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Stocks were on a runaway train. Then Iran happened – CNN

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Stocks were on a runaway train. Then Iran happened – CNN_5e1118a164713.jpeg
Oil prices climbed 4% to three-month highs following the killing of Qasem Soleimani, the head of the Islamic Revolutionary Guards Corps Quds Force. Treasury yields tumbled as investors rushed to safety. The VIX (VIX) volatility index rose sharply.

“All heck is breaking loose on the geopolitical stage,” Bespoke Investment Group co-founder Paul Hickey wrote in a note to clients on Friday morning.

Investors are not panicking, though. US stocks buckled but didn’t break. The Dow retreated roughly 250 points, or 0.9%, giving back just part of the previous day’s sizable gains.

Iranian officials promised a “crushing response” for the killing of Soleimani, who is one of the nation’s most important figures.

‘Retaliatory spiral’ looms

The biggest risk is a military conflict that deals a blow to consumer confidence or unleashes a costly oil price shock.

“We think the stage is set for a retaliatory spiral that could keep markets on edge well into 2020,” Helima Croft, a former CIA analyst who now leads commodity strategy at RBC Capital Markets, wrote in a report Friday morning.

Anything that disrupts consumer spending would be a major problem for the US economy, because American households are arguably the strongest piece of the world economy right now. The US manufacturing industry, on the other hand, is mired in a trade-war-fueled recession.

“The primary issue, which no one knows, is how much retaliation may develop and on what scale,” Eric Freedman, chief investment officer at U.S. Bank Wealth Management, told CNN Business in an email.

How high could oil prices go if Iran retaliates over US attack?

Analysts at the Eurasia Group warned that the chance of a war has increased to 40% from 20% previously following Thursday’s US drone attack. However, the consulting group said a limited conflict lasting days is more likely than a months-long, regional conflict.

“One thing is clear: Iran will respond. Iranian leaders are proud and quite risk acceptant,” Henry Rome of the Eurasia Group wrote in a Friday report.

This risk led investors to buy defense and energy stocks Friday. Shares of defense contractors Northrop Grumman (NOC) and Lockheed Martin (LMT) jumped more than 3% apiece, making them among the best performers in the S&P 500. Oil drillers including Apache (APA) and Hess (HES) also advanced.

US officials said they were on the lookout for possible retaliatory actions from Iran, including the possibility of cyberattacks. Iranian hackers have previously been accused of cyber infiltrations on US banks, dams and other critical infrastructure.

Cyber concerns lifted security stocks, including Crowdstrike (CRWD) and FireEye (FEYE).

Turbulence in financial markets is a risk in itself. A sustained plunge in stock prices could dash confidence among households and CEOs alike.

Extreme greed is still here

Yet that does not appear to be playing out. Markets quickly bounced off their worst levels.

The CNN Business Fear & Greed Index remains in “extreme greed” mode. In fact, at a score of 94, the gauge of market sentiment remains just three points away from the record high set on Thursday.

“Individual geopolitical risks tend not to be sufficient to drive a sustained downturn in markets,” Mark Haefele, chief investment officer at UBS Global Wealth Management, wrote in a note to clients.

Others urged investors to take advantage of the rare selloff to find an attractive entry point into the previously red-hot stock market.

“We remain firmly bullish on tech stocks and the growth prospects of the coming year and believe any temporary risk-off trade is a golden buying opportunity rather than a time to retreat with the bears yelling fire in a crowded theater,” Daniel Ives, an analyst at Wedbush Securities, wrote to clients on Friday.

It’s also important to note that Friday’s oil price jump pales in comparison to the 15% spike in September after a devastating attack on Saudi Arabia’s oil infrastructure, which has been blamed on Iran. Even that surge proved fleeting, with prices quickly retreating after Saudi Aramco quickly got production back online.

There are hopes that cooler heads will ultimately prevail.

