GM Postpones Investor Day Presentation; Wall Street Analysts Sound Alarm
General Motors has postponed its annual Investor Day scheduled for Nov. 16, prioritizing negotiations for a new labor deal with United Auto Workers. This delay has led some on Wall Street to speculate that an immediate tentative agreement with UAW might not be on the horizon.
Auto blog GM Authority reports GM’s explanation of why Investor Day was postponed revolves around “Our leadership team’s focus right now is on securing a new labor agreement in the United States. We’ll update the investor site as soon as the new date is determined.”
GM tends to hold its Investor Day in October or November. Executives provide investors with financial forecasts and review future products, business models, and other revenue opportunities. Last year, GM told investors it would make more money selling electric vehicles, and its EV segment would reach profitability by 2025.
The postponement signals worries across Wall Street that a tentative agreement with the union for a new four-year labor contract is not in the immediate future.
“That’s a sign they aren’t expecting an end soon,” David Whiston, auto analyst at Morningstar, said, adding, “I only see this ending in October if the automakers give the union everything it’s asking for, which I don’t think is likely.”
Wedbush Securities Managing Director and Senior Equity Analyst Dan Ives told the Detroit Free Press that GM could achieve a tentative agreement before Nov. 16 but noted the automaker’s fight with the union feels like “an entrenched” battle. He also pointed out that GM moving the Investor Day date is not a good sign.
“The UAW debacle has been a tornado for GM, Ford and Stellantis and there’s no way that (GM CEO) Mary (Barra) and the team could hold an Investor Day when the foundation of the company is up in the air due to this UAW torpedo.
“It’s created such a time of uncertainty in what should have been a period of celebration going into a transformational electric vehicle (EV) cycle,” Ives said.
The month-long UAW strikes against GM, Ford Motor, and Stellantis, the company that makes Dodge, Jeep, Chrysler, Ram, and Fiat vehicles, continue to expand – now across 38 plants and involves about 34,000 union members.
On Monday, JPMorgan analyst Ryan Brinkman revealed in a note to clients that GM’s overall strike-related costs amount to $507 million and $517 for Ford (so far).
Brinkman said strikes at Ford’s Kentucky Truck could make it even more costly for the automaker in the weeks ahead.
Wedbush’s Ives said beyond the financial costs, the prolonged strikes could jeopardize GM’s future:
“If this goes back to mid-November, we get into the danger zone of what could be significant delays in the EV strategy in 2024. It’s frustrating for investors to watch a strategy that was years in the making to go up in flames.”
What’s also going up in flames are the jobs of thousands of workers who have been sacked by automakers due to ongoing strikes.
Treasury yield levels are overwhelmingly a function of inflation. However, in the short run, a plethora of influences can explain deviations between yields and inflation. These factors, which we call noise, are significant for short-term traders but can hide tremendous opportunities for long-term investors.
As we witness, bond market noise can be deafening. The horror-ridden narratives explaining the sudden rise in yields are compelling. They can steer even the best traders away from a golden opportunity.
For those bullish on bonds, separating the noise from the signal is difficult. But, doing so allows you to alleviate short-term stress when bond prices move adversely. Additionally, it helps maintain confidence in long-term fundamental prognostications.
This article discusses one of our favored bond fair value models to show you the true bond yield signal.
The signal is the meaningful information that you’re actually trying to detect. The noise is the random, unwanted variation or fluctuation that interferes with the signal. – Conceptually
What Is Noise?
Market noise is the primary determinant of hour-to-hour and day-to-day price changes. While it is very important for short-term direction, its influence often wanes quickly.
Today, there are a plethora of concerning narratives explaining why bond yields are rising. At first glance, they make a lot of sense and should be worrying. However, if you take the time to research them, you will find many recent bond market narratives are insignificant temporary noise.
Noise can be separated into real noise and false narratives.
Real Noise
Real noise are influences that changes the demand and or supply of bonds.
For instance, risk premium describes investors’ preferences for longer-maturity bonds versus rolling over a series of short-term bonds. These preferences matter, but trends in the risk premium are well correlated with inflation and inflation expectations. As such, our signal, inflation, catches this noise.
Another example is the Fed. Through managing the Fed Funds rate and doing QE or QT, they affect the supply of and/or demand for bonds. However, monetary policy effects will also show up in our inflation signal.
