43.16 -0.09 (-0.21%)
Pre-market: 8:17AM EDT
|Bid||43.00 x 1200|
|Ask||43.29 x 1800|
|Day's range||42.88 - 43.59|
|52-week range||26.19 - 45.86|
|Beta (3Y monthly)||0.19|
|PE ratio (TTM)||14.29|
|Earnings date||24 Oct 2019|
|Forward dividend & yield||N/A (N/A)|
|1y target est||42.12|
Glassdoor, an online job and recruiting site, has revealed the highest paying companies in 2019
(Bloomberg) -- Boris Johnson’s government is back in the Supreme Court for the second day of hearings into his decision to suspend Parliament. Judges are waiting for a written statement on what he’ll do if he loses the case, which has the potential to derail his Brexit strategy and even curtail his premiership.Reporting to the European Parliament on his discussions with Johnson on Monday, European Commission President Jean-Claude Juncker said the risk of a no-deal Brexit on Oct. 31 is now “palpable.” The pound fell.Key Developments:Day 2 of court hearings has begun; Click here for live streamThe third and final day of hearings is Thursday, but the Supreme Court hasn’t given a date for a rulingPound drops as much as 0.5% after Juncker commentsGerman BDI industry lobby said it would prefer no-deal Brexit to another delay that doesn’t lead to breakthroughDenmark Ramps-Up No-Deal Preparations (12:35 p.m.)Denmark is ramping up preparations for a no-deal Brexit amid concerns at Boris Johnson’s strategy and estimates that divorce without an agreement could cost the Nordic nation as much as 1.3% in lost growth over the next 5-10 years.“The new British government’s approach is worrying,” Danish Foreign Minister Jeppe Kofod told reporters in Copenhagen as he announced the creation of an emergency task force of officials from eight ministries.The Foreign Ministry estimates that around 60,000 Danish jobs, or 2% of the labor force, relies on exports to the U.K.. Tax authorities have hired 50 new staff and the government will spend 10 million kroner ($1.5 million) on a new public awareness campaign.Judges Question ‘Post Hoc’ System of Control (12:20 p.m.)Two judges challenged government lawyer James Eadie’s suggestion that Parliament could address any harm stemming from its suspension after it is recalled. Justice Brian Kerr called it a “post-hoc system of control,” and Justice Jill Black also questioned the idea.But Eadie said that Parliament “can resume all the functions of control it had beforehand.” Eadie effectively argued that the 17 days between Parliament is due to be recalled for a Queen’s speech and the Oct. 31 Brexit deadline would be enough to address any issues.“There is time, and it’s up to Parliament and the government to legislate what they consider necessary,” he said.Barnier: U.K. Must Provide ‘Robust’ Solutions (11:40 a.m.)Michel Barnier, the EU’s chief Brexit negotiator, said the U.K. government must accept the need for “legally robust solutions” in any withdrawal accord, and said the two sides shouldn’t be wasting time “pretending to negotiate.”“We are building a treaty, we’re not making a speech” Barnier told the EU Parliament in Strasbourg. “It’s finding solutions that work, and that’s something that we’ve communicated to Boris Johnson and his team.”Barnier’s comments echo those of European Commission President Jean-Claude Juncker (see 8:40 a.m.), who demanded the U.K. provide its proposals for an alternative solution to the contentious backstop -- the fallback measure designed to keep the Irish border free of checks after Brexit -- as soon as possible. A British official said Tuesday the government is still sounding out the bloc on its ideas for the border before submitting written proposals.Tytti Tuppurainen, European affairs minister of Finland -- which currently holds the EU’s rotating presidency -- said in the same debate that achieving the U.K.’s orderly withdrawal must remain the bloc’s priority “until the very last moment, given the negative consequences of a hard Brexit.”German Businesses Toughen No-Deal Tone (11:30 a.m.)The influential German BDI industry lobby group said it would rather have a hard Brexit on Oct. 31 than accept another delay that leads nowhere, even if -- as the group expects -- it trims economic growth by 0.5 percentage points and leads to the loss of nearly 100,000 jobs.“With every delay, the cost of preparations increase,” Director General Joachim Lang said Wednesday at a press briefing in Berlin. He accused Boris Johnson’s government of “playing with fire,” and said it shouldn’t be given an extension without a plan in place to avoid a no-deal split with the EU.Despite the tougher tone, the BDI, which estimates German companies have spent billions of euros on preparations, said it still sees a no-deal Brexit as the “worst of all possible outcomes.”Who Better Than Court to Protect Parliament? (11:15 a.m.)Justice Nicholas Wilson asked government lawyer James Eadie who was “better placed to protect the principle of parliamentary sovereignty” than the Supreme Court.Eadie replied: “It’s no good simply turning up and shouting about parliamentary sovereignty, because parliamentary sovereignty can mean a number of things.”The exchange goes to the heart of the case, which is trying to determine whether the government’s five-week suspension of Parliament was unlawful.