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Gallant: Conflict with Lebanon may escalate into war……. Israel strikes Hamas, PIJ arms production facility

Israel’s Defense Minister Yoav Gallant ensured on Wednesday that his country is ready to expand its operations against Lebanon if necessary, and warned that the current conflict with Lebanon-based Hezbollah “could also deteriorate into a state of war.” “This is not theoretical, it is real,” he told Israeli soldiers. Gallant further said that Hezbollah Secretary General Hassan Nasrallah’s threats “may drag Lebanon into paying extremely heavy prices,” adding that the militant group “can’t even imagine what might happen.” The day before, Nasrallah stressed that Hezbollah’s retaliatory response to the assassination of the group’s senior commander, Fuad Shukr, committed by Israeli forces, has not yet started, adding that the militant organization intends to target new Israeli sites, “deeper into the country.”

Israel strikes Hamas, PIJ arms production facility

A weapons production facility allegedly owned by Hamas and Palestinian Islamic Jihad located within a designated humanitarian area in Deir al-Balah in central Gaza was demolished in an airstrike, according to the Israel Defense Forces (IDF) on Wednesday. Earlier, the military informed it targeted Hamas’ rocket launchers, which they claimed were placed near aid warehouses in southern Gaza. The strikes come following an evacuation order in Beit Hanoun in the northern Gaza Strip, showing how the Israeli army is targeting north, south, and central areas of Gaza, making it more and more difficult for civilians to find shelter. The latest Gaza death toll update revealed the number is getting closer to 40,000.

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Oil extends gains, WTI surges 2.45%

The prices of oil futures continued to move upward on Wednesday as supply concerns seemingly intensified. With the recent unravellings in the Middle East, the whole world turned its attention to Iran, awaiting its strike on Israel, after the latter killed Hamas’ top member, Ismail Haniyeh. Even though Tehran insisted it doesn’t seek further escalation, worries over the Gaza conflict turning into a regional war persisted. In addition, production disruptions in Lybia added to supply woes.

 

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Trump: Strategic Oil Reserves must be filled up ‘immediately’

Former United States President and Republican presidential nominee Donald Trump stressed on Wednesday that the country’s Strategic Oil Reserves have to be filled up “immediately.”

Crude oil traded 1% higher on Wednesday as uncertainty over steady supply persisted in light of a possible Middle East conflict. In addition, the Libyan state oil company announced yesterday the production at its Sharara oil field will be rolled back due to the ongoing unrest in the country.

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Oil Rebounds from Seven Month Lows

Oil bounced back from a seven-month low as equities led risk assets in a recovery from a global market selloff.  West Texas Intermediate edged higher to settle above $73 a barrel, its first daily gain after tumbling more than 6% over three straight losing sessions. As prices neared the lowest levels this year, traders received multiple warning signs that futures were oversold. Still, it was only when the S&P 500 recovered in New York trading hours that was crude able to recoup its losses.  Meanwhile, traders continued to weigh signs of potential physical market tightness. Those risks include the loss of some Libyan supplies and concerns that the conflict in the Middle East could hurt production from the region.  “Oil prices have fallen in the last few days in lockstep” with equities, with limited reaction to developments in the Middle East, Goldman Sachs Group Inc. analysts including Daan Struyven wrote in a note. They see Brent finding support at $75 a barrel due to the limited risk of a US recession and room for an increase in speculative positioning. Last week, oil notched its fourth straight weekly decline on signals of faltering demand in the US and China, with the Asian nation rolling out plans to spur domestic consumption over the weekend. On Tuesday a US government report flashed warning signs about consumption in China, citing a weak economy in the Asian country for sputtering oil demand growth.  Traders are bracing for a retaliatory attack on Israel by Iran and regional militias, though Tehran has underlined that it wants to avoid all-out war. Hezbollah and Israeli forces exchanged fire on Tuesday. For months, traders were concerned the conflict could spiral into a more devastating proxy war, embroiling the US and Iran and possibly hampering crude exports. Oil’s dive also may have been partly arrested by algorithmic traders approaching the peak of their bearish positioning, according to analysis firms.

