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Hear that?
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That's me in Tokyo learning to make sushi from a master. How did I get here? I invested wisely. Now the only thing I worry about is using too much wasabi. Get where you're going with spy, the world's most traded etf. Getting there starts here with State Street Investment Management.
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Before investing, consider the fund's investment objectives, risks, charges and expenses. Visit state street.comim for prospectus containing this and other information. Read it carefully. Spy subject to risks similar to those of stocks. All ETFs are subject to risk, including possible loss of principal. Alps Distributors, Inc. Distributor an enormous news cycle this weekend with US Israeli strikes on Iran and then its own strikes across several Gulf states. So what did the market say today in response? Through its language of stock prices and a four year high in a jump in oil, we break it all down. Days after Netflix walked away, details emerge about Paramount $110 billion purchase of Warner Brothers discovery. We have the and Live Nation going to trial. The latest on the DOJ's quest to split out Ticketmaster from the entertainment giant for Monday, March 2nd. It's Brew Markets Daily and I'm Ann Berry. More market details to come and of course, those of the important impact of the situation in Iran. But first, Live Nation Entertainment, the giant venue operator and owner of Ticketmaster, now has a long awaited antitrust trial underway with jury selection today in a New York federal court. Well, it's the culmination of a federal lawsuit filed in 2024 when the U.S. department of justice and 40 state attorneys sued Live Nation. That was with claims that the company had a monopoly on the concert promotion and ticketing industry and that it was using its dominant position to engage in anti competitive behavior. Well, there are a pretty broad set of accusations levied against the company. And earlier this month, US District Judge Arun Subramian narrowed the scope of the case. That was by dismissing claims, one particular part regarding impact on fans with respect to ticketing. And that was a really big moment of relief for Live Nation because the firm's head of corporate and regulatory affairs even came out and said, quote, with those claims gone, we see no possible basis for breaking up Live Nation and Ticketmaster. Well, the separation of those two assets after they merged in 2010 had been a major threat and a fear for investors. But what's become clear is the anxiety actually isn't over yet because the trial underway now addresses remaining claims related to the tie between Live Nation's management of over 400 musical artists and allegations that this control of the hottest acts coerces venues to sign long exclusive ticketing contracts with with Ticketmaster. Well, one possible example that will be under scrutiny is that of New York's Barclay center, which switched to SeatGeek in 2021 only to return to Ticketmaster two years later. There's also another set of claims, and that's because Live Nation owns over 265 concert venues in the United States itself. And it faces allegations that the company forced artists who want to play those much coveted venues which being forced to use Live nations promoters. Well, big names are expected to testify in this case, including Louis Messina, the CEO for the touring company behind Taylor Swift's tours and artists like Kid Rock as well, executives from Live Nation, of course, and its rivals, including StubHub and SeatGeek. Well, Live Nation Ticker Lyv, that's of course live stock down over 2% today. It's those fears of a ticket master separation kicking in or a fine with going to keep on watching. Coming up, we survey the market's reaction to the ongoing escalation of attacks around the Persian Gulf. And we whiz through some other headlines that were moving the market today. But first, a word from our sponsor, Charles Schwab. Trading at Schwab is powered by Ameritrade, bringing you an expanding library of education with even more ways to sharpen your trading skills. Access new online courses, insightful webcasts, articles, engaging videos and more or curated just for traders.
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and Israel, of course, we were all glued to our TV screens over the weekend. They jointly launched strikes on Iran over the course of the weekend just behind us. And Iran in its turn launched counter strikes, including on some of its neighbors on the Gulf Coast. Well, throughout the day, stocks across all of the major indices, not only here in the United States but globally fluctuated. Many started down when Monday's trading open, when this morning's trading open, but eventually bounced back from earlier losses. And we're going to unpack why. Well, traders and analysts have been debating all day the potential market impact from the conflict, whether it de escalates from here or escalates further. So we're going to try to recap some some of the movement that we saw today. Always bearing in mind this is an exceptionally fluid situation and at any time, news could be breaking. We're going to Keep watching it very, very closely. But this is a situation as we see it at this particular moment through the eyes of the market.