‘Treasury Devil’ to Open Day 2 for Government (10:15 a.m.)James Eadie, the government’s go-to lawyer in major pieces of litigation -- a role known as the “Treasury Devil” -- is due to kick off the second day of hearings at the Supreme Court. Aidan O’Neill then presents on behalf of 80 Scottish lawmakers, who secured the ruling in Edinburgh that the government’s suspension of Parliament was unlawful.The government’s main contention is the issue has no place being decided by judges, and that Johnson has acted within his powers. The decision to prorogue Parliament was one of “high policy and politics, and not law,” they argue.“The appeals would also involve the courts identifying and enforcing a new constitutional convention as to the length of prorogation, which the courts have no jurisdiction to do,” lawyers led by Eadie said in their written arguments.Both the Scottish and English challengers -- who lost their separate case in the High Court in London -- argue the issue falls squarely in the jurisdiction of the court to deal with and that Johnson abused his executive powers.“It is not, and cannot be, right that the executive can exercise its powers so as to remove itself from accountability to Parliament in relation to decisions of high constitutional -- and potentially irreversible legal, economic and social -- impact,” lawyers for Joanna Cherry in the Scottish case said.Sturgeon Doubts Johnson’s Brexit Ideas (9:30 a.m.)Scotland’s First Minister Nicola Sturgeon cast doubt on Boris Johnson’s proposal to replace the so-called Irish backstop, and said the prospects of a Brexit deal “have to be slim.”“We will have to see what unfolds over the next few weeks, but it’s a very limited form of Northern Ireland-only backstop he appears to be talking about,” Sturgeon told reporters in Berlin, where she is due to meet German officials. “It’s very difficult to see how Boris Johnson can secure a deal that satisfies the European Union and commands a majority” in Parliament.On the Supreme Court hearings in London, Sturgeon said that a ruling for the government would effectively mean a “government can suspend Parliament at any time it wants.” Conversely, a loss for Johnson would mean he “will have been found to have acted unlawfully” and would have to consider his position.Speaking at the German Council on Foreign Relations on the fifth anniversary of the Scottish independence referendum, Sturgeon predicted that “over the next few years,” Scotland will become an independent member of the EU. “We are living in extraordinary and unprecedented times in the U.K,” she said.Juncker: Sticking Point Is Still the Backstop (8:40 a.m.)In his briefing to the European Parliament in Strasbourg, France, on Monday’s talks with Boris Johnson, European Commission President Jean-Claude Juncker said the main sticking point remains -- as it has for months -- the so-called backstop provision for the Irish border. He demanded the U.K. provide its proposals for an alternative solution in written form as soon as possible.Juncker said that while the discussions with Johnson in Luxembourg were “friendly, constructive and, in part, positive,” the risk of the U.K. leaving the bloc without an agreement at the end of October is “palpable.” The pound fell 0.3% after Juncker’s comments.A British official said on Tuesday the government is sounding out the bloc on its ideas for the Irish border before submitting its plans in written form.Carney Could Be Asked to Extend Term on Brexit: FT (Earlier)Bank of England Governor Mark Carney could be asked to extend his term past Jan. 31 if Brexit is delayed again, the Financial Times reported, citing people familiar with the matter it didn’t identify.The newspaper cited a government official as saying the process of choosing Carney’s successor is going “very slowly,” while an expected election in the fall makes it likely that a decision would not be made until a new government was in place.Responding to the report, the Treasury said “the process is on track and we will make an appointment in due course.”Earlier:Johnson Struggles in Supreme Court on Day One of Suspension CaseRecord Numbers Seek Debt Help With U.K. on Brink of BrexitEurope Hunts For Boris Johnson’s Plan: Brexit Bulletin\--With assistance from Stuart Biggs, Thomas Penny, Alan Crawford, Ian Wishart, Chris Reiter, Jonathan Stearns and Morten Buttler.To contact the reporters on this story: Jeremy Hodges in London at firstname.lastname@example.org;Jonathan Browning in London at email@example.com;Franz Wild in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Flavia Krause-Jackson at email@example.com, Stuart Biggs, Thomas PennyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Cboe Global Markets Inc.’s BZX exchange has withdrawn a proposal to the U.S. Securities and Exchange Commission to list and trade shares of a Bitcoin investment vehicle.A proposed rule change that would have allowed BZX to list and trade SolidX Bitcoin Shares issued by the VanEck SolidX Bitcoin Trust was withdrawn by the exchange on Sept. 13, according to an SEC filing.Gabor Gurbacs, director of digital asset strategy at VanEck Associates, tweeted in response to CoinDesk’s earlier report of the withdrawal that the firm continues “to work closely with regulators and market participants to get one step closer every day” to a Bitcoin exchange-traded fund.