WSJ What’s News - Oil Surges After Biden Comment on Possible Israeli Strike on Iran Oil

Episode Date: October 3, 2024

P.M. Edition for Oct. 3. A possible strike on Iran’s oil facilities could push prices higher just weeks before the U.S. presidential election. And deadly workplace accidents continue despite a regulation meant to prevent them. WSJ reporter John Keilman explains why. Plus, credit reporter Matt Wirz on the Wall Street rush to get ordinary investors into private credit. Tracie Hunte hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

I'm Dave, and saving with TD Insurance made me feel like I scored my own jingle. With over 30 ways to save, nobody seems like Dave. Save on home and auto like only you can at tdinurance.com slash ways to save. TD. Ready for you. Oil prices surge after President Biden talks Israeli strike on Iranian oil facilities, and Wall Street wants to bring its private credit craze to the masses. Plus, a workplace regulation was supposed to prevent factory worker deaths.

Why hasn't it worked? Sometimes the worker is clearly at fault and sometimes not. Sometimes there's a culture that develops that regardless of whatever it says on a piece of paper, the actual practice is to do things as quickly as possible without keeping safety top of mind. It's Thursday, October 3rd. I'm Tracy Hunt for The Wall Street Journal. This is the PM edition of What's The News, the top headlines and business stories that move the world today. Oil prices jumped today after President Joe Biden suggested that U.S. officials are considering whether to support an Israeli strike on Iranian oil facilities. Biden was asked by a reporter as he was departing the White House for Georgia. — Do you support Israel's right-wing Iran and oil facilities, sir?

— We're in discussion with that. I think that would be a little...anyway. — The president was also asked whether the U.S. would let Israel retaliate against Iran. He pushed back on the question. — First of all, we don't allow Israel. We advise Israel. And there's nothing going to happen today. We'll talk about that later. A White House spokesman didn't immediately respond for a request for additional comment.

Oil prices surged as investors weighed the risk of escalating conflict in the Middle East. Brent crude and West Texas intermediate crude both rose more than 5%. A strike on Iran's oil facilities could push gasoline prices higher just weeks before the presidential election. US markets have been volatile in recent days

as tensions ratchet up between Israel and Iran. The Chicago Board Options Exchange Volatility Index jumped to nearly 20 today as traders are piling into wagers that it will keep rising. All three major indexes fell, led by the Dow, which dropped 0.4%. More Americans filed for initial jobless benefits last week, a hint of continued cooling in the labor market ahead of tomorrow's unemployment data for September. And according to a survey of managers, U.S. services activity picked up at a greater pace than expected last month, pointing to increasing demand in the sector.

Money managers are racing to bring the Wall Street craze known as private credit to ordinary investors. Investment giants, including Apollo Global Management, BlackRock, Capital Group, KKR, and State Street, are jostling to launch private credit exchange traded funds and other retail products. The funds would allow anyone to buy into the $1.7 trillion market for loans made by Wall Street's non-banks to corporations and consumers. Matt Wirtz covers credit for the Wall Street Journal and he joins us now to explain all of this. So Matt, first off, what is private credit and why is it so exciting to Wall Street? Private credit is essentially loans that are made by non-bank lenders.

It's been blowing up over the last five to ten years. Think of some of the names that you just mentioned. Alternative asset managers, firms that used to run private equity funds or hedge funds. Now a lot of what they do is make loans to businesses. They also make loans to businesses. They also make loans to consumers. So loans for installing solar panels on your roof, auto loans, buy now, pay later loans. At this point, a large part of our economy

is being funded by credit from these firms. And the reason that they're doing a lot more lending is banks are doing a lot less lending as they used to. And why is it so exciting for Wall Street to get smaller investors involved? So this is a product that creates income. Historically it's been very stable and depending on the year high single digits, so like 7, 8, 9, 10 percent. And it does that pretty consistently.

So that's very attractive to a large number of investors, but particularly individual investors who are very income minded. But the catch is these loans, they don't trade because they are private. And if you want to trade out of that loan, it's very difficult. There isn't really a secondary market. And for, you know, an insurer pension fund, buying into a fund for five or 10 years is not a big deal. But for most investors who have personal needs, like sending kids to college or retirement or buying a car or whatever, they need access to

their investments. They need to be able to buy in, sell out. So that is the catch is how is Wall Street going to create funds that buy up these loans and then hold them, but allow investors to trade in and out of the shares of the funds relatively easily. Matt Wirtz covers credit for the Wall Street Journal. Coming up, U.S. factory workers are dying in accidents despite the regulations for safety standards in the workplace. We see why after the break.