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That's right. And so for some context, Iran is the fourth largest producer of oil for opec. But it's the country's proximity to the Strait of Hormez that sent oil prices higher today. The Strait of Hormez runs south of Iran and to the north of the United Arab Emirates and Oman, connecting the Persian Gulf to the Indian Ocean. So it's almost 100 miles long, and shipping lanes in each direction are just two miles wide. About 15 barrels of oil, a fifth of the world's supply, runs through the strait daily.
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So the importance of the strait cannot be underestimated, John. And so just to put it in some context, again, as you just said, it's a pretty narrow strait. It's only two miles wide and 20% of the world's oil supply running through it every single day. As of the this taping. Right. We're just coming in before the closing bell. Iran hasn't officially closed the strategic waterway. Some folks are saying they don't believe it will. But there is recent reporting that an Iranian commander has said the strait is closed and will. And that Iran will set fire to any ships trying to pass. Now, there are a lot of things that revolving over the weekend. You saw the Financial Times almost immediately come out and say, did you see this, John? Just tracking the press that insurers were basically pencils down. They pulled the canceled policies.
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Yep.
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On ships that were being insured to go along the strait. They're saying this is a state of war that's not covered and creating a lot of speculation as to when insurance would be put back on those ships and if so, at what massively increased price, perhaps 50%, perhaps more, versus what had been seen previously. So just one nugget as we think about how this is going to flow into money flows and impact the market ultimately. Then you layer on top of that the fact that there have been reports of oil tankers in the strait having been attacked already, which raises the question, will captains and crews be willing to put their lives at risk and go on ships even if insurance does remain possible, even if physical passage does look like it could physically be on the card. So real impact here on the shipping sector. And there are two bellwethers for the shipping sector that the market tends to look at. There's Maersk and there's Hapag Lloyd, which is two major shipping companies. Shares were up, and here's why. It may seem counterintuitive, given we just talked about the risk to ships going through. They have announced plans to reroute vessels to go instead around the southern tip of Africa to avoid the Suez Canal and the Strait. And as a result, that means they are able to command increased prices. Right, because we've got fewer ships now willing to basically go the shortcut route or able to. And so those that are still willing to make the journey, even if it's longer, are going to be able to command a premium. And the costs, as is always the case on these, will probably be passed on essentially to their customers. Would just be grateful to make sure that that cargo is on the move. So we saw Maersk shares 7% today, Hapag Lloyd about the same, up 6 and a half percent.
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And Hapag Lloyd introduced a war risk surcharge. What you're saying for the cargo to and from the Persian Gulf, customers will be charged an extra $1,500 for each standard container. But as you mentioned, the cost of insuring these vessels is going to go up as much as 50% from some reports. And just talking again about the strait, roughly 30% of global chemical fertilizer goes through the strait, and that's what powers the world's agriculture.
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Yes, it's a huge deal. So again, can't underestimate the importance of this. So then let's take a look at what this means for oil. So again, the Gulf states, these are massive producers of oil and natural gas. And so any potential restrictions to their supply has massive implications for the oil price, as had been predicted. And as we have seen in prior conflicts in the region, we did see the futures price for Brent crude oil, which is the global energy benchmark, go up. It did swing up a bit more than we're actually seeing today. It was up about 6.6% to $77 a barrel. It did nudge up a little bit higher than that very early this morning and in futures over the weekend, but not quite as big of a swing as perhaps people thought that might be.
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Right. Exactly. And there was an article that I read in Bloomberg today that was saying that that $100 price point for a barrel is what you're looking for because it's at that point that stocks and consumer spending tend to see impacts. Historically. They looked over all the years where oil has hit $100 and a prolonged surge in energy costs would not only threaten consumer spending, but also reignite inflation and send interest rates back up. Jamie Dimon was talking about CNBC and He said that if the economy is not often driven by something like that unless it's prolonged.
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Right.
