Middle East Conflict Threatens Global Growth

Fed warns of more risks from the Mideast conflict

President Biden used a rare address from the Oval Office last night to urge Americans to support war efforts in Israel and Ukraine, as Israeli troops amassed ahead of a possible ground invasion of the Gaza Strip and exchanged fire with Hezbollah forces near the border with Lebanon.

Worries are growing about how much the turmoil could cost the global economy. Biden is expected to ask Congress to approve $14 billion in military aid for Israel and $60 billion for Ukraine — no easy task with the House still without a leader — as part of a jumbo $100 billion aid package.

The risk of wider conflict is again roiling the markets. A U.S. Navy warship shot down missiles and drones launched by Iran-backed Houthi militants in Yemen, and American military bases in Syria and Iraq have come under drone attack, too.

Brent crude, the global oil benchmark, hit a three-week high this on Fridayfears that a military escalation could disrupt already tight supplies. Asian and European stocks and U.S. futures were in the red, adding to Thursday’s losses.

The Fed is watching the region closely. In a speech largely focused on inflation, interest rates and economic growth, Jay Powell, the central bank’s chair, warned on Thursday that “geopolitical tensions are highly elevated and pose important risks to global economic activity.”

The Middle East is becoming a wild card for the global economy. Rising oil prices could push up inflation, hindering central banks’ efforts to bring down prices. Higher energy costs could also force businesses and consumers to cut back on spending. That would probably sap growth but might also slow the economy enough to negate the need for an additional interest-rate increase.

The Fed, Powell said, would “monitor these developments for their economic implications, which remain highly uncertain.”

Powell had a more immediate concern: that the economy might be running too hot — consumers are spending and hiring remains brisk — despite a rapid rise in interest rates to a range of 5.25 to 5.5 percent. Policymakers remain divided over whether to raise rates at least one more time.

Powell reiterated that he’s in the wait-and-see camp. There was a steep sell-off in bonds on Thursday after his speech, with the yield on the 30-year Treasury coming within a tick of the 16-year high of 5 percent.

• In related news: Intel and Siemens joined an exodus of companies and investors who have pulled out of the Web Summit technology conference in Lisbon next month, following comments by the event’s C.E.O. that were widely criticized by supporters of Israel. And the European Commission has given Meta and TikTok until Oct. 25 to detail how they are monitoring Israel-Hamas war misinformation on their social networks, as required by the recent Digital Services Act.

Save the date: The DealBook Summit will be on Nov. 29. Vice President Kamala Harris; Jay Monahan, commissioner of the PGA Tour; and David Zaslav, president and C.E.O. of Warner Bros. Discovery are among the interviewees. You can apply to attend here.

HERE’S WHAT’S HAPPENING

Jim Jordan pursues another run at House speaker. The far-right Ohio lawmaker pushed for a third vote to become leader, scheduled for 10 a.m. Eastern, after his supporters rebelled against efforts to empower the interim speaker, Representative Patrick McHenry, to lead legislative business for a short time. Jordan appears set to lose again, prolonging the paralysis.

The Hollywood actors’ union insists there’s no movement in talks with studios. Fran Drescher, the president of SAG-AFTRA, said an unusual proposal led by George Clooney to have A-list stars defray $150 million in costs for media companies by paying higher dues — a plan meant to help end the strike — didn’t alter the state of negotiations. “What we are fighting for in terms of benefits has to remain in this contract,” Drescher said.

Sidney Powell pleads guilty in Georgia’s election fraud case. The move by Powell, who was part of Donald Trump’s legal team in 2020, means she is likely to testify against the former president about accusations he tried to subvert the state’s election results. Her testimony could also aid the federal election case against Trump.

China limits exports of a crucial material for electric vehicle batteries. Beijing, which dominates global production of graphite, will now require special permits from producers to ship it overseas because of what it says are national security concerns. The measures were announced days after the U.S. imposed tighter restrictions on sales of more advanced semiconductors to China.

Iguodala goes from the hardwood to the boardroom

For nearly two decades, Andre Iguodala established a reputation as one of the N.B.A.’s most versatile players, an All-Star and Olympic gold medalist who racked up four championships with the Golden State Warriors.

Now, Iguodala has told DealBook exclusively that he is retiring from pro basketball to focus on his other career: start-up investor. He will run Mosaic, a $200 million venture capital fund that he just raised with his longtime business partner, Rudy Cline-Thomas.

Iguodala’s disclosure ends years of speculation. The 39-year-old had suggested that last year’s season would be his last, only to shoot down rumors about it earlier this year. But now is the time to hang up his sneakers. “It’s been a blessing to play for that long,” he told DealBook. (He hasn’t fully come to grips with it yet: “I don’t know if it’s actually hit me yet,” he said.)