A recent illustration is the flight to quality trade to U.S. Treasury bonds due to the Israeli-Hamas war. The demand spurt will likely be short-lived as investors begin to acclimate to the situation. However, oil-driven inflationary concerns may arise if the war proliferates to Iran or other oil-producing countries. Again, this will show up in our inflation signal.
False Narratives
False narratives are meaningless noise. These are stories market pundits tell to justify market actions. False narratives can certainly move the bond market in the short term, but their shelf life is often minimal.
We expose a current false narrative in our recent Daily Commentary.
Listening to the media or Twitter, one might think Treasury debt issuance over the last six months is off the charts. Such stories are far from the truth when looked at from the right perspective. Consider the graphs below. The top left graph shows federal debt is growing slightly faster than the pre-pandemic years but well below prior surges. The right chart puts debt growth on a log scale to show the current growth rate is actually slightly below the trend of the last fifty years. Lastly, the bottom graph shows the sharp increase in debt to GDP during the pandemic. However, it has declined since. A high debt-to-GDP ratio, as we have, is very problematic. But false narratives claiming recent issuance is well above average are flat-out wrong.
The recent sell-off in bond prices and increasing yields is not due to “massive” Treasury debt issuance. Nor is it due to China, Japan, or other nations selling our bonds. The reason is noise.
The Signal: Inflation Drives Yields
The true signal guiding bond yields is inflation. When combined with current yield levels, we have found that a combination of actual inflation data, market-implied breakeven inflation rates, and surveys of inflation expectations are extremely well correlated with yields.
After comparing much economic and inflation data with bond yields, we have observed that the Cleveland Fed’s Inflation Expectation Index is far and away the best predictor of yields. Per the Cleveland Fed:
How we get our estimates: Our estimates are calculated with a model that uses Treasury yields, inflation data, inflation swaps, and survey-based measures of inflation expectations.
Our Fair Value Model
The monthly scatter plot below shows that since 1990, ten-year yields and the Cleveland Fed Inflation Expectations Index, which is also ten years, have an R-squared of .966. Simply, 97% of Treasury bond yields are explainable by the Index. As you can see, the current yield (green) lies about 1% above the trend line. Ergo, current yields are about 1% above fair value.
The following graph uses a line graph to compare our regression model (dotted line above) to actual yields. As it shows, they track each with precision. However, the green and red differential bars show bond yields can deviate from the model’s fair value calculation. As we highlight, the increase in the difference, or noise, has grown since 2008. It is likely due to the Fed’s bond-buying activities.
The current deviation is the largest since at least 1990!
Fair Value Model Predictions
Our fair value model not only tells us how much noise the bond market is pricing in but also allows us to forecast future fair value yields based on our own inflation expectations projections.
The regression trend line in the scatter plot (black dotted line) is defined by the circled formula. It calculates where yields should be based on the Cleveland Fed Index.
The slope of the regression line is 2.77x. Each 1% change in inflation expectations should result in a yield change of 2.77% in the same direction.
The current inflation expectation is 2.21%. If you think expectations will eventually return to average pre-pandemic levels (1.65% – 2017-2019), the fair value ten-year yield falls to 2.09%. With current yields around 4.60%, a turnaround to fair value would generate a 20%+ return on a ten-year note plus nearly 5% a year in coupon payments.
What If Inflation Expectations Rise
Thus far, we have made a bullish case for bonds, assuming the Cleveland Fed Inflation Expectations Index remains at the current level or declines.
We would be remiss if we did not discuss what happens if inflation expectations increase.
Current yields will be at fair value if inflation expectations rise by about half a percent. For every one percent that expectations rise after that, we should expect yields to increase by 2.77%.
Let’s put some context around that. Inflation expectations at the recent peak were 2.45% or about .25% above current levels. Therefore, a full one percent increase is highly unlikely, especially given that many supply and demand imbalances that led to higher inflation have largely dissipated.
Further, if inflation expectations start rising consistently, the Fed will increase interest rates and all but assure a recession and disinflation or deflation.
It’s also worth noting that elevated rental and house prices (aka shelter) keep CPI well above where it should be. We say “should be” because real-time market shelter prices are falling. As the arrows in the graph below highlight, shelter should continue to decline, catching up with actual prices. With it, about 40% of CPI will be dragged lower.
Summary
The noise in the bond market is thunderous these days as inflation is still well above norms, deficits remain high, and the Fed continues to promise higher rates for longer. Noise creates differences between the yield on bonds and their true fair value.
Noise is hard to ignore, but it can create tremendous opportunities!
