US sending troops and munitions to Israel

The United States said on Sunday it will send US troops to Israel along with an advanced US anti-missile system, in a highly unusual deployment meant to bolster the country's air defenses following missile attacks by Iran.

US President Joe Biden said the move was meant "to defend Israel," which is weighing an expected retaliation against Iran after Tehran fired more than 180 missiles at Israel on October 01.

The United States has been privately urging Israel to calibrate its response to avoid triggering a broader war in the Middle East, officials say, with Biden publicly voicing his opposition to an Israeli attack on Iran's nuclear sites and his concerns about a strike on Iran's energy infrastructure.

Pentagon spokesperson Major General Patrick Ryder described the deployment as part of "the broader adjustments the US military has made in recent months" to support Israel and defend US personnel from attacks by Iran and Iranian-backed groups.

But a US military deployment to Israel is rare outside of drills, given Israel's own military capabilities. US troops in recent months have aided Israel's defense from warships and fighter jets in the Middle East when it came under Iranian attack.

But they were based outside of Israel.

The Terminal High Altitude Area Defense system, or THAAD, is a critical part of the US military's layered air defense systems and add to Israel's already formidable anti-missile defenses.

A THAAD battery usually requires about 100 troops to operate. It counts six truck mounted launchers, with eight interceptors on each launcher, and a powerful radar.

Iran's Foreign Minister Abbas Araqchi warned earlier on Sunday that the United States was putting the lives of its troops "at risk by deploying them to operate US missile systems in Israel."

"While we have made tremendous efforts in recent days to contain an all-out war in our region, I say it clearly that we have no red lines in defending our people and interests," Araqchi posted on X.

Still, experts say Iran has sought to avoid a direct war with the United States, making deployment of U.S. forces to Israel another factor in its calculus going forward.

Iran launched missiles and drones at Israel in April. Then on October 01, Iran fired more than 180 ballistic missiles at Israel amid another escalation in fighting between Israel and Iran-backed Hezbollah in Lebanon. Many were intercepted in flight but some penetrated missile defenses.

US officials did not say how quickly the system would be deployed to Israel.

The Pentagon said a THAAD was deployed to southern Israel for drills in 2019, the last and only time it was known to be there.

Lockheed Martin, the biggest US arms maker, builds and integrates the THAAD system, which is designed to shoot down short-, medium- and intermediate-range ballistic missiles. Raytheon, under RTX, builds its advanced radar.

Israel, Iran, Lockheed Martin, Raytheon, THAAD system,

Indonesia urges recognition of Palestine State

Indonesia has called on East Asian nations to officially recognize the state of Palestine and urged the international community to uphold international law and principles of humanity.

Speaking at the East Asia Summit in Laos, Indonesian Vice President Ma'ruf Amin warned that failure to adhere to international law could lead to the emergence of new conflicts.

“As leaders, we must take a stance and side with international law and humanity. Do not be selective in implementing international law. If this continues, I am afraid that many new conflicts will emerge,” Amin said, as reported by Antara News.

Amin also urged countries that have yet to recognize Palestine to do so immediately, stressing the importance of universal respect for international law without exceptions.

Currently, 146 countries recognize the state of Palestine, with recent additions including Spain, Norway, Ireland, and several Caribbean nations.

His remarks come amidst ongoing Israeli military actions in Gaza. Despite a UN Security Council resolution calling for an immediate cease-fire, the conflict has claimed the lives of over 42,000 people, mostly women and children.

 

Treacherous Geopolitical Conditions

JPMorgan Chase CEO Jamie Dimon on Friday warned about potential risks in the future for the economy, citing the war in Ukraine and Israel’s war against Hamas and Hezbollah.

“There is significant human suffering, and the outcome of these situations could have far-reaching effects on both short-term economic outcomes and more importantly on the course of history,” Dimon said in the bank’s third-quarter results release, CNBC reported.