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So he was saying if this is not a prolonged experience, it's not going to be a major inflationary hit.
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And this sort of question of whether this is going to be prolonged is something that we've seen come up all day and particularly from political perspective folks saying is this going to be a short lived set of strikes? Is this going to be a prolonged process to see what, what happens next in the region? So this idea of what does prolonged mean is a really, really important question and an answer that the looking for with real sense of urgency. Now we did see shares in Exxon and Chevron and Shell. So those are the three oil majors sort of most closely linked to all this. Up about 1% today. Again, you look back in history, it's typically gone up a bit higher. We'll come back to that. But they all did touch their 52 week highs over the course of the trading session earlier today. And you can't talk about oil, John, without talking about natural gas. Now Qatar produces 20% of the world's liquid natural gas. The nation was struck or assets in the nation were struck over the course of the weekend. And a state owned energy company in Qatar said today it had actually halted production of LNG liquefied natural gas after attacks on its facilities. That's a big deal. That's a big deal. So again, cut to 20% of the world's LNG.
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And to American companies, Cheniere, which is the largest U.S. supplier of liquid natural gas, their ticker is LNG shares were up 5%. And then Venture Global's stock was up 16% today. That has to do with the fact that they reported earnings this morning that were strong earnings. The CEO said on the earnings call with the largest available incremental LNG capacity in the world, the United States will play a critical role during this historic disruption in the market.
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So John, when we were talking about this earlier today and we've just been really thinking hard about what to cover and how to cover this particular story as we did with Venezuela, as we did with Greenland, because when these big geopolitical moves take place, you do see the market, at least at the beginning, have big reactions and they tend to tamp down over time. And what's so adding some complexity to this is we are still in earnings season. It's easy to forget that because no one's been talking about it so much. But what you just touched on with Venture Global stock up 16 today was partly also driven by that better than expected earnings. So we've got to remember that there are two forces at play for companies right now. They've got their earnings and what the market's reaction to that would be, even factoring in geopolitical considerations and then how these geopolitical moves actually impact them, specifically in addition to whatever it is that they are disclosing in their earnings. And travel is one sector where that was abundantly clear today. So travel related names, cruises, airlines were down, of course, not just because airspace has literally been shut down over the region, which is going to have an enormous impact in terms of flight cancellations, flight delays, impact on traveler demand to go to the region because of fear about their safety. Also unfortunately, terrorism fears. That is something that happens to go up, of course, in these kinds of moments. And so we saw that American Airlines stock came down 4% today, Delta down 2 and a half percent, United down 3%. But again, some of these folks are coming out with earnings, which is muddying the picture of what their fundamental performance may look like.
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Right. And we saw that in the cruise lines today because obviously the cruise lines exposed to higher fuel costs and regional port disruptions. Carnival shares down 7%, Royal Caribbean down 3 1/2 percent. But here's one, Norwegian Cruise Lines was down 9%. The biggest loser of the of the group. Yeah, but they reported soft guidance today on their earnings call. And so again, that's a muddled report there.
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The other thing to read, Norwegian Cruise Line, trying to get the syllables out, also has an activist that's taken a stake. Do you remember we talked about this for a moment and it's interesting because just to put in context, what happens in these kinds of moments when there is this kind of macro disruption, this is one person's view and this is just coming from my own experience. Experience, I would not be surprised if a company like a Norwegian Cruise Line, knowing it's got an activist circling, pushing for it to make change, looks at a situation like this and says here's a bunch of tough stuff that we've been wanting to do in terms of cost reduction. This has now given them the ability to say thanks to this exogenous set of circumstances, thanks to what's going on in oil prices, because of the situation in Iran, we are now going to do those difficult things. And they can point at another reason for doing it, to offset the, the increase in their oil costs, for example. So just something that's worth looking out for in these moments, trying to sort the sort of noise from the signal is really difficult. And I think we're going to see companies using this as an excuse to try and do some very, very difficult things. Now, at the flip side of that, companies are going to benefit, of course, from this. In the defense sector, let's talk about these massive missile defense deployments. We've also got drone warfare underway, something that has been thematically getting a lot of coverage. And here it is in action now, very visible, people getting a sense for what the capabilities really are. And there's been a thesis of munitions restocking. So just to put this in perspective, like John will tell you, I'm a massive nerd and I love to read. I've always got my nose in a book. And there's one book that I've talked about a lot and that is by Bob Woodward, the famous journalist. And he wrote a book called War. And it was talking about how the war in Ukraine and between Ukraine and Russia basically came about and how the US Sort of took the position that it has been taking. And one of the points he made is that as a result of that conflict, there's been a massive drawdown in munitions that literally, if you look around globally and see how many missiles were still available, given how much has been deployed or given or bought in that area, there's been this massive sort of dwindling in inventory, which means there has to be a restocking at some point. And it means that obviously governments are going to step up Dubai. So real implications there in terms of the money flowing to some specific defense stocks.