France Evacuates Six Regional Airports After ‘Threats Of Attack’
Six regional airports across France were evacuated on Wednesday after emailed “threats of attack,” according to The Telegraph, citing police sources.
The Lille, Lyon-Bron, Nice, Nantes, Toulouse, and Beauvais airports were all evacuated, causing travel disruptions.
Six French airports have been evacuated after receiving bomb threats, according to French media. Lille, Lyon-Bron, Nice, Nantes, Toulouse, and Beauvais airports were evacuated, as announced by French police.#Francepic.twitter.com/a9phZvX21p
“State security teams are on site,” a statement from Lille airport said.
Meanwhile, authorities at Lyon-Bron airport have already declared the bomb threat was a false alarm.
This comes after the Palace of Versailles was evacuated for a bomb threat on Tuesday. France remains on the highest alert after a suspected Islamist terrorist killed a teacher last Friday.
Also, the missile blast Tuesday at a hospital in Gaza, killing and injuring hundreds of Palestinians, has sparked anger across the Arab world (read: here).
In response to the bomb threats, shares of Air France-KLM dropped as much as 6%, while Paris airport operator ADP fell 4.4%.
Police said the threats did not affect Paris- Charles de Gaulle and Orly airports.
Expectations were extremely mixed with Starts expected to jump 7.8% MoM after plunging last month and Permits expected to plunge 5.7% after soaring last month (so big reversals).
Permits beat expectations, but tumbled 4.4% MoM (-5.7% MoM exp) but Starts missed expectations, rising ‘only’ 7.0% MoM (+7.8% exp) worsened still by a downward revsision for August from -11.3% to -12.5% MoM…
Source: Bloomberg
This data reverses the recent trend in SAAR (but Starts remain weak)…
Source: Bloomberg
Under the hood, multi-family rental permits plunged by the most since Nov 2022 while single-family permits rose for the 9th straight month. Multi-family unit starts rose by the most since Aug 2022…
Source: Bloomberg
For context, Sept multi-fam permits down 14% to 459K from 534K, lowest since Oct 2020, but Sept single-fam permits rose 1.8% to 965K from 948K, highest since May 2020
And Rental Starts bounced from 3 year lows..
Given the NAHB sentiment, it would appear build permits are set to keep falling…
Source: Bloomberg
So, why is construction employment still holding near its highs…
Will The Fed be pleased to see permits going down? Their hawkishness is driving homebuilders to produce less inventory? That will not help ‘prices’ and ‘affordability’…
Biden In Israel, Agrees With Netanyahu: Looks Like The “Other Team” Did Hospital Strike
At a moment the whole region threatens to erupt, and as mass protests have continued across Arab capitals and in many other parts of the world, President Joe Biden arrived in Israel Wednesday pledging unwavering US support for Israel.
Breaking from other allies like France’s Macron (and some Europeans), who appeared to condemn Israel for the deadly al-Ahli Baptist Hospital bombing, Biden instead during his first meeting with Netanyahu since the crisis began sided with Israel’s narrative of events. “Based on what I have seen, it was done by the other team, not you,” Biden said.
“But there’s a lot of people out there who are not sure. So we’ve got to overcome a lot of things,” he added. The Israelis had the day prior emphasized they had shared their case, including intelligence they say they possess, with the Americans as Biden was en route in Air Force One to Tel Aviv.
Likely Biden’s comments were enough for now to satisfy the Israelis, who are under growing international pressure given the massive death toll of at least 200-300 Gazans at the hospital, many of them women and children; however, the “other team” reference is somewhat awkward a response – as it doesn’t directly name Palestinian Islamic Jihad (PIJ) or Hamas.
Later in the day, in a meeting with Netanyahu which also included members of his war cabinet in Tel Aviv, Biden as expected pledged that “We will continue to have Israel’s back as you work to defend your people.”
“We’ll continue to work with you and partners across the region to prevent more tragedy to innocent civilians,” said, and described the Oct.7 Hamas cross-border raid as “brutal, inhuman, almost beyond belief.”
BIDEN: “I asked the secretary of state when he and I were working in the Senate to write something for me and he said he wrote a line that I think is appropriate. He said, ‘It’s not we lead, it’s not just…’ Well, I won’t go into it, I’ll wait ’til later, taking too much time.”
