Israeli Start-ups Are Joining the Fight Against Hamas

Israel’s entrepreneurs brace for war

The Israel-Gaza war is intensifying, with Israeli forces having killed about 1,500 Palestinian fighters in retaliation for the deadly weekend attacks by Hamas. The government is mobilizing 360,000 reservists for a larger military campaign.

Companies worldwide have joined global leaders in expressing support for Israel and are looking after their employees in the country. But the businesses feeling the war’s impact most acutely are Israeli start-ups whose employees are taking up arms. (Israel has so many start-ups it has earned the nickname “the start-up nation.”)

Some are seeing up to half their staff being mobilized, one venture capitalist estimated to The Wall Street Journal. Some C.E.O.s, including those living abroad, are volunteering for service: “I want to be part of the people who are protecting our country,” Itamar Friedman, the co-founder of an artificial intelligence company, told The Journal.

Start-ups in particular are likely to see their staff called up, given how young many of their workers are. That may disrupt the tech sector, which accounts for roughly one-fifth of the Israeli economy.

Other businesses are committing aid. General Catalyst, the American venture capital firm, said it had pledged an initial $250,000 to humanitarian efforts there. And the U.S. Chamber of Commerce said it was working with Jewish organizations to line up support for victims.

Prominent corporate leaders also publicly deplored the violence and backed Israel, including JPMorgan Chase’s Jamie Dimon and Goldman Sachs’s David Solomon.

The fighting continues to disrupt business and markets. Companies have told employees based in Israel to stay home, while Chevron temporarily shut operations at a major natural gas platform off Israel’s coast. Yields on U.S. Treasury bonds fell as investors flocked to safer securities, reversing last week’s rout. Aerospace and defense stocks rose 5.6 percent on Monday, after Washington pledged to supply Israel with more arms.

But the oil market appears to be in a holding pattern. After a sharp rise on Monday, the Brent and West Texas Intermediate benchmarks for crude were down slightly this morning. Oil analysts warn that instability in the Middle East could push up prices. Still, American and Israeli officials have played down reports that Iran helped directly plan the attack (though they haven’t ruled out any Iranian role), perhaps suggesting that strikes against Tehran would be less likely.

HERE’S WHAT’S HAPPENING

Kevin McCarthy floats the idea of becoming House speaker again. With Republicans divided between Jim Jordan and Steve Scalise, leaving a power vacuum that has paralyzed the chamber, McCarthy laid out a plan to help defend Israel and said he was willing to return to the post he was ousted from last week.

Robert Kennedy Jr. is running for president as an independent. The vaccine skeptic and conspiracy theorist ended his long-shot bid to challenge President Biden for the Democratic nomination, setting up an expensive campaign to get on ballots in all 50 states. Kennedy’s move drew opposition from Republicans who fear he could siphon support from their eventual candidate.

Sam Bankman-Fried’s former girlfriend is set to testify at his trial on Tuesday. Caroline Ellison, who ran the trading firm accused of misusing billions of dollars’ worth of customer money from his FTX crypto exchange, is one of the government’s star witnesses. Meanwhile, the presiding judge has repeatedly admonished Bankman-Fried’s lawyers over their questioning of witnesses.

Hollywood screenwriters approve a new contract. Members of the Writers Guild of America overwhelmingly voted in favor of a proposed deal with media giants that includes pay raises and guardrails on the use of artificial intelligence. In related news: The SAG-AFTRA actors union is set to negotiate again with Hollywood studio chiefs on Wednesday, and members of the Unifor autoworkers union in Canada are striking against three General Motors plants in Ontario.

What to watch this earnings season

The first big round of quarterly earnings reports kicks off on Tuesday with PepsiCo and LVMH, Bernard Arnault’s luxury conglomerate, reporting. The results come as business leaders stare down the triple threats of persistently high inflation, surging oil prices and an epic sell-off in bonds that’s destabilizing global markets and economic growth.

Beware of falling profits and lackluster outlooks. S&P 500 firms are expected to report, on average, a 0.3 percent drop in annualized earnings this quarter, according to FactSet, the fourth straight quarterly decline for the index. FactSet adds that 76 companies in the S&P 500 have lowered earnings guidance for the previous quarter as inflation ate into consumer buying power; 42 have upgraded their guidance.

The good news: Analysts at Zacks Equity Research predict that earnings growth will rebound by year-end. David Kostin, chief U.S. equity strategist at Goldman Sachs, concurs. But he warned in a research note this weekend that a “‘higher for longer’ interest rate regime, resilient wage growth and A.I. investments among some tech firms” will cap margin growth for the S&P 500 as a whole.