JPMorgan Chase posted earnings showing a 2% loss in net income from the year before, down to US$12.9 billion. Revenue was up 6% to US$43.4 billion, the report showed.

CNN reported that Dimon had warned that while inflation appears to be slowing and the country has avoided recession, “several critical issues remain, including large fiscal deficits, infrastructure needs, restructuring of trade and remilitarization of the world.”

“While inflation is slowing and the US economy remains resilient, several critical issues remain, including large fiscal deficits, infrastructure needs, restructuring of trade and remilitarization of the world,” Dimon said, according to CNBC.

To Dimon’s point, CNBC reported last week that the Russian government approved a draft budget that upped defense spending by 25% from 2024.

 

Pakistan Stock Exchange posts 2.3%WoW gain

Pakistan Stock Exchange began the week ended on October 11, 2024 on a strong positive note, sustained its momentum through the initial days, with the benchmark index rising to a record high of 85,669 points on Wednesday. However, concerns in the power sector amid the termination of IPP contracts, coupled with some profit-taking in the last two sessions, dragged the index to close at 85,483 points on Friday, posting an increase of 1,951 points or 2.3%WoW gain.

Overall positive sentiments were largely driven by improved liquidity in equity market, as local funds continued to shift flows from fixed-income assets due to declining interest rates.

Investors’ optimism was further bolstered by the visit of a Saudi delegation, which resulted in the signing of 27MoU’s worth US$2.2 billion, and discussions surrounding the Reko-Diq stake sell.

The GoP finally terminated Power Purchase Agreements (PPA) with five Independent Power Producers (IPPs) during the week, with discussions regarding 17 more IPPs lined up for future negotiations to shift from Take-or-pay model to Take-and-pay.

On the macroeconomic front, workers' remittances inflow remained robust in September 2024, totaling US$2.85 billion or 29%YoY increase.

While the trade deficit for the month was reported at US$1.78 billion, current account is expected to remain stable, with a potential surplus for the period.

Moreover, in efforts to address the tax gap from the 1QFY25 deficit, GoP communicated likely tax hikes to the IMF, particularly on direct imports (mainly machinery) and advanced import taxes.

Furthermore, a tax on agriculture is expected to be implemented from July 2025, according to the Finance Minister.

Amid the positive momentum, market participation also surged by 51.3%WoW, with average daily traded volume rising to 518 million shares, from 342 million shares in the earlier week.

Foreign exchange reserves held by SBP increased by US$106 million WoW to US$10.8 billion as of October 04, 2024, a 2.5-year high.

Other major news flows during the week included: 1) Public debt in August 2024 surged to PKR70.4 trillion, 2) Task force to discuss mechanism for 35% gas sale to private firms, 3) Rebasing of electricity tariffs likely from January 01, 2025, and 4) Car sales surged by 24%YoY in September 2024.

Transport, Modarabas, and Woollen were amongst the top performing sectors while the laggards included: Power Generation & Distribution, Vanaspati & Allied industries, and Paper & board.

Major selling was recorded by Foreigners with a net sell of US$18.9 million. Mutual Funds absorbed most of the selling with a net buy of US$22.6 million

Top performing scrips of the week were: PTC, PSO, ATLH, LCI, and PPL, while top laggards included: HUBC, KOSM, NCPL, YOUW, and LUCK.

Going forward, the market is expected to remain positive, supported by declining interest rates, likely to continue driving flows towards equity market.

Despite recent highs, market remains attractive, trading at P/E of 3.7x and a dividend yield of 12.7%.

Pakistan’s leading brokerage house, AKD Securities recommend focusing on sectors that stand to benefit from monetary easing and structural reforms, particularly high-dividend-yielding stocks, which are expected to rerate as yields align with fixed-income instruments. Top picks include: OGDC, PPL, MCB, UBL, MEBL, FFC, PSO, LUCK, MLCF, FCCL and INDU.