Biden is collapsing in this Israel meeting. He can’t even stay awake
Netanyahu then spoke of “this terrible, double-war crime against humanity” — in reference Israel’s claims that Gaza’s militant factions killed the hundreds of Palestinians at the hospital. Israel’s version of events is that an errant missile fired by the PIJ faction struck the hospital.
“While Israel seeks to minimize civilian casualties, Hamas seeks to maximize civilian casualties,” Netanyahu said. “Hamas wants to kill as many Israelis as possible and has no regard whatsoever to Palestinian lives – every day they perpetrate a double war crime, targeting our civilians while hiding behind their civilians, embedding themselves in the civilian population and using them as human shields.”
The Israel Defense Forces (IDF) has released what it says is evidence, in the form of intercepted communications, that it wasn’t Israel behind the attack:
Islamic Jihad struck a Hospital in Gaza—the IDF did not.
“We saw the cost of this terrible war crime yesterday, when a rocket fired by Palestinian terrorists misfired and landed on a Palestinian hospital,” Netanayahu continued in his meeting with Biden. “The entire world was rightfully outraged – but this outrage should be directed not at Israel, but at the terrorists. As we proceed in this war, Israel will do everything it can to keep civilians out of harm’s way.”
Netanyahu further said “the civilized world must unite to defeat Hamas” and that “we will defeat Hamas and remove this terrible threat from our lives.”
After Arab leaders, including King Abdullah and Egypt’s Sisi, canceled planned meetings with Biden, US Secretary of State Antony Blinken held a phone call with Palestinian Authority President Mahmoud Abbas – who had also refused to meet with Biden. A readout said Blinken called “to express profound condolences for the civilian lives lost in the explosion at the Al-Ahli Anglican hospital in Gaza City.”
“The Secretary expressed continuing U.S. support for the Palestinian people, stressing that Hamas terrorists do not represent Palestinians or their legitimate aspirations for self-determination and equal measures of dignity, freedom, security, and justice,” the readout published Wednesday said.
As for the hospital massacre, it remains that no foreign investigators or even for the most part foreign journalists have access to the site at this point. Some mainstream media reports in the West have highlighted this fact…
German Chancellor Olaf Scholz while in Egypt meeting with Sisi has called for a “thorough investigation” into the attack, saying “we still do not know exactly what happened.” Anger continues to explode on the Arab street, after overnight fires were reported at the entrance of the US Embassy complex in Beirut.
Oil Surges After Iran Calls For Oil Embargo Against Israel
Oil prices spiked on Wednesday morning after Iran called for an oil embargo against Israel over its air strikes on Gaza. Iranian Foreign Minister Hossein Amirabdollahian said there should be an “an immediate and complete embargo on the Zionist regime by Islamic countries, an oil embargo against the regime,” Bloomberg reported citing a ministry statement on Telegram. He also urged Muslim countries to expel Israeli ambassadors.
Amirabdollahian made the comments in Saudi Arabia at a summit of the Organisation of Islamic Cooperation, called to discuss the Israel-Hamas war. The comments came as US President Joe Biden arrived in Tel Aviv in a bid to calm regional tensions and support Israel.
Oil traders are increasingly concerned that Israel’s war on Hamas will spread and potentially draw in Iran and its allies such as Hezbollah in Lebanon.
Still, Israel is a small importer. And while other Middle Eastern energy producers, including Saudi Arabia and the United Arab Emirates, have criticized Israel for its strikes on Gaza, they’ve not talked of halting sales to it or any of its allies.
Brent crude extended gains, rising as much as 3.5% following the comments. It traded 2.6% higher at $92.30 a barrel as of 7:15 a.m. ET.
Candidate for the Republican nomination for the presidency, Donald Trump, has raised more than $60 million since starting his campaign in Q4 of 2022.
Incumbent and Democratic challenger Joe Biden only had a tally of $56.8 million even when counting all funds his campaign raised since he took office in January of 2021.
However, as Statista’s Katharina Buchholz notes, this is likely because Biden only kick-started his 2024 campaign in April of last year – around the traditional time for candidates to enter the race.
When Biden started his campaign for real in the second quarter of this year, the biggest challengers to Trump’s new reelection bid also announced their candidacies.
Florida governor Ron DeSantis entered the 2024 race in May and has since collected $31.6 million – the second-highest result for a Republican in the current cycle but still only around half of Trump’s tally.
Entrepreneur Vivek Ramaswamy has raised $26.6 million since February, while Trump UN ambassador Nikki Haley’s total comes to $18.7 million for approximately the same time period.