He’s embracing his next act. Though he and Cline-Thomas had begun buying tech stocks in 2010, the two dived deeply into start-ups when he joined the Warriors in 2013. “When I initially went out to the Bay Area, it was my intent to have success on and off the court,” Iguodala said. “I thought about how to get access.”

That led to meetings with venture capital firms like Andreessen Horowitz, and then to taking stakes in start-ups, including Zoom and the cybersecurity provider Cloudflare.

It is a model now followed by many pro athletes, from the N.F.L.’s Patrick Mahomes and Aaron Rodgers to Iguodala’s longtime Warriors teammate Steph Curry. “Athletes are becoming smarter and smarter,” Iguodala said, asserting that their competitiveness and an ability to speak to audiences help to sell and scale products.

Mosaic is now his focus. The firm will home in on seed- and early-stage investments in enterprise software, fintech health care and sports companies. Iguodala and Cline-Thomas closed Mosaic’s first fund — whose investors included endowments, institutions and founders of companies they have already backed — in May.

Mosaic’s investments include Vessel, a builder of modular multifamily homes, and Athletes First, an N.F.L. talent agency and management firm.

Sports franchise ownership is another focus. Iguodala is a co-owner of Leeds United, an English soccer club; Bay Area F.C., the National Women’s Soccer League team; and, along with former teammates Curry and Klay Thompson, the San Francisco branch of TGL, the upstart golf league co-founded by Tiger Woods and Rory McIlroy.

Iguodala’s highest aspiration? Owning an N.B.A. team. “The timing has to be right,” he said, but “that’s definitely the ultimate goal.”

“The disruption to an already difficult business model is real. … This is a post-social web.”

— Adrienne LaFrance, executive editor of The Atlantic. Media executives have come to the realization that traffic to their websites from tech giants like Google and Meta’s Facebook is in sharp decline, and probably won’t rebound.

A new push for net neutrality

The Federal Communications Commission has revived a plan to restore so-called net neutrality rules, reigniting a fight over how Washington regulates internet services and whether the web should be treated as a utility.

The Democrat-led agency voted along party lines. Commissioners voted 3-2 to revive Obama-era regulations that prohibited broadband providers, such as Comcast, Charter Communications and AT&T, from blocking or slowing down services like Google and Netflix that compete with them. The Trump administration had repealed the rules, saying they were an example of regulatory overreach.

The rules let the F.C.C. treat the internet like a utility, like a water or electricity provider. Jessica Rosenworcel, chair of the F.C.C., said the importance of internet access was illustrated during the Covid pandemic. Broadband access became a necessity for work and education but the regulator was unable to police providers to ensure quality service, she said.

The agency will be able to monitor the companies for net-neutrality violations, consumer harm and security lapses. This could include forcing internet providers to lower rates that the F.C.C. deems unreasonable.

Republicans and the cable companies vowed to fight the move. Brendan Carr, a Republican F.C.C. commissioner, said the rules were counterproductive and that internet service had improved for consumers when the rules weren’t in place.

USTelecom, a cable industry trade group, warned of “mission creep” by the F.C.C. into cybersecurity. Internet providers said they would challenge the policy change, including through lawsuits all the way up to the Supreme Court.

THE SPEED READ

Deals

• Video game publishers are sitting on $45 billion in cash, potentially fueling more consolidation in the industry after Microsoft closed its $69 billion takeover of Activision Blizzard. (CNBC)

• Thrive Capital, the venture capital firm led by Josh Kushner, is reportedly leading talks to buy shares of OpenAI at a valuation of more than $80 billion. (The Information)

• U.S. banking giants have shed a combined 20,000 jobs so far this year. (CNBC)

• Investors in the U.S. and Europe have sold $5.1 billion worth of shares in major Chinese tech companies, including Alibaba and Tencent, over the past two months. (Bloomberg)

Policy

• The S.E.C. will drop lawsuits against two crypto executives over trading of the digital token XRP. (WSJ)

• Mike Huckabee, the former Arkansas governor, is the latest author to sue tech companies including Meta and Microsoft, for training A.I. tools on their published works without compensation. (The Verge)

• Was Peter Thiel a confidential F.B.I informant? (Insider)

Best of the rest

• Jon Stewart’s talk show on Apple TV+ has ended amid creative disagreements over how to handle topics including China and artificial intelligence. (NYT)

• CVS withdrew several popular decongestants from sale after an F.D.A. advisory panel found that their main ingredient, phenylephrine, didn’t work. (WSJ)

• The El Niño weather phenomenon and rising ocean temperatures are set to bring a warmer, wetter winter to the U.S. this year. (Axios)

• “The Battle Over Rewards Points” (NYT)

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