 

 

 

 

US Enabled a Middle East Bully

According to Joe Macaron, one of the collateral damages of the Gaza conflict is the US global leadership. In the past year, the Biden administration was unable or unwilling to tame an out-of-control Israeli Prime Minister Benjamin Netanyahu, who has gone beyond the retaliation to the October 07 attacks on the Gaza Envelope of southern Israel.

Netanyahu compared it to Pearl Harbor and 9/11, and the Biden administration has understandably embraced that,

However, this worn-out argument has unleashed a beast that is undermining US interests and failing to secure Israel in the long run.

Netanyahu is switching from one front to the other: Gaza, the West Bank, Lebanon, and Yemen with no internal or external constraint on his actions and the disproportional killing of civilians.

The Biden administration has initially advised Israel to agree on a ceasefire in Gaza and move to the second level of targeting Hamas commanders.

Netanyahu did neither; instead, he initiated another conflict in Lebanon with a death toll exceeding 1,000 since September 23, where not more than 3% of them were Hezbollah commanders.

Netanyahu’s discourse and policies are putting the Middle East in a perpetual security competition where Israel does whatever is necessary to ensure its self-defense while maximizing its force with an ambitious agenda to change “the balance of power in the region for years.”

It was enough to watch Netanyahu’s speech at the United Nations General Assembly to detect an egomaniacal discourse that is taking both Israel and the US on a dangerous path.

This overconfidence in Netanyahu’s discourse would not have existed without the air power dominance that the US provides, the Biden administration has yet to use this leverage of military aid to constrain Netanyahu. 

The US is now perceived as complicit with Netanyahu or unable to influence a key ally.

Beyond the immediate ecstasy of killing Hezbollah and Hamas leaders, Netanyahu has no clear plan or exit strategy, neither in Gaza nor Lebanon.

The Biden administration is enabling a bully by providing the tools and protection.

The excessive use of force will not secure the long-term stability of Israel nor sustain a moral and effective US global leadership.

Iran’s strategy for a year at least has been to intimidate the US military so Washington can exercise enough pressure on Netanyahu to agree on a ceasefire in Gaza, which was the safest path for the Iranian regime to avoid a direct confrontation with Israel.

The Biden administration has conveyed a clear message to Tehran not to attack American assets on the assumption that the US is committed to Israel’s security but is not directly involved in the conflict in Gaza and beyond.

It seems Netanyahu is pulling the US into a regional conflict rather than maintaining the stance from the first Iranian attack last April when Washington acted as a global leader managing the conflict between two regional powers. The US wants Iran to stay idle as Israel goes after its proxies one after the other.

Dealing with the threats of the Iranian regime and its proxies requires a long-term strategy because mass killing would only produce a radical generation in Gaza, Lebanon, and beyond.

Guaranteeing the silence of Arab autocrats is not enough to secure a long-term resolution of the Arab conflict with Israel.

In an insightful analysis in Foreign Affairs, Richard Haas argued, “America needs a playbook for difficult friends” and that Washington should have an independent policy when it disagrees with an ally as a subtle way to show objection without damaging the relationship.

The US should claim back its leadership role in the Middle East and send a clear signal that there is daylight between American and Israeli interests and that the US commitment to Israeli security is not a blank check.

The Biden administration’s blind support for Netanyahu is unprecedented and setting a dangerous precedence.

The damage to US image and interests in the Middle East should not be underestimated, and the long-term game is the most effective one; there are no quick fixes to the threats of the Iranian regime and its proxies.

Gaza War Dooms Biden’s Plan

According to David B. Ottaway, a year after the onset of the Israel-Hamas War, the Biden Administration’s plan for a new Middle East security architecture anchored in an alliance between the United States, Israel and Saudi Arabia is dead for the foreseeable future.

Its death is another victim of Israeli Prime Minister Benjamin Netanyahu’s refusal to allow an independent Palestinian state as a basis for a solution to the conflict that most countries, including the United States, are demanding.