All three Republican candidates also come closest to Trump in the polls, yet are even further behind the former president in that metric than in campaign funds raised.
“We Forecast An Imminent Recession”: Italian Equities To Face Sovereign Risk Again
By Michael Msika and Chiara Remondini, Bloomberg Markets Live reporter and strategists
Italian equities’ stellar performance this year could soon be set for a reality check as sovereign risks return to investors’ radars.
The benchmark FTSE MIB is up 20% this year, outperforming most other major European markets, mostly because of its heavy weighting toward banks which have seen a boost from higher interest rates. But with sovereign spreads recently reaching almost 200 basis points over German bonds — the widest since January — some now see sovereign debt risks as too much to ignore.
Spreads have been widening as Italian Premier Giorgia Meloni laid out a budget outlook that will delay the country from getting its deficit below a European Union target by a year. Italy’s cabinet on Monday approved the new budget law worth €24 billion ($25.3 billion), which includes tax cuts on wages, and said that it faces €13 billion higher costs on its debt due to European Central Bank rate rises.
“Investors appear to be overlooking the possible risks from widening spreads amid a worsening macro picture,” said Fabio Caldato, a partner at Olympia Wealth Management. “We forecast an imminent recession in Italy.”
The new economic forecasts — announced last month — have unsettled investors. Fitch Ratings said they represent “a significant loosening of fiscal policy,” while the International Monetary Fund said Italy will be stuck with a debt burden above 140% of gross domestic product even in five years’ time.
Strategists at Goldman Sachs Group Inc. are now recommending investors avoid Italian stocks. The FTSE MIB is “vulnerable to higher yields, wider spreads and any worsening in growth outcomes,” strategists led by Sharon Bell said in a note on Friday. The gauge has de-coupled from the widening in spreads since July, and this isn’t sustainable, she said.
Italian stocks have outperformed because of the boost to bank earnings from higher rates, but a worsening macroeconomic backdrop could change things. The FTSE MIB is one of the more domestically-exposed indexes in Europe, with about 40% of revenue exposure to Italy and another 25% to the rest of Europe, according to Bell. Goldman’s analysis indicates that a 10 basis point rise in sovereign spreads would mean a 1.5% hit to the FTSE MIB.
While investors are starting to put Italy’s sovereign debt risk on their radars, they aren’t seeing a repeat of the country’s woes during the 2011 crisis. And Italian stocks still have a lot going for them — the FTSE MIB is the cheapest major benchmark in Europe, trading at around a 37% discount to the Stoxx 600 based on 12-month forward price-to-earnings ratios. It also offers the highest dividend yield forecast at 5.7%.
“These multiples are extremely attractive and make the index cheap compared to other European indexes,” said Margherita Strazzari, an asset manager at Sempione SIM, adding that earnings per share of larger Italian companies have continued to grow. “Italy remains the country with the lowest multiples but with companies with solid fundamentals compared to European peers.”
Ultimately, it will be down to how the economy performs from here. Allianz SE economists led by Ludovic Subran said that Italian government GDP estimates still appear optimistic and, along with an elevated debt-to-GDP ratio, this creates conditions for market turmoil. Still, the economists don’t expect a recurrence of the major financial stress episodes seen by Italy in the past decade.
“With higher interest rates and slowing inflation, thus positive real yields, combined with an economic slowdown, sovereign risk of highly indebted countries like Italy might be put under the spotlight,” said Jacopo Ceccatelli, head of institutional clients at FININT Private Bank. Still, this “has to be put into the context of an ever-growing presence and support of European institutions.”
Financial Crisis “Nearly Unavoidable” Without AI Regulation, SEC’s Gensler Warns
US Securities and Exchange Commission (SEC) boss Gary Gensler says a financial crisis brought on by artificial intelligence (AI) will be “nearly unavoidable” without swift and meaningful action by regulators.
In an interview with Financial Times, Gensler suggested that because more and more Wall Street firms are using AI to detect fraud and conduct market surveillance, multiple institutions might base their decisions on the same data models. The ensuing herd mentality could ‘undermine stability’ and accidentally unleash another crisis that would lead to recession, Gensler said.
“I do think we will in the future have a financial crisis, and in the after-action reports, people will say ‘Aha! There was either one data aggregator or one model we’ve relied on,” he said, adding “Maybe it’s in the mortgage market, maybe it’s in some sector of the equity market.”
In other words, there’s a new scapegoat in town!