Hey Prime members, did you know you could be listening to this show ad-free on Amazon Music? Prime members get access to the largest catalog of ad-free top podcasts. To listen to your favorite podcasts without ads, simply download the Amazon Music app or visit Amazon.com slash WSJ. Hundreds of U.S. workers have died over the past decade in mishaps that a regulation known as lockout tagout is supposed to prevent. According to the Occupational Safety and Health Administration, every year an average of 85 people are killed and 364 suffer amputations. A Wall Street Journal review of inspection documents over the last decade shows that

among manufacturers, violations related to the lockout standard are the most common safety citations issued by inspectors. John Kileman has been covering this issue for the Wall Street Journal and he joins us now. John, in a few words, what are these lockout tagout rules? So the concept is very simple. When there is a machine that needs to be serviced or maintained, what is supposed to happen is that workers will cut off the power, the equivalent of flipping a circuit breaker, although it can be much more complicated in a factory, and putting a lock on that so that nobody can turn it on when they're in the middle of this machine making

repairs. John, you went through these inspection documents. Why are these deadly accidents happening despite the existing safety standards? It's happening in the view of a lot of people in the industry for a couple of reasons. One is that there is always pressure to keep these machines operating as much as possible. And anytime you do a lockout, sometimes they can be quite elaborate and take a good bit of time. And so if it seems like something that can be handled pretty quickly, a conveyor belt that's maybe jammed up, there's a temptation both on the part of workers and on the part of management to just cut that corner and do it as quickly as possible. And what's being done about it?

There's a great deal of training that happens often within factories to try and educate workers and supervisors about how this is supposed to be done. But in the view of some people, the best way to address this problem is to essentially take it out of the workers' hands by adopting new technology that is basically a failsafe that will prevent a machine from starting up unexpectedly when somebody is in a dangerous spot. What about the families of those killed in these accidents? How can they seek relief and accountability?

It's always difficult when you're talking about a workplace accident because the workers comp laws that exist usually will shield the company from being sued. In exchange for that, families or the workers themselves can somewhat quickly get a payment for what they have suffered. Because of that, families sometimes go after the companies that make the machines that the person was hurt or killed by. And that can be difficult as well,

because a lot of those companies are not based in the US, which makes it a whole different legal challenge. That was John Kileman, who covers US manufacturing for The Wall Street Journal. Thanks, John. Thank you. Americans are having fewer babies, and it's become a campaign issue.

What questions do you have about what our falling birth rate means for the way we live, how our economy grows, and for America standing in the world? Send a voice memo to wnpod at wsj.com or leave a voicemail with your name and location at 212-416-4328. We might use it on the show. We might use it on the show. Savers who poured billions of dollars into high-yielding certificates of deposit—we're

talking north of 5% here—are seeing those investments fizzle. So-called callable CDs give consumers a higher yield, but that return on investment comes with a catch. The bank can call it in anytime. And with interest rates falling, it's become attractive for banks to do just that. They just have to pay the investor cash in accrued interest,

but not the high yield investors initially signed up for. WSJ personal economics reporter, Imani Mouiz, spoke with our Euro Money Briefing podcast about the new calculus for banks. The way banks make money is that they pay depositors to borrow money and then they lend that money out for more money than they're paying their depositors. So now that rates are falling they can get those same deposits at a lower rate. So when people purchase CDs they're locking in a rate for a term.

That could be one year, that could be five years. But if rates fall, that means that banks are stuck paying you that higher rate when they could just refinance it and get that money for cheaper. It's at every bank's discretion. They may call some CDs and not others. They may be waiting for the market to fall a little bit more, but really the only way to know

is to keep track of your brokerage account. And you can hear more about this in tomorrow's Your Money Briefing podcast. And finally, what do you do? It may sound like an innocent question, but many Americans are pretty frustrated by it. It can be especially off-putting for retirees, stay-at-home parents, or anyone who's been freshly laid off.

Wall Street Journal contributor Joanne Lippman says the question misses its mark because it reflects a uniquely American affliction, an obsession with career as a proxy for identity. The reason why it frustrates people so much is that there is an implied value judgment with what do you do. It's like, how important are you? Are you worth talking to? This really is such a part of American culture because we identify so much with work. It probably dates back all the way to the Protestant work ethic going way back centuries. This idea that if you don't work, you don't have a job, that you are less valuable.

And so we have, again, this culture that values you for what you do, as opposed to valuing you for who you are. Joanne says there are better ways to make friendly small talk. Even a tiny tweet can be enough. Try asking, what are you up to? How are you spending your time these days? Or even just, what are you excited about? And that's What's News for this Thursday afternoon.

Today's show was produced by Anthony Bansi and Pierre Bienneme with supervising producer Michael Kosmitis. I'm Tracy Hunt for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening. with supervising producer Michael Kosmitis. I'm Tracy Hunt for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.