“This is not bad news in my view just a different process,” Gurbacs said later in response to questions from Bloomberg. The institutionally oriented VanEck SolidX 144A Bitcoin product “is a good step toward a full publicly traded ETF,” he said.Earlier this month, VanEck and SolidX Management LLC said in a statement that they had found a workaround for some large investors by using Rule 144A of the Securities Act of 1933. The VanEck SolidX Bitcoin Trust 144A Shares are the first Bitcoin product for institutions that is cleared and features the same creation-and-redemption process common with traditional ETFs, according to the statement.The SEC had in August delayed a decision on approving the Bitcoin ETFs, extending until Oct. 18 the period to consider whether listing rules could change to allow the funds to start trading. Other applications for approval have also been delayed. The agency rejected an exchange’s request last year to list a Bitcoin ETF backed by Tyler and Cameron Winklevoss.Bitcoin dropped about 1% to $10,173 as of 7:30 a.m. in New York. The digital token has almost tripled this year, after tumbling 74% in 2018 and surging 1,400% in 2017. \--With assistance from Alastair Marsh and Vildana Hajric.To contact the reporter on this story: Joanna Ossinger in Singapore at firstname.lastname@example.orgTo contact the editors responsible for this story: Christopher Anstey at email@example.com, ;Dave Liedtka at firstname.lastname@example.org, Andreea Papuc, Cormac MullenFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The Terminal is Square’s third hardware product launched in the UK and does not need to be linked to a smartphone or tablet to function.
(Bloomberg Opinion) -- The House Judiciary Committee brought in President Donald Trump’s former campaign manager Corey Lewandowski on Tuesday as part of what it’s now calling an impeachment investigation. Indeed, the committee subpoenaed Lewandowski, former White House staff secretary Rob Porter and former White House deputy chief of staff Rick Dearborn to discuss clear evidence of obstruction of justice by Trump in attempting to shut down the Justice Department’s investigation of Russian campaign interference.Porter and Dearborn didn’t show up after the White House instructed them not to. Lewandowski did, but he refused to answer most questions under White House instructions. In each case, the White House made assertions of executive privilege that went far beyond any interpretation that’s ever been claimed. Or, as Democratic Representative Jamie Raskin of Maryland put it while questioning Lewandowski, it was a “tooth fairy” privilege that doesn’t actually exist. Committee Chairman Jerrold Nadler of New York eventually made the key point, as my Bloomberg Opinion colleague Timothy L. O’Brien noted in a tweet, in response to prodding from another committee Democrat, Eric Swalwell of California:Indeed, as Nadler added, obstruction of a Congressional inquiry was part of the three counts of impeachment voted by the Judiciary Committee in 1974 against President Richard Nixon, which would certainly have been overwhelmingly adopted by the full House before an overwhelming Senate vote to remove him if Nixon hadn’t resigned first. In other words, whatever Trump did or didn’t do in response to the Russia inquiry, he is now fully engaged (as Nixon was in the months before he resigned on Aug. 9, 1974) in a a coverup of a coverup.And that is legitimate grounds for impeachment and removal.As it happens, there’s plenty of evidence of obstruction of the Russia probe, which the Democrats attempted to dramatize in their questions to Lewandowski. He didn’t say much, but he did confirm that the description of obstruction detailed by the report that Justice Department special counsel Robert Mueller delivered in April was, to the extent it involved him, accurate. That is: The president used Lewandowski as part of his scheming to shut down investigations into his campaign, and more broadly into Russian interference with the 2016 election. The crucial point here is that Republicans in Congress are unmoved by any of this. What’s important to understand is just how much all of this undermines the rule of law. The president certainly did something