Gensler predicts that the AI-driven financial crisis could happen as soon as the end of the current decade, or the early 2030s.
As the Epoch Times notes, AI regulation is an uphill battle.
While Mr. Gensler does see more regulation around AI as necessary, he does concede that shaping AI regulation will be a “hard challenge.”
“It’s a hard financial stability issue to address because most of our regulation is about individual institutions, individual banks, individual money market funds, individual brokers; it’s just in the nature of what we do,” Mr. Gensler said.
“And this is about a horizontal matter, whereby many institutions might be relying on the same underlying base model or underlying data aggregator.”
The SEC has already taken some steps on rules around AI. In July, the regulator proposed “conflict of interest” rules that would prevent investment firms from placing their interests ahead of investors, while using predictive data analytics (PDA) or similar AI tech. The proposal has attracted some criticism from firms; chiefly that it could hinder innovation and AI use.
Mr. Gensler isn’t the only regulator sounding alarm bells over AI’s potential to cause harm. The Federal Trade Commission has previously launched a review of Open AI, the creators of ChatGPT, over concerns around consumer harm and data security.
In September, Senate Majority Leader Chuck Schumer (D-N.Y.) hosted a series of closed-door listening sessions with tech leaders, including Elon Musk, Sam Altman, and Satya Nadella to discuss the regulation of AI.
Mr. Musk previously called all AI labs to “immediately pause” training of systems more powerful than Chat GPT-4 for at least six months in an open letter signed by dozens of artificial intelligence (AI) experts and industry executives. However, Mr. Musk also announced plans to use the tech in new products around the same time.
Forum Criticized for No Real Progress
Many of those present at Mr. Schumer’s September AI forum later claimed that the meeting presented little to no real progress on the development of legislation. Sen. John Kennedy (R-La.) noted that the forum heard from 30 speakers, each with only three minutes to talk, leaving little time for meaningful discussion or questions.
“In terms of regulatory suggestions, I didn’t hear much,” he told The Epoch Times at the time.
Sen. Josh Hawley (R-Mo.) said he doubted Mr. Schumer’s sincerity in seeking solutions to protect the U.S. public from AI.
“It’s a little bit like with antitrust the last two years,” Mr. Hawley said at the time.
“He talks about it constantly and does nothing about it. You’ll see. My sense is that a big part of what this is a lot of song and dance that covers the fact that actually nothing is advancing.”
The forum came just one day after a Sept. 12 Senate Judiciary subcommittee hearing on the issue of AI regulation received expert testimony that government inaction and weak regulations governing AI development are directly harming Americans while profiting major tech corporations.
Woodrow Hartzog, a professor of law at Boston University, said in the Sept. 12 Congressional Hearing that “half measures” like audits and controls that are implemented after AI systems have already been deployed are putting the safety of American citizens at risk.
Arab Leaders Refuse To Meet Biden As Protests Rage Around The World After Gaza Hospital Strike
Update (2100ET): Wednesday is shaping up as quite a global day of rage as the following series of clips from major cities around the world demonstrates.
Update(1820ET): As expected, the fallout from the al-Ahli Baptist Hospital bombing has been swift, with a domino effect of negative consequences both for diplomacy and on the ‘Arab street’. The situation outside the US Embassy in Beirut is deteriorating tonight, with reports of riot police and tear gas being deployed against large crowds waving Hezbollah flags.
But more importantly, and just as Air Force One is departing Washington for Israel, the White House has canceled the entire leg of Biden’s trip to Jordan. The confirmation was issued within the same hour that Arab leaders announced they were unwilling to meet with Biden, given the US is Israel’s biggest funder and supporter.
Biden issued a statement “deepest condolences” to victims of Gaza “hospital explosion,” according to the White House official statement:
After consulting with Jordan King Abdullah II & in light of the days of mourning announced by Palestinian Authority President Abbas, President Biden will postpone his travel to Jordan and the planned meeting with these two leaders and Egypt President Sisi.
The President sent his deepest condolences for the innocent lives lost in the hospital explosion in Gaza, and wished a speedy recovery to the wounded.
So even before arriving in Israel, the Tuesday massacre – which Israel is actually blaming on Palestinian militants (specifically PIJ) – has effectively served to box-in Biden. France’s Macron has just issued a condemnation to boot, saying “nothing can justify targeting civilians” in a statement which appears to place blame squarely on the Israelis. Biden will now also face the pressure to join the chorus of international condemnation. “International humanitarian law is binding on all and must enable the protection of civilian populations. Humanitarian access to the Gaza Strip must be opened up without delay,” the French foreign ministry said in the statement.
