Can Netanyahu Hold On?

Early results from Israel show no clear winner in the country's closely watched election. Plus, we'll drop in on Dueling rallies in Texas, home to a could be the most expensive Senate race in history. And even as Korean chipmaker SK Heinex reports blow-out earnings, not everyone's convinced. Investors are getting very jittery about AI valuations, even if demand for the hardware that's underpinning AI is remaining pretty strong. It's Wednesday, October 28th, I'm Luke Vargas for the Wall Street Journal, and here is the AM edition of What's News, the top headlines and business stories moving your world today. Can Benjamin Netanyahu do it again? The Israeli Prime Minister was dealt a rebuke by voters at the polls yesterday, but as our Anat Palad in Tel Aviv is here to discuss, don't count him out just yet. Anat, you were at Netanyahu's election headquarters overnight. Tell us about how the evening progressed and where things stand now as the votes continue to be counted. As of this morning, we've had a little more than half of the votes counted, and Israeli Prime Minister Benjamin Netanyahu's block is in the lead. It still doesn't have enough seats to form that ruling majority. So the magic number in Israel is 61 seats out of 120 seats available. He's not there yet, but he's in the mid-50s, according to the preliminary count. On the other side, we had the opposition block led by Gadi Eisenkot, his chief opponent, and he is around 49 seats at the moment that could change, but he still is not around that 61 magic number that we need. So there's still deadlock, but Netanyahu is doing better than expected at the moment. So yesterday, I was at Netanyahu's election party headquarters in Jerusalem, and the evening started a bit muted. There weren't many activists, so it was mostly journalists kind of waiting to see what will happen. When the exit polls came out at 10pm Israel time, the result showed a slight lead for the opposition, although it was still a deadlock. Then, as the vote started to be counted, and we moved into the early hours of the morning, the mood shifted, more activists came, ministers from Netanyahu's party arrived, and it really turned into a celebration. You know, people were chanting, there was dancing, loud music, and Netanyahu came to speak at around 3am. And in those remarks, Netanyahu called the results merely a prelude, and he spoke about the work that he still wants to do with his wonderful friend, President Trump, to eliminate the Iran threat once and for all. We'll talk a little bit about foreign policy in just a second, but before we move past yesterday's vote, tell us a little bit about turnout, which was very high, right? So this was a huge turnout in Israeli elections. It was over 77 percent, the highest number since 1999. So one of the most interesting places to look at was actually Arab Israeli communities. So Arab citizens of Israel have in the past not taken a really active part in the democratic process. They've sometimes boycotted elections, and this year there was a very different energy. This is a line that Netanyahu would use to kind of scare his voters to come to the polls, he famously said in one previous election, the Arabs are coming out and droves. And this time they actually did. They really came out in very, very high numbers. The problem is, is that some of the parties in the opposition have said they will not sit with the Arab parties or rely on their support. The opposition in Israel is quite fragmented, and I think that's part of the problem, and they will have to do some reckoning after this, depending on the results. But they thought that maybe they could achieve some sort of majority without the Arab parties. Their message throughout the campaign was Netanyahu failed on October 7th. He led to a security failure as Prime Minister for the past 19 years on and off. They said that he was undermining democratic institutions. They said that he was prolonging wars for political gain. So there was a lot of anger in the country. The vote has shown that that is not how everyone thinks in Israel, and the country is bitterly divided over his leadership. And finally, if we do find that it's impossible for Netanyahu or for Eisencock to cobble together a coalition, where might that leave Israel day to day, especially as the country considers its next steps in a whole range of areas, Gaza or perhaps the Iran War? I think it leaves Israel in a dangerous place. As we have reported, my colleagues and I have reported, President Trump and Israel are preparing options for strikes in Iran. Trump has told some of his Gulf allies to prepare for a short intense campaign after the midterms against Iran. So that leaves Israel in a dangerous place. I mean, there will be this kind of sensitive negotiations going on between both sides, but there won't be a Prime Minister. And so that could create pressures. Perhaps Netanyahu will use that. So it's possible that Netanyahu will use the threat of Iran as some sort of lever to kind of try to force a unity government. That is something that some analysts are saying. But it remains unclear where we stand because the security situation is messy. Speaking to Wall Street Journal reporter Anat Taled with us this morning in Tel Aviv after a long election night and not. Thank you so much for the update. Thanks for having me. Well, as Anat mentioned, there are a growing number of indications through military and diplomatic channels that the U.S. and Israel are considering a major escalation against Iran after the midterms aimed at pushing the country toward negotiations. We report that President Trump hasn't decided on whether to go ahead with the plan, but is leaning toward a large attack that would target Iran's infrastructure and nuclear sites. An alternative would be trying to cut a deal with Iran, though ongoing diplomatic efforts led by regional mediators have yet to bear fruit. The White House said it wouldn't comment on sensitive military plans that may or may not exist, but emphasize that the President is keeping all options on the table. Meanwhile, the Trump administration is planning to issue visas to defeated Brazilian presidential candidate Flavio Bolsonaro and his family, according to two State Department officials. We reported yesterday that authorities in Brazil were probing reports that Bolsonaro had fled the country, having defied a Supreme Court order to hand over his passport. Bolsonaro is facing two investigations into alleged financial crimes involving online betting and the financing of a film about his father, former right-wing president Jair Bolsonaro, who was convicted and sentenced to 27 years in prison for plotting a coup following his own election loss. Trump and many of his allies have been vocal supporters of the Bolsonaro family, and on Sunday, Trump questioned the results of Brazil's election, saying they looked rigged. Bolsonaro's spokesman didn't respond to requests for comment. And the