that looks like obstruction of justice. The Mueller report said that it was obstruction of justice. And yet congressional Republicans are ignoring it. And they are actively cooperating with the president’s attempts to stretch executive privilege to the point where the president would be immune from any congressional and perhaps judicial oversight at all. Whether or not Tuesday’s hearing has any effect on public or media opinion, it is further evidence of the president’s abuse of power, and legitimate cause for removing him.That’s in theory. In reality, we’re still pretty far from actually getting to impeachment. Democrats continue to have difficulty using oversight hearings to make their points. They are getting better: Committee members asked good questions on Tuesday or used their five-minute turns to highlight the key points of the Mueller report and the case against Trump. But Nadler stumbled at the beginning, not seeming to know exactly how to deal with Lewandoski’s entirely expected refusal to answer questions. CNN, MSNBC and Fox News all carried the beginning of the hearing live, but all three cut away after an hour or so, missing some of the more effective questions. What’s more urgent than the eventual decision on impeachment — which, remember, won’t actually do anything to slow Trump down as long as Republicans in the Senate are unlikely to even take it seriously — is whether Trump will get away with obstructing Congress and inventing ever-expanding claims of executive privilege. It appears at this point that the courts will weigh in, with the Democratic House choosing to look for answers there rather than attempting to cite anybody for contempt, which would be subject to enforcement by a Trump Justice Department that’s unlikely, to put it mildly, to follow through.The danger is that if the courts side with Trump then they’ll be establishing that the president is, for all practical purposes, above the law. It would be better if Congress, Democrats and Republican together, made it clear that such conduct is unacceptable. But without that, House Democrats, and the rule of law, just don’t have a lot of good options.To contact the author of this story: Jonathan Bernstein at email@example.comTo contact the editor responsible for this story: Jonathan Landman at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Jonathan Bernstein is a Bloomberg Opinion columnist covering politics and policy. He taught political science at the University of Texas at San Antonio and DePauw University and wrote A Plain Blog About Politics.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Facebook Inc., ahead of a congressional hearing on violent content, revealed the charter for an independent oversight board that will make irreversible decisions about what posts stay up and come down, even if the company disagrees.The board, which Facebook started talking about in January and which will begin to hear cases early next year, represents the first real check on Facebook’s power to decide who gets a voice on its site. Its members -- at least 11 people at any given time and fully staffed at 40 -- will be the final word on controversial cases that affect Facebook’s 2.7 billion users. The board’s charter outlines a vision that is easier said than done.The members will “exhibit a broad range of knowledge, competencies, diversity and expertise” with no “actual or perceived” conflicts of interest that would affect their decisions on user content, according to the charter revealed Tuesday. They will “collaborate in decision-making to foster an environment of collegiality, and issue principled decisions and policy recommendations using clearly articulated reasoning.” The committee deciding on cases will include one member from the region of the post in dispute.Facebook spent months deliberating with outside experts to ensure the board acts independently, even though members are paid indirectly by the tech giant. Funding is channeled through a trust and the trustees can’t fire board members if they make bad content decisions, only if their conduct is poor. At stake is the trust of Facebook’s users, who sometimes don’t understand why posts are removed, or why questionable content they report remains online.The company is also dealing with increasingly damaging types of content -- like posts to recruit terrorists or influence elections. On Wednesday, executives from Facebook, Twitter Inc. and Google will testify before a Senate committee on violent content and extremism, after a string of mass shootings, some of which were broadcast live on social media.Kate Klonick, an assistant professor at St. John’s University Law School, has been embedded at Facebook to observe the oversight board’s creation, including sitting in on meetings with staff. She described a notable update: The board can provide feedback on Facebook policies, and the company will review that and write a public statement explaining why it did or did not change a policy as a result.