WSJ What’s News - What Has Israel Gained by Attacking Hezbollah?

Episode Date: September 19, 2024

P.M. Edition for Sept. 19. The attacks using booby-trapped Hezbollah devices was a tactical win for Israel. National security and foreign policy correspondent Michael Gordon discusses whether it was a strategic one as well. And U.S. home sales were down in August. The Journal’s Nicole Friedman talks about why lower mortgage rates can’t offset rising home prices. Plus, WSJ reporter Will Parker explains how property investors capitalize on the American Sunbelt’s manufacturing boom. Tracie Hunte hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

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But what has it gained with its latest attacks? The first thing one has to say is that the pager attack from a tactical standpoint was a stunning achievement. The big question is whether this is an enduring gain and what the strategic significance is. And why U.S. home sales are down in August despite lower mortgage rates. Plus, real estate investors take advantage of the manufacturing boom and the American Sun Belt. It's Thursday, September 19th. I'm Tracy Hunt for The Wall Street Journal. This is a PM edition of What's News, the top headlines and business stories that move the world today. Let's start with

the US markets. The Federal Reserve's big rate cut yesterday sparked a furious global rally in stocks today. Traders bid up technology shares and other risky assets in a bet that lower borrowing costs will help keep unemployment low without reigniting inflation. The tech-dominated Nasdaq Composite led the way, climbing 2.5 percent. The S&P 500 added about 2 percent, and the Dow Jones Industrial Average gained about 1.3 percent. U.S. Home Sales Aren't Going Up Even Though Mortgage Rates Are Falling The National Association of Realtors said today that sales of previously owned homes in August fell 2.5 percent from the prior month to a seasonally adjusted annual

rate of 3.86 million. That's the fifth time sales have declined over the past six months. Freddie Mac says that since the spring, mortgage rates have steadily fallen to 6.09 percent this week, the lowest level in more than a year. Nicole Friedman covers the U.S. housing market and the home building industry for The Wall Street Journal and she joins me now. Nicole, why can't lower mortgage rates offset the high price of housing? Even though mortgage rates have come down significantly from their highs late last year, it's still really expensive to buy a home. Home prices are still high, there's still low inventory in a lot of parts of the country, so there's

not a lot for buyers to choose from, insurance and property tax costs are going up, and so it's slightly more affordable than it was earlier this year, but that doesn't mean it's actually affordable. And a lot of buyers are still priced out or they're looking at falling mortgage rates and saying, well, I'll just keep waiting. Maybe they'll fall even more and then I'll jump in. Will the Fed's interest rate cut yesterday bring down mortgage rates? So long-term rates like mortgage rates have already been pricing in expectations for what

the Fed will do. And so economists say it's unlikely that rates are going to fall dramatically more this year based on what the Fed has done because that's already been priced into the market. But depending on how the economy does and what the Fed decides later this year, there could be a small additional decline. That was WSJ reporter Nicole Friedman. News Corp, owner of the journal, also operates Realtor.com, under license from the National Association of Realtors.

The American Sun Belt is experiencing a manufacturing boom, and property investors are eager to capitalize on it. According to real estate analytics firm Green Street, American and overseas companies have committed nearly half a trillion dollars to build new factories for electric vehicles, semiconductors, and other products in the U.S. My colleague Anthony Bansi spoke with our housing reporter Will Parker and asked him what's drawing property investors. So the idea is if you have a big new factory, it's got thousands of new employees, that creates demand for all these other types

of properties. So restaurants for workers to eat at, hotels for employees from out of town to stay in, and housing for people who are going to come and work at those plants or other facilities years down the line. So you have a lot of people now trying to buy land, starting to plan developments in the future for when these projects hit and the people are moving to areas around them. Well, speaking of these projects hitting, what are these risks that these property investors are taking on when they're proposing these buildings?

So many of these on-shoring projects, they're huge and they're at a scale that's not been seen in a long time. So they're incredibly expensive. They're very worker and financially intensive and they take a long time to build. And so you've seen some pretty big examples with some delays, the largest one being Taiwan Semiconductors facilities in Arizona, which are underway but production of chips has been delayed. You're seeing Ford's electric vehicle plant in Tennessee also kind of kick back the production date.

So that means it could be tricky business for property investors to figure out, you know, when is the time to get into a market, build something, have it ready for when these ambitious projects become reality. That was WSJ housing reporter, Will Parker, speaking to my colleague, Anthony Bansi. Coming up, Israel's attacks on Hezbollah this week may be a tactical victory, but will it be a strategic one? That's after the break. Earn points on everyday purchases. Use them for that long-awaited vacation. You can earn points almost anywhere, and they never expire. Treat your friends or spoil your family. Earn them on your adventure and use them how you want, when you want. That's the powerful backing of American Express.