Before the war started, US diplomats were making progress in nudging Saudi Crown Prince Mohammed bin Salman (MBS) toward establishing ties with the Jewish state. Both the crown prince and Biden were talking optimistically about Saudi recognition of, and open cooperation with, the Jewish state.

Two of Saudi Arabia’s closest allies, the United Arab Emirates and Bahrain had already taken that step in the 2020 Abraham Accords.

Biden was enticing MBS with a formal US-Saudi defense treaty to protect the kingdom from its chief enemy, Iran. The Palestinian cause was fading, in the minds of Arab leaders, and Israel was on the verge of fulfilling its dream of winning recognition from the Middle East’s Arab powerhouse. 

The Gaza War halted all this momentum in its tracks, and there is no ceasefire in sight. The Israeli military has occupied all of Gaza and, in the process, killed nearly 42,000 Palestinian civilians and Hamas fighters, displaced most of its 2.2 million Palestinian population from their homes, and inflicted massive damage on its infrastructure.

This has caused even Arab leaders with no love for Hamas because of its Islamic roots, refusal to recognize the Jewish state, and ties to Iran to harden calls for the establishment of a Palestinian state.

Nowhere is this shift in the attitude of Arab leaders better on display than in Saudi Arabia. In an interview with Fox News on September 20, just 17 days before the Hamas attack, MBS went out of his way to deny reports that US-led negotiations over Saudi normalization of relations with Israel were in trouble.

To the contrary, he said, “every day we get closer” toward what he called “the biggest historical deal since the end of the Cold War.” He made no demand for a Palestinian state as a precondition, just that Israel “ease the life of the Palestinians.”

On September 19, 2024 he delivered quite a starkly different message at the annual opening of his kingdom’s consultative Shoura Council.

The Palestinian cause was “at the forefront” of Saudi attention, and he was working tirelessly to see the establishment of a Palestinian state.

He warned, “We affirm that the kingdom will not establish diplomatic relations with Israel without that.” He thanked the 143 countries that had already recognized a Palestinian state and urged others to follow suit.

If Saudi Arabia hews to this precondition, then the new Middle East the Biden administration has worked tirelessly to birth seems doomed, at least without a radical change in Israeli thinking and government.

US renewable diesel production declines

US renewable diesel production capacity declined in July 2024 by the most since the industry began its rapid expansion three years ago, data from the Energy Information Administration (EIA) shows.

Capacity to produce biomass-based renewable diesel and other biofuels, excluding biodiesel and ethanol, fell by about 299 million gallons per year from June to about 4.60 billion gallons a year in July, the second time it has declined since the EIA began keeping records in 2021.

Well-established oil refiners and startups have made large bets on renewable diesel in recent years as government mandated consumption targets and subsidies lowering costs of production have encouraged investments in supply growth. However, output from new plants is starting to outpace demand, leading to a glut in the market.

Vertex Energy, one of the newest entrants in the U.S. renewable diesel industry, filed for Chapter 11, bankruptcy protection last week, just months after it paused output of the biofuel, citing macroeconomic weakness.

Demand for vegetable oils as feedstock for renewable diesel production, which include canola oil, corn oil and soybean oil, fell more than 5.6% from June to 1.168 billion pounds in July, the EIA data showed.

Demand for the same feedstocks from facilities producing biodiesel, which is blended into petroleum-based fuel to lower emissions, rose 5.6% from June to 866 million pounds in July, according to the data.

Demand for waste oils, fats and greases, such as tallow and used cooking oil, rose to 1.43 billion pounds in July from 1.38 billion pounds in June, the data showed.

Those consumption levels indicate biofuel producers are running their plants below capacity, said Zander Capozzola, vice president of renewable fuels at AEGIS Hedging.

At current capacity, renewable diesel plants could burn through at least 3.162 billion pounds of feedstocks per month, while biodiesel producers would consume another 1.288 billion, if they were running at full capacity, Capozzola said.