5 Things You Need to Know to Start Your Day

Good morning. The conflict in Israel causes a spike in oil prices and investors worry about profit warnings this earnings season. Here’s wha [View in browser]( [Bloomberg]( Good morning. The conflict in Israel causes a spike in oil prices and investors worry about profit warnings this earnings season. Here’s what’s moving markets. — [Sam Unsted]( Israel conflict The death toll from the conflict between Israel and militant group Hamas [has topped 1,100]( as fighting carries into a third day. The [Bank of Israel stepped in]( with plans to supply dollar liquidity to local banks and sell foreign exchange for the first time since the shekel was allowed to trade freely. Chuck Schumer, the US Senate Majority Leader, [criticized China’s response]( and called on the country’s top diplomat to condemn the violent attacks on Israel. Oil spike The conflict has caused [oil prices to surge]( amid concerns that it could inflame tensions across the Middle East, which produces a third of the world’s crude. Oil observers said the military actions in Israel have injected [fresh geopolitical risk]( into a market already roiled by supply cuts, falling inventories and worries about high prices hitting demand. OPEC, however, [raised its demand forecast]( through the middle of the century. Profit warnings US stocks already in a precarious position due to high bond yields [could see a new threat]( from the risk of a slew of profit warnings as earnings season gets underway. The Bloomberg Markets Live Pulse survey found 80% of respondents expect that some sectors will caution about earnings trends when they report. In particular, the consumer space is likely to see some weakness. Futures sink S&P 500 and Nasdaq 100 stock futures are firmly lower amid the jitters around Israel and oil prices. The [dollar is stronger]( as investors seek out safe haven assets. European markets are mostly lower with the exception of the FTSE 100, which is gaining due to rises for oil majors and defense contractors. Cash Treasuries are closed for Columbus Day. Coming Up… The World Bank-International Monetary Fund [annual meetings are starting]( in Morocco. Federal Reserve Bank of Dallas President Lorie Logan, Fed Vice Chair Michael Barr and Fed System Board of Governors Member Philip Jefferson are all due to speak. What We’ve Been Reading This is what’s caught our eye over the past 24 hours. - Bond market carnage [is spreading]( and the implications are huge. - Mack Trucks UAW workers [to strike](. - Strangers [sneaking Chinese cash]( out of the country. - Gen Z’s [psychological scars]( from inflation. - The scientist sounding the alarm on [ancient zombie viruses](. - A prototype of Ferrari’s [first electric model](. - Star witness testimony in [Sam Bankman-Fried’s trial](. And finally, here's what Joe’s interested in this morning Friday's jobs report was hot and cool at the same time. It was hot in the sense that 336K jobs were created, which was well above the expectations of economists. And revisions added 119K to the two months before. On the other hand, it was cool in the sense that hourly earnings grew just 0.2% from the previous month, which was below expectations at 0.3%. In other words, it was a continuation of the story over the last year. That the economy seems capable of cooling down -- with inflation coming off the boil -- without a decrease in employment. In other words soft landing, [AKA The Golden Path](. Again, standard caveat, that nobody knows what the future holds. But the past holds that you can have a decrease in inflation without a significant rise in unemployment, which is great. Whether inflation will get back to target without more material economic weakness remains the big question. All that being said, there's more to an economy than low unemployment and modest inflation. That's the Fed's responsibility, sure, but from an economic policymaking standpoint that's not the only game in town. There are also questions about growth, and wealth and standard of living, and economic stability, and curbing inequality and all kinds of other questions that aren't simply captured by the two main numbers that the Fed tracks. Right now, the US is making a huge bet on domestic manufacturing, via the CHIPS Act and the Inflation Reduction Act. The latter was the focus of a [conversation we held with Jigar Shah of the Loan Programs Office at the Department of Energy](. His office has hundreds of billions of dollars in lending authority designed to help proven technologies scale up the commercialization and deployment. His work is an essential component of the so-called energy transition. If all of this spending and domestic industrial policy doesn't work, it could be a recipe for waste, inflation and stagnation. For overcapacity, for inefficient infrastructure, and for falling behind the technological cutting edge, in areas like batteries. It could bring costly, unreliable electricity. If it does work, however, then obviously, things would look brighter in many respects. Anyway, Jigar presents an optimistic case that positive things are happening. US manufacturing is gathering steam. Local governments are engaged in making things work. Companies are planting roots in new communities, in positive ways, with beneficial public spillovers. With any luck, we reach some kind of stability in the Fed's goals. And if we do contain inflation, while maintaining a robust labor market, then the focus should increasingly turn to whether these transformational investments in domestic industry actually pan out as supporters hope. Follow Bloomberg's Joe Weisenthal on Twitter [@TheStalwart]( Like Bloomberg's Five Things? [Subscribe for unlimited access]( to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. Want to sponsor this newsletter? [Get in touch here](. You received this message because you are subscribed to Bloomberg's Five Things to Start Your Day: Americas Edition newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. 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