other guy does not deserve it. He doesn't represent your values, and as soon as that election would be over, I don't even want to say the words if he won because I can't believe it's even possible. Well, as you heard there, President Trump was on the campaign trail last night in Texas, where he joined a rally in support of Republican Senate candidate Ken Paxton. Paxton is going up against Democrat James Tallerico, who held an event just three miles away. It's why we can't afford the basics in this economy. Gas, groceries, health care, it's because the system has been rigged by billionaires and crooked politicians like Ken Paxton. According to Add Impact, that Texas race is on track to be the most expensive Senate contest in history, with spending topping half a billion dollars. Tallerico has maintained a narrow lead in the polls in a contest that he's compared to David and Goliath, and last night called out Elon Musk for pouring millions into the race on Paxton's behalf. Well, with energy prices on a lot of voters' minds, President Trump last night announced plans to dismantle Biden-era rules aimed at limiting the oil and gas industries emissions of methane, a potent greenhouse gas. Here we go, speaking in Corpus Christi, courtesy of Fox 4 Dallas For Worth. And you'll see it'll happen very quickly. It'll be like a blink. Gasoline and diesel prices will soon come down. They'll come plummeting down for the consumer. Large oil and gas producers have been supportive of federal regulations, but smaller producers focused on the domestic market say the compliance costs are prohibitive. The Environmental Protection Agency estimates that the rollbacks, which includes scrapping a program to identify large methane leaks, will save 45 billion dollars. Scientists and environmental groups say that reducing methane leaks from oil and gas wells is crucial to combat and climate change will increase pollution and endanger communities that are near oil and gas sites. Coming up, it's a busy day in markets. In the head of this afternoon's Fed interest rate decision, plus we've got a raft of earnings to cover from chip makers to automakers, consumer goods giants, and banks after the break. It's Fed Day with a U.S. rate decision due at 2 p.m. Eastern. Traders aren't expecting any fireworks though, and are pricing in a 90% likelihood that the central bank holds rates steady. Meanwhile, global markets are mostly up today on the back of a slew of strong earnings updates, including from South Korean memory chip titan SK Heinix, which saw its shares jump by more than 10% on the back of blockbuster results. Reporter Ji Young-son says the key supplier for NVIDIA has become one of the biggest beneficiaries of the AI investment boom. The company's net profit for the third quarter tripled from a year earlier to roughly $30 billion. Revenue for the quarter quadrupled to a new record while operating profit grew about sevenfold to set another all-time high. According to company executives, their support of DRAM and high bandwidth memory chips that are needed for the data center's powering AI is effectively sold out for the next three years all the way through 2029. And they also expect the memory chip shortage to stretch well into 2030. And the management also said that the AI investment momentum was expected to continue because AI spending was directly driving a wider adoption of AI services and thriving tangible business results for companies. And on top of the blowout earnings, SK Heinigs also announced a really generous shareholder return package for the year that's going to total about 100 trillion won or roughly $75 billion. Those results also lifted shares of rival Samsung, which along with SK Heinigs make up almost half of South Korea's benchmark Cosby Index, which closed up around 6% today. However, G Young says that despite the strong earnings, investors are still uncertain about overall AI spending. So just last week, SK Heinigs pulled a plug on its plans to take its U.S. Flash memories subsidiary Solidine public. And that was assigned that investors are getting very jittery about AI valuations, even if demand for the hardware that's underpinning AI is remaining pretty strong. So SK Heinigs said that decision was driven by volatile market conditions and share price trends. And also regulators and existing shareholder of SK Heinigs had been pushing back really hard against an IPO for the subsidiary because they were saying the subsidiary would be diluting the value of SK Heinigs' existing stock. Meanwhile, in Europe this morning, UBS Deutsche Bank and BNB Paribop all reported a rise in Q3 profits. Consumer goods giants Denon and Unilever also had positive updates with Unilever recording a big boost in emerging markets. Though for car makers, results were more of a mixed bag. Jeep maker Stellantis confirmed its full-year guidance on signs that an aggressive turnaround effort and cost-cutting are starting to prop up its earnings. While Mercedes-Benz didn't fare quite as well, announcing a new voluntary buyout program for support staff as the German luxury carmaker warned of a worsening market in China and higher materials costs. Earning season is set to roll on today after the closing bell with updates due from alphabet Microsoft and Ford. And finally, this is a tough transition. Social media is a wash with heated political debate these days. But if you thought elections were polarizing, our Jamie Waters says that a war pitting pet owners over how to train a dog is getting nastier by the day. So in the dog training world, there has been a rivalry in recent decades between different camps of trainers, positive trainers who are very pro, praise, and then what's called the balanced camp, which uses a whole range of motivators and tools. And so basically the two camps have disagreed for decades. From what I've heard, it's become more heated because of social media. Part of your trainers likened it to debates over raising kids and the best ways to do it, and whether to punish kids and how much to spoil kids. I mean, nowadays so many people think of dogs as being very much family members. I think it sparks a lot of kind of impassionate responses when you think about how the best ways to train and treat these beloved family members. And especially when it comes to things like spoiling them or punishing them from my reporting, there does not seem to be any indication that a consensus is going to be reached between these different camps. They just are never going to see eye to eye. And it's just this as one person said to me, one side calls the other the devil and the other side calls the other treat singing wieners. I'm glad you said that one, Jamie, and not me. And that's it for what's news for this Wednesday morning. Today's show was produced by Hattie Moyer, our supervising producer, was Daniel Bach. And I'm Luke Vargas for the Wall Street Journal. We will be back tonight with the news show. And until then, thanks for listening.