“There is no point in doing anything at this time other than stopping this war,” Jordan’s Foreign Minister Ayman Safadi said on Al Jazeera Arabic early Wednesday morning. “There is no benefit to anyone in holding a summit at this time.”
There are emerging reports that crowds are attempting to storm the US Embassy in Beirut, based on unconfirmed but widely circulating footage overnight (local time):
Alleged footage circulating showing US Embassy in Beirut being stormed by a huge crowd of angered Lebanese following the horrific Israeli strike on a hospital in Gaza.#Lebanon#Gazapic.twitter.com/smtqv5cl3X
Also, things continue popping off around the Israeli Embassy in Jordan…
Watch: Jordanian security forces block protesters from attempting to storm the #Israeli embassy in Amman following a deadly attack on a #Gaza hospital.
According to one US special forces veteran, now journalist:
I can’t recall ever seeing the Israeli government just completely lose control of the narrative they way they have recently. Their messaging/propaganda (depending on where you sit) is usually on point. https://t.co/yFTdwD0Ezm
Update(1610ET): The IDF, and PM Netanyahu have weighed in on the Gaza hospital bombing, which killed and injured hundreds:
Tal Heinrich, a spokesperson for Israeli Prime Minister Benjamin Netanyahu, told CNN Tuesday that the “IDF does not target hospitals,” adding, “we only target Hamas strongholds, arms depots and terror targets.”
Heinrich’s comments came after Palestinian officials said that preliminary estimates indicate between 200 to 300 people were killed in an Israeli strike on the Al-Ahli Baptist Hospital in Gaza City.
An analysis of IDF operational systems indicates that a barrage of rockets was fired by terrorists in Gaza, passing in close proximity to the Al Ahli hospital in Gaza at the time it was hit.
Intelligence from multiple sources we have in our hands indicates that Islamic Jihad is…
— Benjamin Netanyahu – בנימין נתניהו (@netanyahu) October 17, 2023
The IDF issued a statement based on a preliminary investigation, claiming that it was an errant missile fired from within Gaza itself. The IDF alleges that Palestinian Islamic Jihad fired the rocket in a “failed shooting” that was intended for Israel.
“According to intelligence information, from several sources we have, the Islamic Jihad [PIJ} terrorist organization is responsible for the failed shooting that hit the hospital,” the IDF statement said, as it appeared in English on the Government of Israel’s “X” account. PIJ responds:
PALESTINIAN ISLAMIC JIHAD SPOKESMAN DENIES ISRAELI ALLEGATIONS THAT THE MILITANT GROUP IS RESPONSIBLE FOR GAZA HOSPITAL STRIKE
Breaking: IDF Spokesperson
From the analysis of the operational systems of the IDF, an enemy rocket barrage was carried out towards Israel, which passed through the vicinity of the hospital when it was hit.
The international reaction has been swift, especially from regional heads of state, with Turkey’s Erdogan and Jordan’s King Abdullah being among the first to condemn the “war crime” and “massacre”. Abdullah said no one can be “silent” about it.
Large evening protests have not only erupted in towns across the West Bank, especially in Ramallah, but in Arab capitals from Tunisia to Amman. There are fresh reports that Israel’s embassy in Jordan is coming under attack. Large groups of demonstrators have also been seen headed toward the US Embassy in Beirut.
BREAKING: Dozens of protesters attempt to storm Israeli embassy in Amman, Jordan
WHITE HOUSE EYES $100 BILLION UKRAINE, ISRAEL AND BORDER ASK
Will this event be the spark that sets the whole region on fire? Whether what Israel is claiming is true or not, we may be witnessing the first rumblings…
Israel just made a horrible mistake, which will unleash a new major war in the region.
Israel made the impossible possible.
Factions who were fighting yesterday in Syria or the Afghan and Iranian forces. They actually could join tomorrow hands, while fighting Israel.
President Biden is on his way to Israel in Air Force One as all of this is escalating fast.
Already, Palestinian President Mahmoud Abbas has canceled a scheduled meeting with Biden, citing the “cold-blooded massacre”.
