything a person thinks or physically/emotionally feels, that may be collected by companies.

Auto Autopilot: After being delayed from its original August release date, Elon Musk is planning to unveil Tesla's fully autonomous robotaxi service on Thursday. 

Mac Attack: Starting on Thursday, McDonalds will start selling the chicken Big Mac are participating locations.

Good Gambling: Due to his gambling addiction, a former employee of the Jacksonville Jaguars who was imprisoned for stealing $22 million from the organization filed a lawsuit against FanDuel. That was a mouthful.

Robot Revolution: OpenAI CEO Sam Altman predicted that we could have superintelligence “in a few thousand days (!)," according to a blog post. Welcome to the end of the world.