The strength of the consumer will be in the spotlight. Investors will be focused on LVMH’s performance in China, the company’s fastest-growing market but where the economy has slowed in recent months. PepsiCo, meanwhile, reported better than expected profit moments ago. In its earnings call, watch for analysts’ questions on consumer spending and for signs of an “Ozempic effect” on sales, as demand for the weight-loss drugs begins to eat into snack-food purchases.

Wall Street heavyweights and the banks start to report on Friday. JPMorgan Chase, Wells Fargo and BlackRock are among the big names set to report quarterly earnings. (Goldman Sachs, Morgan Stanley and Bank of America go next week).

For the banks, deposits and loan volumes will be in focus, as will signs of whether their capital levels are under threat by rising Treasury yields. On a positive note: “Investment banking revenues should see a bounce from Q2 levels,” wrote Sean Ryan, a FactSet director who specializes in banking and specialty finance, in a research note.

Wall Street’s expectations for earnings season are “modest,” Gina Bolvin, president of the Boston-based Bolvin Wealth Management Group, told DealBook. But even with all the uncertainty, don’t count out stocks, she added. Were companies to outperform this quarter, it could prove to “be a catalyst for a fourth-quarter rally.”

Another Chinese developer is on the brink

Shares in Country Garden plunged this morning after the mammoth Chinese property developer said it was unable to repay a $60 million loan and admitted that it was on the brink of default with its international lenders.

Country Garden has been teetering for months under a mountain of debt. The developer was once China’s biggest property developer but its shares have lost nearly three-quarters of their value this year. Sales have plummeted amid a wider economic slowdown in China and investors fear the company won’t be able to pay off roughly $187 billion in liabilities.

The property sector has been hammered recently. Two years of severe restrictions during the pandemic slowed growth and real estate development, which has accounted for as much as a quarter of China’s gross domestic product and which has been hit by slumping sales and developer defaults.

Country Garden is in a cash crunch. The company said market conditions continued to deteriorate. “Consequently, the group’s cash position remains under significant pressure,” it added in a statement.

The company’s travails resemble that of Evergrande, a larger rival that has been trying to restructure $300 billion in debt after defaulting in 2021. A group of offshore creditors who hold more than $6 billion of Evergrande’s offshore bonds warned this week that the developer could fold after it canceled talks on a restructuring plan at the last minute. The group’s woes have been complicated by criminal investigations.

The billionaire who gave away his billions in secret

Many of the world’s wealthiest people are known for extravagant jet-setting lifestyles and splashy philanthropic gifts like university buildings emblazoned with their names. And then there was Charles Feeney.

Feeney, who died on Monday at age 92, amassed an estimated $8 billion fortune as the co-founder of Duty Free Shops, but made it his life’s goal to give away virtually all his wealth before he died. (He succeeded in 2016.) Bill Gates once called Feeney “the ultimate example of giving while living,” while Warren Buffett said Feeney was “my hero and Bill Gates’s hero — he should be everybody’s hero.”

More from The Times’s Robert McFadden:

His name appeared on none of the 1,000 buildings on five continents that he gave $2.7 billion to fund. Grants to institutions and individuals were paid by cashier’s checks to conceal the source. Beneficiaries were told that the money came from a generous “client” who wished to remain anonymous. Those who learned his identity were told not to reveal his involvement.

His philanthropic organizations were incorporated in Bermuda to avoid United States disclosure requirements, although the arrangements disallowed United States tax deductions for his donations. …

In his last decades Mr. Feeney did not own a home or a car, wore a $10 wristwatch, preferred buses to taxis and, until he was 75, flew coach. He and his second wife lived in a two-bedroom rented apartment in San Francisco.

THE SPEED READ

Deals

• E.U. regulators will reportedly order Illumina to sell the cancer developer Grail after the gene-sequencing giant closed on its $8 billion takeover of the company without approval from Brussels. (FT)

• A look inside 777 Partners, the mysterious company that has bought stakes in soccer clubs around the world — and faces questions about its finances. (NYT)

Policy

• Nikki Haley’s presidential campaign raised $11 million in the third quarter, as she gained ground in the race to challenge Donald Trump for the 2024 Republican nomination. (NYT)

• The debate over whether health insurers should cover prescription costs for obesity drugs like Wegovy and Ozempic is heading to court in Washington State. (NYT)

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