Learn more at mx.ca slash ymx. Terms apply. Israel launched a wave of airstrikes against Hezbollah targets in Lebanon today. Hezbollah leader Hassan Nasrallah said two days of debilitating attacks on the group's members amounted to a declaration of war. Israeli attacks this week caused pagers and walkie-talkies carried by thousands of Hezbollah members to explode, killing at least 37 people and injuring nearly 3,000. Wall Street Journal national security and foreign policy reporter Michael Gordon joins me now. Michael, what has Israel achieved with these attacks?

The first thing one has to say is that the Pager attack from a tactical standpoint was a stunning achievement. It caught their adversary by surprise. In fact, it caught the entire world by surprise. It caused a lot of disruption within that militia organization. It certainly killed and wounded thousands of people, many of them Hezbollah operatives, but perhaps some innocents too, and some children we know. And they created disarray and sowed confusion within the organization. They certainly can't trust their means of communication at this point. The big question is whether this is an enduring gain and what the strategic significance is.

Let's talk about the strategic significance of the attacks. What were the Israeli aims? I wish I could tell you I knew for certain, but I don't think anybody on the outside does. When the pagers exploded, there was the thought that this would be potentially the opening up below in a much larger, more comprehensive military campaign. The idea would be to sow confusion in your enemy's ranks and then move in with airstrikes and potentially with some sort of ground operation to grab a buffer strip inside southern Lebanon. But we really don't know how far the Israelis plan to take it.

And some of that may also depend on Hezbollah's response. We do know that some elite Israeli ground forces have been moved to the border. Right now, it's not a sufficient number of forces to launch a major ground incursion. But this could be the beginning of a bigger buildup or it could just be a contingency plan that the Israelis are readying. I imagine the latest events wouldn't help the efforts to achieve a ceasefire agreement between Israel and Hamas and Gaza, would they? The American plan has been to get a ceasefire in place in Gaza and then use that as a foundation

to try to negotiate a diplomatic settlement for Lebanon that silences the tit-for-tat attacks along Israel's northern frontier and the Lebanese-Israeli border. It doesn't look like that's what's happening, and the Israeli military operations appear to be based on the assumption that the ceasefire is a bust and they have to take military action in their own hands to push Hezbollah back from the border and stop the rocket attacks on northern Israel. Just a few days ago, the Israeli government announced that one of the war aims that they've had for Gaza has been expanded now to include the return of Israeli citizens to the north, or 60,000 or 70,000 Israeli residents have been forced to be evacuated

by these Hezbollah rocket attacks and mortar attacks and the threat of ground incursion that began after October 7th and a similar number of Lebanese have been displaced. So the government's been very open that that's now a war aim and how they're going to try to carry out this policy and whether there's still a potential role for diplomacy after maybe they get a few blows in. That's what everyone's waiting to see. Hezbollah's leader promised retribution for the Israeli attacks. What is the danger of a broader war involving Hezbollah?

As bad as the Gaza conflict is, an all-out war between Hezbollah and Israel would be far, far worse. And the reason is Hezbollah is a far more competent militia organization. It's backed by Iran. It has more than 100,000 rockets. It has rockets and missiles with the range to reach Tel Aviv. So a war between Israel and Hezbollah would be a major war and much more potentially damaging than what happened in Gaza.

So the assumption has been that an all out war is something that Hezbollah and Israel, that neither party wants. But in these kinds of situations where each side is escalating, there's always the risk that things could spiral out of control. And that's a big fear. That was Wall Street Journal National Security and Foreign Policy reporter Michael Gordon. In other news, we're exclusively reporting that hedge fund powerhouse 2 Sigma will likely pay $100 million to settle an investigation by the U.S. Securities and Exchange Commission into a trading scandal at the firm. According to people familiar with the matter, the company is in hot water because of how

it oversaw an ex-employee at the center of the misconduct. The researcher had allegedly adjusted trading models without authorization, causing hundreds of millions of dollars in unexplained losses and gains. Two Sigma is still negotiating with the regulator and could pay a lower amount as a result of the talks, the people said. A spokeswoman for the firm and an SEC spokesman declined to comment. As we've previously reported, the firm's co-founders

John Overdeck and David Siegel resigned last month following a years-long clash. And finally, conservative media star Tucker Carlson is taking his feud with nicotine pouch maker Zin to the next level by launching his own brand. Carlson had been a prime supporter of the Philip Morris-owned company, which makes flavored nicotine pouches.

But when the company refused his partnership offer because of an off-color joke he made, he decided to create his own brand, Elp. In an interview, Carlson said Zinn is a brand for women and liberals. He pointed to donations made to Democratic presidential candidate Kamala Harris by employees of Zinn's owner Philip Morris as evidence that the company is out of touch with Zinn's

conservative users. A Philip Morris spokesman said, quote, it's frustrating that Mr. Carlson wants to turn Zinn into a political football to promote his own business venture, noting the brand's users include Democrats and Republicans. 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.