“Iran’s leaders probably aren’t suicidal; we doubt they will take action that will trigger air strikes on Tehran,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a Friday report.

The impact of the shale revolution

There’s also debate over the impact of oil spikes in the modern economy.

Clearly, a surge in oil prices above $100 a barrel would be painful to many Americans as well as airlines, trucking companies and other parts of the transportation industry.

Nicholas Colas, co-founder of DataTrek Research, has pointed out that oil shocks have killed more US economic expansions over the past 40 years than any other single cause. Recessions followed the 1973-1974 Saudi oil embargo and the Iranian Revolution of 1979, for instance.
Oil prices surge 4% after Iran military leader killed in US strike

Every $5 increase in oil prices is equivalent to an annualized tax of about $183 billion per year, or 0.1% of global GDP, according to Shepherdson.

At the same time, this is not the 1970s. Due to the shale revolution, the United States is now the world’s leading oil producer. Texas alone pumps more crude than most OPEC nations. That makes America less reliant on foreign oil than in the past.

All of this means that higher oil prices may no longer be a net negative for the US economy and could even be a net positive.

If anything, a spike in prices would force oil companies to rapidly spend more money to increase production. That in turn would spill over into the rest of the economy.

This thinking could help explain another reason why investors are not freaking out about the rising tensions with Iran — at least not yet.

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France risks ‘losing control’ over Covid-19 spread without stricter national measures — Macron – CNN

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The measures will start Saturday and last for at least a month, Macron said in a televised national address.

Under the “limited lockdown,” curfews will remain in place, domestic travel will be limited and people will be asked to work from home. Nurseries and primary and secondary schools will be closed for at least three weeks, Macron said.

The new variant first detected in the United Kingdom has created an “epidemic within an epidemic” and it is more contagious and deadly, he said.

Almost 44% of all Covid patients in intensive care units are under the age of 65, the President said. He insisted that France had made the “right choices” so far, but added that in the past few weeks the vaccine has “accelerated” and “things have changed.”

Macron has faced growing criticism over his approach to the current Covid-19 surge. His administration has until now favored regional restrictions instead of the strict national lockdowns imposed in other European nations, against the advice of France’s scientific council.

In his televised address, Macron said France would be extending the regional “reinforced slow-down” restrictions, already in place in 19 areas of the country, to all of France. The new rules will last four weeks from Saturday.

“If we make this choice to extend them to the entire metropolitan territory, it is because no metropolitan area is now spared,” he said.

“These last weeks we are facing a new situation. We have entered a race of speed,” he added. “We must therefore set ourselves a new framework for the coming months,” Macron added.

The French president said schools would gradually reopen at the end on April for kindergartens and primary schools and from May 3 for middle and high schools.

Macron, who is up for reelection next year, had justified his regional strategy by saying the country needed to consider the impacts on mental health and the economy in devising a balanced response to the third wave.

But as of Tuesday, more than 28,000 people were being treated in hospital for Covid-19 in France, including 5,072 in intensive care units (ICU), according to French health ministry data. It’s the first time since April last year that ICU patient numbers have surpassed 5,000.

A dangerous coronavirus variant is wreaking havoc in parts of Europe. Experts fear US could be next

More than 40 ICU and emergency doctors in Paris published an op-ed Sunday in the newspaper Journal du Dimanche, warning that ICUs in the region would reach capacity in the next two weeks if restrictions were not tightened.

There are more than 1,500 patients in ICU in the Paris region alone.

The doctors wrote that they had “never experienced such a situation, even during the worst terrorist attacks in recent years,” and said there was a “glaring mismatch between needs and available resources,” in what they described as a “disaster.”

Much of Europe has struggled to contain a third wave of Covid-19, in part fueled by new variants that early studies suggest are more transmissible and possibly deadlier than previous ones. Like many European Union member countries, France has rolled out a sluggish vaccination program, as drug companies have fallen short on their delivery targets by tens of millions of vaccines.