Hard to see how Biden’s meeting with Arab leaders in Amman will take place after this. And the optics of going just to Israel after the carnage in Gaza are also terrible. https://t.co/gQ4cfHHY0i
And in additional breaking news: Russia and the UAE have called for an extraordinary UN Security Council meeting after the strike on the hospital in Gaza, per Tass.
* * *
Update(1400ET): Horrific reports of a mass casualty bombing are emerging from Gaza, where a hospital suffered direct hit reportedly by Israeli airstrikes. Gaza’s health ministry has said there are at least 500 casualties in the aftermath of the hospital blast, with “hundreds of victims” buried under the rubble. Gaza sources also say that a UN-run school housing refugees was attacked.
Initially, local emergency officials said there were at least 200 killed in the mid-evening bombing of al-Ahli Arab Hospital in Gaza City, but the count has been steadily rising. Now, per Al Jazeera: “The health ministry in the Gaza Strip says at least 500 people have been killed in an Israeli attack on al-Ahli Arab Hospital.”
This humanitarian catastrophe is unfolding as President Biden is en route to Israel. Likely many of the victims of the hospital attack were women and children.
Certainly this greatly raises the pressure and the stakes for Biden, as the White House will have to ‘answer’ for this as Israel’s most powerful ally. No doubt the US administration is scrambling to prepare for how it will respond.
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At this point, exchanges of fire between the Israel Defense Forces (IDF) and militants in south Lebanon, especially Hezbollah, have become a daily occurrence – and yet still a full assault from Hezbollah has been avoided. Many analysts have speculated that Israel could be holding off its expected major ground invasion of Gaza precisely to avoid provoking a ‘northern front’ from opening up.
But there are continuing signs the situation is sliding toward that feared two-front scenario, as the IDF has initiated a plan to evacuate all civilians who live within two kilometers of the Lebanese border. They said the repeat rocket and mortar fire make it necessary, also in preparation for potential greater military action.
The country’s National Emergency Management Authority (NEMA) will oversee transferring of Israeli civilians to state-funded guesthouses. In total a whopping 28 towns and communities will be evacuated.
NEMA has listed them out as follows: Ghajar, Dishon, Kfar Yuval, Margaliot, Metula, Avivim, Dovev, Ma’ayan Baruch, Bar’am, Manara, Yiftah, Malkia, Misgav Am, Yir’on, Dafna, Arab al-Aramshe, Shlomi, Netu’a, Ya’ara, Shtula, Matat, Zar’it, Shomera, Betzet, Adamit, Rosh Hanikra, Hanita and Kfar Giladi.
Many of these in the last several days saw residents flee due to rocket fire from the other side of the border.
Hezbollah has issued new claims it has destroyed an IDF tank and other military assets. Already both sides have taken on a few casualties.
“Hezbollah carried out a number of attacks yesterday in order to try to divert our operational efforts [away from the Gaza Strip], under the direction and backing of Iran, while endangering the state of Lebanon and its citizens,” an IDF spokesman had said Monday.
“We have increased our forces on the northern border and will respond aggressively to any activity against us,” the IDF said. “If Hezbollah dares to test us, the reaction will be deadly. The United States is giving us full backing.”
⚡️Hezbollah published a video showing them “targeting this morning, Tuesday 10/17/2023, a vehicle of the Zionist enemy army in the Metulla site, causing direct hits.” pic.twitter.com/BRhUdpB31E
Dozens of rockets have been launched from Hezbollah positions in the last days. Israel has in response shelled militant positions in Lebanon, but has also hit Lebanese residential areas, prompting people in the area to flee.
On Tuesday, Hezbollah announced that its fighters launched an anti-tank guided missile (ATGM) at a gathering of Israeli soldiers, which the group said resulted in “a number of casualties”.
Meanwhile, Hezbollah’s main state backer Iran has continued ratcheting the threats against Israel:
Whatever crimes the Zionist regime commits will fail to compensate for its disgraceful defeat during the Al-Aqsa Storm operation.
For now, the situation is expected to be contained given President Biden’s expected Wednesday trip to Israel. There’s widespread belief that Israeli will not go into Gaza with full force so long as the US leader is visiting.
Additionally, Israel is still facing condemnation and international pressure related to the Reuters crew which was fired upon: “On Friday, Issam Abdallah, a Reuters video journalist, was killed in southern Lebanon after missiles launched from the direction of Israel struck him,” writes the New York Times. “Six other journalists — from Reuters, Al Jazeera and Agence France-Presse — were also injured in the attack, which occurred near the village of Alma al-Shaab.”