“That’s actually kind of a huge deal,” Klonick said. “That’s probably the most accountable we’ve ever seen Facebook.”There are still elements that are unclear, according to Klonick. The charter references “bylaws” -- the “operational procedures of the board” -- and a Code of Conduct outlining the “norms, procedures, and proper practices” expected of board members. Neither exists right now, but both will be important to start the board off in the right direction with the right set of principles, she said.To contact the reporters on this story: Sarah Frier in San Francisco at email@example.com;Kurt Wagner in San Francisco at firstname.lastname@example.orgTo contact the editors responsible for this story: Jillian Ward at email@example.com, Alistair Barr, Molly SchuetzFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.Facebook Inc. is once again defending Libra -- this time against fears that the envisioned cryptocurrency could replace sovereign currencies from the U.S. dollar to the Euro and threaten central banks’ control over money creation.David Marcus, the executive leading the project, posted a series of tweets the same day members of the Libra Association met with regulators convened by a G-7 working group in Switzerland. He argued that creating Libra isn’t the digital equivalent of printing U.S. dollars or minting new euros. The simple existence of Libra, he says, doesn’t create new value.Facebook’s crypto plans, unveiled in June, have faced intense push-back from regulators all over the world. One of the biggest concerns is that the new digital currency will be used by smugglers, drug dealers and terrorists. Another is that the social media giant, which has run afoul of regulators over user data in the past, should not be trusted to handle sensitive financial information. Facebook has said repeatedly it would be just one of many companies managing the new currency.“Recently there’s been a lot of talk about how Libra could threaten the sovereignty of nations when it comes to money,” Marcus tweeted. “Libra will be backed 1:1 by a basket of strong currencies. This means that for any unit of Libra to exist, there must be the equivalent value in its reserve,” he tweeted. “As such there’s no new money creation, which will strictly remain the province of sovereign nations.”Currency competition is yet another sticking point for wary regulators.In a follow-up call after Marcus’s tweets, Christian Catalini, the lead economist inside Facebook working on Libra, declined to say whether or not the issue came up during Monday’s meeting. But he did say that this element of Libra is one of many that are “misunderstood or not correctly interpreted.”“All of the design of Libra is really around being a complement of fiat [currencies], not a substitute,” he said.Why Everybody (Almost) Hates Facebook’s Digital Coin: QuickTakeLibra does not yet exist, and Facebook has pledged that it will not launch until regulators are appeased. It hopes to start the currency sometime in 2020. Facebook shares were little changed Tuesday in New York at $186.70.The concern from regulators is that giving over the control of currency creation to Facebook -- or any private company -- would strip governments of one of their greatest assets: monetary policy. The response from central banks has varied from active engagement as in the case of Singapore, to China considering its own equivalent.In a blog post from July on Harvard Law School’s forum for “corporate governance and financial regulation,” three professors who wrote a paper about regulating Libra argued that it posed a threat to sovereign governments.“Once Libra becomes well established in some countries, national governments will lose control of their money supply and lose monetary policy as a tool of economic expansion or contraction,” the post reads. “They will also lose the capacity, in times of severe uncertainty, to impose capital controls to prevent capital flight. All of these changes may well prove highly destabilising to the entire global financial system.”Catalini disagrees. He says that even for countries whose currency is not part of Libra’s reserve, there is little fear of Libra replacing local tender because of how the digital coin will be used. Its main purpose, Catalini says, is to help with payments that include lots of fees or burdens, like cross-border money transfers. It will be less useful for day-to-day commerce, he added.“It’s unlikely that Libra will be used locally because the local currencies have better properties” for local commerce, he said.