Macron said last week that accelerating vaccination was a “national priority,” but he also admitted European nations had lacked “ambition” around vaccine procurement.

Veterinarians and dentists have been allowed to administer Covid-19 vaccines in the country since Friday in order to “speed up the campaign.” More than 7.5 million people in France, around 11% of its population, have received at least one shot of a two-dose regimen, government data shows.

CNN’s Martin Goillandeau and Lindsay Isaac contributed to this report.

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Delta and Coca-Cola Reverse Course on Georgia Voting Law, Stating ‘Crystal Clear’ Opposition – The New York Times

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Delta and Coca-Cola Reverse Course on Georgia Voting Law, Stating ‘Crystal Clear’ Opposition – The New York Times_6064ffdbea4f4.jpeg

In the memo, Mr. Bastian said it was only after the law was passed that he truly understood the degree to which it would impose restrictions on Black voters.

“After having time to now fully understand all that is in the bill, coupled with discussions with leaders and employees in the Black community, it’s evident that the bill includes provisions that will make it harder for many underrepresented voters, particularly Black voters, to exercise their constitutional right to elect their representatives,” he said. “That is wrong.”

Mr. Bastian went further, saying the new law was based on false pretenses.

“The entire rationale for this bill was based on a lie: that there was widespread voter fraud in Georgia in the 2020 elections,” he said. “This is simply not true. Unfortunately, that excuse is being used in states across the nation that are attempting to pass similar legislation to restrict voting rights.”

Several other companies also weighed in on the issue on Wednesday.

Larry Fink, the chief executive of BlackRock, issued a statement on LinkedIn saying the company was concerned about the wave of new restrictive voting laws. “BlackRock is concerned about efforts that could limit access to the ballot for anyone,” Mr. Fink said. “Voting should be easy and accessible for ALL eligible voters.”

Mark Mason, the chief financial officer of Citi, in a post on LinkedIn, called out the Georgia law as discriminatory.

“I am appalled by the recent voter suppression laws passed in the state of Georgia,” said Mr. Mason, who is Black. “I see it as a disgrace that our country’s efforts to keep Black Americans from engaging fully in our Constitutional right to vote continue to this day.”

Chuck Robbins, who is the chief executive of Cisco and grew up in Georgia, said on Twitter that “voting is a fundamental right in our democracy” and that “governments should be working to make it easier to vote, not harder.”

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Tucker Carlson livid after Rep. Matt Gaetz tries to rope him into controversy, source says – CNN

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Tucker Carlson livid after Rep. Matt Gaetz tries to rope him into controversy, source says – CNN_6064ffd5b7db2.jpeg

“It pissed him off,” the person familiar with the matter explained to CNN on Wednesday.

Gaetz, who has strongly denied allegations that he had a sexual relationship with a 17-year-old girl and paid for her travel with him, seemed to attempt to draw Carlson into the controversy during a bizarre Tuesday night interview.

The Florida lawmaker first referenced a previous allegation of sexual misconduct against Carlson, which the Fox News host has denied, saying that he was “not the only person on screen right now who’s been falsely accused of a terrible sex act.”

Then, and more interestingly, Gaetz suggested Carlson had met a woman involved in the recent controversy related to the sex allegations. Gaetz said that woman was threatened by the FBI to tell people he was involved in a “pay to play scheme.”

A person familiar with the DOJ investigation told CNN that the probe is part of a broader probe into trafficking allegations against another Florida politician. Gaetz has not been charged with a crime.

“You and I went to dinner about two years ago,” Gaetz told Carlson. “Your wife was there, and I brought a friend of mine, you’ll remember her.”

Carlson immediately denied knowledge of the dinner.

“I don’t remember the woman you are speaking of or the context at all, honestly,” Carlson said.

After the interview concluded, Carlson described it as “one of the weirdest” he’s “ever conducted.”

A representative for Fox did not offer a comment. Gaetz’s office also did not respond to a request for comment.

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