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We saw those defense stocks up today. L3Harris up more than 3.5%, Lockheed Martin up over 3%, Northrop Grumman up 6% and RTX up nearly 5%. And it's worth noting all of those were 52 week highs. And so similar to the oil companies. And then Palantir was up 5.8% today. And of course, the data analytics giant has the US Government as one of its biggest customers and also maintains a relationship with the Israeli Security Agency.
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Now also in terms of the cyberspace and data analytics, let's talk about cybersecurity quickly. Is positioned for critical infrastructure protection. This is now an elevated threat environment not just in the United States, but internationally as well. So we saw Palo Alto Networks Panw up just under a percent today. CrowdStrike holdings up over 3% today. And that's off the back of some of these names having been hit by the software sell off.
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Yes.
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And a lot of the things that the CEOs have come out and said again predating this weekend strikes, remember the Palo Alto CEO said I have no idea why we are being thrown out alongside other software stocks because in the world in which we live, we are ever more necessary. People need more cybersecurity. And unfortunately these events sort of proving his point over the course of the last couple of days.
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And that has been a conversation throughout the day. Again, Jamie Dimon on CNBC today was saying that he expects there will be some sort of cyber attack retaliation.
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Now on that note, wherever there is this kind of situation, you do tend to see increased demand for safe haven assets. And so the definition of what is a safe haven asset has kind of changed over time. It used to be it was gold only then sort of gold, well, gold only but also gold and US Treasuries by the other typical safe haven stock in more recent, in the more recent decade. You know, people throw Bitcoin in there and say look, this is sort of border agnostic, right? It's out there. So we want to take a quick look at what's going on in particular with gold. Futures did trade as high as $5,000 400 bucks an ounce today, but still not where as high as it has been, which is sort of interesting.
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Exactly. That's still $200 less than it was trading at its all time high in January. And to date gold is up 21%. And so it's not just that it's the safe haven around the conflict this this weekend, but lower interest rates and weak dollar, all these things have driven up demand.
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Now a lot of people looking at gold saying when's it going to crack? Right. Despite everything you've described that has driven up demand. Others have been out there. We Talked to Danielle DeMartino Booth, do you remember last year? And she said this is a gold is now a meme stock. But in moments like this, actually this is where gold we often find just sort of sustain itself because people are saying no, no, wherever it was before, we need it now even more as a safe haven asset. And so this is one we're going to keep on watching. Well, to get a sense for the 247 nature of how the markets are feeling, what the global sentiment is here, we took a quick look at how other international indices move today. So London, the FTSE 100 did fall, closing down over 1%. The Nikkei in Tokyo finished down just under 1.4%. The DAX in Berlin down over 2%. So you've definitely seen at least in the non US markets a collective belief that this is bad news for the markets. You've seen that in those prices coming down. And again, a lot of the chatter when you listen to commentators talking about it was not necessarily that it happened per se, but how long were the repercussions stick around for? And that is what's driving sentiment in those markets right now.
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Now and this morning, Matt Malley, chief market analyst at Miller Tabak, said the level of complete complacency is very, very high.
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This morning he expected to see bigger swings.
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Yep.