  • WTI for September delivery AT 6:00 AM New York Time  were trading at $73.20  a barrel
  • Brent for October settlement was quoted at  $76.48 a barrel.
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Goldman Sachs Sees a $75 Floor for Brent Oil Prices

Goldman Sachs expects a $75 per barrel floor under Brent Crude prices that is unlikely to be breached due to the current macroeconomic fears of a U.S. recession. Oil prices slumped by 6% in the past few days, dragged down by weaker-than-expected jobs data in the U.S. on Friday, which sparked a massive selloff in equity markets globally and in risk assets, including crude oil. Early on Tuesday, Brent Crude prices were down by 0.43% on the day to $75.96 as of 8:37 a.m. EDT, following two consecutive daily declines on Friday and Monday. Recession fears triggered an exit and added to the perceived weak demand for Chinese oil to weigh on the petroleum futures.

However, Goldman Sachs says that the recession risk is still limited, demand in the West and India remains strong, and the speculative positioning of traders is very low. All these factors support the investment bank’s view that oil will find support in the coming weeks.

“While the increase in recession risk following the weak U.S. July employment report and the impact of volatile financial conditions on oil demand further skew the risks to our $75-90 range for Brent prices to the downside, especially in 2025, our base case remains that oil prices will find support in coming weeks,” Goldman Sachs analysts wrote in a note dated Monday. Goldman put out a $75-$90 range to its Brent forecast earlier this year. “Brent crude touched its USD 75 floor before bouncing back with focus on geopolitical developments and OPEC+ response to the latest drop,” Saxo Bank analysts wrote in a note early on Tuesday. According to ING commodities strategists Warren Patterson and Ewa Manthey, “Investors have been exiting commodities in recent weeks, highlighted in positioning data and this has continued in recent days.” “ICE data shows that aggregated open interest in ICE Brent has fallen by more than 8% since mid-June. This souring in speculative appetite comes despite oil fundamentals still looking supportive,” they wrote in a Tuesday note. NN: I could not be any clearer. I put out a very clear reco:  BUT THE SHIT OUT OF OIL

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Banks Sweeping Dead Property Loans Under the Persian Rug

 

Under the new system, in place at most large companies since 2020, lenders from day one are supposed to continuously estimate their credit losses over the life of a given instrument, be it a loan or bond. The threshold for recording losses is supposed to be much lower—when they are “expected,” rather than waiting until losses probably happened. This was supposed to lead to more aggressive, and more timely, loss recognition. The office-loan market is testing investors’ faith in the new expected-loss model. As with other commercial properties, loan payments on office buildings often are interest-only until maturity. When rates were ultralow, many lenders and borrowers went into these loans assuming they would be refinanced rather than paid off at the end. That would mean no defaults as long as they could keep rolling over the loans. The pandemic sent office values in many big cities tumbling as more people worked from home. Now, for many borrowers, refinancing isn’t an option because the buildings are worth less than the borrowers owe. That makes defaults inevitable. Until then, though, the owners still may be current on their payments. Hope springs eternal, until it doesn’t.

In a July 24 note, Pimco’s John Murray and François Trausch warned of a $1.5 trillion wall of maturities for commercial real-estate loans over the next two years. “Lenders and borrowers will be forced to ‘face the music,’” they wrote. If they are right, it would mean the expected-loss model hasn’t been working as billed. Lenders still have wide discretion to delay officially expecting red ink if they would prefer not to expect it.

At New York Community Bancorp NYCB , credit losses on commercial real-estate loans, including office loans, have surged in the past few quarters, raising questions about why management took so long to identify them. A bigger concern should be the losses at other lenders that aren’t yet visible to outsiders. Noted short seller Carson Block, in a report last December, predicted large credit losses would soon swamp  nonbank commercial real-estate lender. The company at the time called his report “self-interested and misleading” and said it was “well positioned to navigate this environment.” Then in July, it cut its dividend and posted its third consecutive quarterly net loss. Credit losses last quarter were so large that they exceeded the company’s net interest income.

Curiously, default rates have been higher for property loans backing widely held commercial-mortgage-backed securities than for the same types of loans on banks’ balance sheets. That underscores how traditional lenders have more flexibility to help borrowers work out their problems than do the vehicles that issue commercial-mortgage-backed securities, which can’t so easily “extend and pretend.” Banking regulators have said they are aware there is a problem, while also assuring the public that this won’t be another 2008. An interview that Federal Reserve Chair Jerome Powell gave to CBS’s “60 Minutes” in February is worth revisiting. Asked about banks’ office loans, he said, “There will be expected losses. It feels like a problem we’ll be working on for years. It’s a sizable problem.” The irony of that statement: If Powell was right about the losses then, under the expected-loss model, banks probably should have booked them already. NN: This will be the greatest real  estate wipe  out and banking failure of our time.

