| Good morning. Israel sends troops and tanks into Gaza, US Treasury's new borrowing plan, and Sam Bankman-Fried faces cross-examination. Here's what people are talking about. Israel has sent troops and tanks into the northern Gaza Strip in what it calls the second and longer phase of its war against Hamas. Instead of a massive ground invasion, the military has started slowly, taking a day-by-day approach based on casualties, concerns of the conflict spreading to Hezbollah in the north and internal political pressures on Prime Minister Benjamin Netanyahu. The price of oil fell as the move bolstered speculation the fighting may remain contained despite rhetoric from Iran. The Federal Reserve's policy statement is setting up to be the No. 2 event on Wednesday, with investor focus instead likely to be on the Treasury Department's new borrowing plan, due hours ahead of the interest-rate decision. The so-called quarterly refunding announcement will reveal the extent to which the Treasury will ramp up sales of longer-term debt to fund a widening budget deficit. Those securities have been tumbling for weeks, even amid signals from Fed officials they're "at or near" the end of rate hikes. The European Central Bank is done with interest-rate increases for the time being, Governing Council member Boris Vujcic said. "We have finished with the process of raising interest rates for now," Vujcic told Croatian state broadcaster HRT1 in a TV interview on Sunday. The Croat central bank chief spoke three days after the ECB kept rates unchanged for the first time in more than a year. FTX co-founder Sam Bankman-Fried returns to the stand Monday, when he's likely to face a bruising cross-examination based on his Friday testimony that he made mistakes but didn't commit fraud that led to the cryptocurrency exchange's collapse. Bankman-Fried was questioned by his own lawyer on Friday, and he used his time on the stand to offer alternative explanations for actions prosecutors have described as nefarious. European stocks are headed for a steady start with corporate earnings and Middle East tensions in focus. NATO Secretary General Jens Stoltenberg, Nordic premiers and foreign ministers attend a Nordic Council meeting in Oslo. ECB's Ignazio Visco speaks in Rome. Italian, German, French industry ministers hold a trilateral meeting in Rome. Expected data include Spanish and German inflation. Erste and Galp are on deck for earnings results. This is what's caught our eye over the past 24 hours European stocks have so far had a tumultuous earnings season with no room to disappoint, and analysts are lowering estimates. Cyclical sectors such as autos have been particularly hard hit, and are set to underperform defensives more into year-end. In Europe cyclicals are lagging the market on both revenue and earnings-per-share beats and overall company outlooks are more cautious on the economy, according to Barclays analysts. This downbeat tone has cropped up from banks to appliance manufacturers to spirits on Friday alone. Autos seem to have had an especially tough time so far and is the worst-performing sector this past week as high interest rates and inflation pressure margins. Mercedes sees margins at the low end of its forecast this year due to rising costs and a weaker global economic environment. Even Porsche flagged buying fatigue. Volvo Car was hit by more competition selling electric vehicles. More defensive companies such as health care haven't been immune to profit warnings, just look at Sanofi. But the Source Europe Defensives index has dropped less this month than the Source Europe Cyclicals and defensives are now outperforming year-to-date as the macro backdrop deteriorates. A stronger dollar may give defensive sectors such as health care some support. Some defensives may also get a boost if bond yields start receding. Earnings will also continue to play a role next week, with Novo Nordisk and German chemicals giant BASF report. Heather Burke is an editor for the Markets Live team for Bloomberg News, based in London. | 
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