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He said to be a swing as well. We're going to stay with you through the close and just see how big of a swing actually the US Equity markets ended up making through the closing bell. So stick with us because for now we're going to take a very quick break. But when we come back, we're going to take a spin through the headlines that moved the market as well today. John, what do you prefer, mystery meat or meat from an organic farm that you know has high standards?
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Obviously the latter.
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Well, do you hold your supplements to the same standards?
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I've never thought about it, but I guess not.
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Well, you should. It's why Iherb buys direct from manufacturers and trusted distributors to ensure authenticity. No third party resellers allowed. You can finally 2000 brands and tens of thousands of products to choose from on iherb.com what you won't find hidden membership fees. They make wellness accessible globally, shipping to over 180 countries while accepting 80 plus currencies and more than 40 payment methods.
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Plus their eye tested products are continuously tested for purity and quality standards. Stock up on supplements from a trustworthy source. Go to iherb@iherb.com that's iherb.com get in
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the game with the College branded Venmo debit card. Rep your team with every tap and earn up to 5% cash back with Venmo Stash a new rewards program from Venmo. No monthly fee, no minimum balance, just school pride and spending power. Get in the game and sign up for the Venmo debit card@venmo.com collegecard the Venmo MasterCard is issued by the Bancorp Bank NA Select Schools available Venmo Stash terms and exclusions apply at venmo me terms max $100 cash back per month. Well, it's 4pm on the east coast. The markets wrapping up for today. There it is, the closing bell taking us over the finishing line. Well, we don't have a ticker tape so let's throw it over to our human ticker, our producer John The S&P 500 finished flat.
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The NASDAQ was down a tenth of a percent and the Dow finished up a third of a percent for the day. Some market headlines, shares in Netflix were up another 1 1/2% today as investors signal their approval of the company's decision to walk away from a deal to buy Warner Brothers Discovery. Meanwhile, shares in Paramount Skydance were down over 1.5% while details of the company's $110 billion acquisition of Warner's come out.
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Well, Paramount said it's planning to combine its Paramount plus and HBO Max streaming services into a single plat are two big brands. So a little bit of contention there around which one ultimately wins out. Paramount will also retain Discovery suite of cable channels that includes HGTV and tbs. And in terms of looking at comps to figure out is this valuation the right one, we've seen Paramount stock bump up on the news that it's sort of the winner in this bid for Warner Brothers Discovery. Well, tomorrow we will get the earnings for Vernt, which is the package of cable networks that was spun off from Comcast. Now those shares are down 25% since debuting earlier this year year. So we will get the numbers tomorrow and we will find out was that 25% dip too pessimistic or was there actual reason for the market saying we're not feeling this thesis?
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And finally, shares In Aerovironment ticker AV market cap of $10 billion were down nearly 20% after the company lost exclusivity on a $1.4 billion US Space Force satellite Communications contract. The outlier on a day that saw shares in defense companies soar.
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Well, we're going to keep on watching and says one thing I would point to here, the composition of the major indices and is so important in moments like this. The fact that the NASDAQ has closed a little bit up just goes to companies like Palantir and the weight that they have in terms of bringing up the indices. When you take a look at the fact that the major other indices were sort of flat or didn't really move too much again speaks to the impact that big oil companies have in terms of the composition of the overall index. So it's a complicated story. It's a complicated situation in the Middle East. It's complicated in how it's manifesting itself in the markets. But we're going to keep on watching and that's it. Otherwise for today's brew markets, Daily Blue
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markets, Daily hosted by Anne Barry and produced by John Couteau, Tarka Bellatief and Emily Millihan. Our technical director is Yu Chen and Wyogo Brittany Dotako is our audio engineer and the president of Morning Brew, Inc. Is Devin Emery. If you have any feedback or a company you'd like us to COVID leave a comment or send me an email to brewmarketshoworningbrew.com Wake up tomorrow with the
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Morning Brew newsletter and tune in to Neil and Toby on Morning Brew Daily. I'll see you back here tomorrow, same time, same place.