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Israel, Mideast Markets Fall on Iran Threat, Global Stock Plunge

Financial markets across the Middle East tumbled Monday, as concerns over a potential Iranian attack on Israel added to bearish sentiment spawned by the ongoing global equity rout. Israel’s equity benchmark, the TA-35 Index, slid as much as 3.1%, to trade at the lowest since February, extending last week’s 3.3% slide — the biggest weekly loss since last October. The shekel fell as much as 1% against the dollar to trade nearly at a nine-month low, while its $3 billion eurobond maturing 2023 was quoted lower.The latest losses were sparked in part by an Axios report that US Secretary of State Antony Blinken had told his G-7 counterparts that Iran and its ally Hezbollah could attack as early as Monday. Citing three unidentified sources briefed on the call, Axios said Blinken saw the attacks starting in the next 24 to 48 hours.  However, regional markets were also feeling the heat from a global selloff that’s been fueled by signs of a worse-than-expected US economic slowdown. The growth concerns also weighed on oil prices, sending crude futures to a seven-month low.  The Saudi Tadawul Index and Egypt’s Hermes benchmark shed as much as 3.7% and 5.8% respectively. Turkey’s Borsa Istanbul 100 Index was the hardest hit, sliding more than 7% at one point.  “There remains much greater risk to asset prices in Israel, Lebanon, and Iran, with the latter fully sanctioned for foreign investors anyway, than anywhere else in the region,” he added. But with the conflict threatening to escalate, markets will likely remain under pressure. The shekel was down for the sixth straight day, while the Egyptian pound slid as much as 1.6% against the dollar to trade at a five-month low. Yields on Egypt’s May 2050 dollar bonds exceeded 12%, advancing for the sixth day to their highest level since February, according to data compiled by Bloomberg.

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Gallant: Army should be ready for ‘quick transition to offense’

Israel’s Defense Minister Yoav Gallant said on Monday that the country’s military should be prepared for a “quick transition to offense” in case of an anticipated Iranian and Hezbollah attack on Israel, following last week’s Israeli strikes on Beirut and Tehran. “Our enemies are carefully considering their steps thanks to the abilities you have demonstrated in the last year. However, we must prepare for all possibilities, including a quick transition to offense,” Gallant stated during his visit to the Israel Defense Forces (IDF) headquarters in Tel Aviv. Previously, sources told Axios that the United States and Israeli officials expect Iran to carry out its retaliatory attack on Israel on Monday.

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Users report issues with online trading platforms

Numerous users reported issues with the online trading services of Fidelity Investments, The Charles Schwab Corporation, and The Vanguard Group Inc., Downdetector’s data showed on Monday. Most problems reported include mobile brokerage and online brokerage. Meanwhile, Fidelity acknowledged the issue in a post on X, formerly Twitter. The news came amid a drop in the prices of cryptocurrencies linked to a plunge in Wall Street.

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Iran says it does not want regional escalation but must ‘punish’ Israel

DUBAI, Aug 5 (Reuters) – Iran is not looking to escalate regional tensions but believes it needs to punish Israel to prevent further instability, the foreign ministry spokesperson said on Monday, following the killing of Hamas leader Ismail Haniyeh in Tehran last week.
“Iran seeks to establish stability in the region, but this will only come with punishing the aggressor and creating deterrence against the adventurism of the Zionist regime (Israel),” Nasser Kanaani said, adding that action from Tehran was inevitable. Kanaani called on the United States to stop supporting Israel, saying the international community had failed in its duty to safeguard stability in the region and should support the “punishment of the aggressor.” The Islamic Revolutionary Guards Corps’ top Commander Hossein Salami on Monday reiterated the elite group’s threat that Israel “will receive punishment in due time”. Tehran and Iran-aligned groups such as Hamas and Hezbollah have accused Israel of killing Haniyeh on 31st July. Israeli officials have not claimed responsibility. NN: Says the head of a murdering regime. Wakes up every day screaming death to Israel… Death to America. Who supplies weapons to murdering terrorist organizations the world over.