(Updates with shares in eighth paragraph)To contact the reporter on this story: Kurt Wagner in San Francisco at firstname.lastname@example.orgTo contact the editors responsible for this story: Jillian Ward at email@example.com, Edwin Chan, Joanna OssingerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Oil surged the most on record after a devastating attack on Saudi Arabia intensified concerns about growing instability in the world’s most important crude-producing region.In an extraordinary start to the week’s trading, Brent futures in London leaped a record $12 a barrel in early trading Monday, before settling just above $69 for the biggest one-day percentage gain since the contract began trading in 1988. Prices may remain elevated after Saudi officials downplayed prospects for a rapid recovery of production capacity.Saudi Aramco faces weeks or months before most output from its giant Abqaiq crude-processing complex is restored, according to people familiar with matter. Saudi Arabia’s Foreign Ministry said Iranian weapons were used in the attacks on Saudi Aramco, while the U.S. blamed Iran for the attacks.For oil markets, it’s the worst sudden supply disruption ever. The attacks that damaged a key processing complex and one of the Saudi’s marquee fields highlight the vulnerability of the world’s biggest exporter. The crisis also means a “new geopolitical premium” of about $5 a barrel, Mizuho Securities USA’s Paul Sankey wrote in a note.“We have never seen a supply disruption and price response like this in the oil market,” said Saul Kavonic, an energy analyst at Credit Suisse Group AG. “Political-risk premiums are now back on the oil-market agenda.”Meanwhile, U.S. Energy Secretary Rick Perry told CNBC that a “coalition effort” will be needed to counter Iran, which the Trump administration said was behind the attacks.Haven assets including gold and U.S. government debt surged as investors fled riskier instruments. Currencies of commodity-linked nations including the Norwegian krone and the Canadian dollar also advanced. U.S. gasoline futures jumped 13%.State-run producer Saudi Aramco lost about 5.7 million barrels a day of output on Saturday after 10 unmanned aerial vehicles struck the Abqaiq facility and the kingdom’s second-largest oil field in Khurais. A Saudi military official earlier said preliminary findings showed that Iranian weapons were used in the attacks but stopped short from directly blaming the Islamic Republic for the strikes.The disruption surpasses the loss of Kuwaiti and Iraqi petroleum output in August 1990, when Saddam Hussein invaded his neighbor. It also exceeds the loss of Iranian oil production in 1979 during the Islamic Revolution, according to the International Energy Agency.“The vulnerability of Saudi infrastructure to attacks, historically seen as a stable source of crude to the market, is a new paradigm the market will need to deal with,” said Virendra Chauhan, a Singapore-based analyst at industry consultant Energy Aspects Ltd. “At present, it is not known how long crude will be offline for.”Aramco officials are growing less optimistic that there will be a rapid recovery in production, a person with knowledge of the matter said. The kingdom -- or its customers -- may use stockpiles to keep supplies flowing in the short term. Aramco could consider declaring itself unable to fulfill contracts on some international shipments -- known as force majeure -- if the resumption of full capacity at Abqaiq takes weeks. Alternatively, the kingdom’s own refineries may cut runs just to keep crude exports flowing, according to analysts with JBC and Energy Aspects.Declaring force majeure would rattle oil markets further and cast a shadow on Aramco’s preparations for what could be the world’s biggest initial public offering. It’s also set to escalate a showdown pitting Saudi Arabia and the U.S. against Iran, which backs proxy groups in Yemen, Syria and Lebanon. Iran-backed Houthi rebels in Yemen claimed credit for the attack, but U.S. President Donald Trump and Secretary of State Mike Pompeo have already blamed Iran.Trump Vows U.S. ‘Locked and Loaded’ If Iran Was Behind AttacksTrump, who said the U.S. is “locked and loaded depending on verification” that Iran staged the attack, earlier authorized the release of oil from the nation’s emergency reserves. The IEA, which helps coordinate industrialized countries’ emergency fuel stockpiles, said it was monitoring the situation.Brent for November settlement rose 15% to $69.02 on ICE Futures Europe. The global benchmark could rise above $75 a barrel if the outage at Abqaiq lasts more than six weeks, Goldman Sachs Group Inc. said.On the New York Mercantile Exchange, West Texas Intermediate futures for October delivery settled up 15% at $62.90, the highest close since May 21. Brent’s premium to WTI for the same month closed at $6.35 a barrel. Volume for both Brent and WTI hit record highs, according to the exchanges.The drama wasn’t limited to flat prices. The spread between Brent and WTI widened as much as 37%, showing that the oil spike will affect global prices more than those in the U.S., where shale output and ample supplies provide more of a buffer.\--With assistance from Nayla Razzouk, Javier Blas, Anthony DiPaola, Michael Roschnotti, Tina Davis, Serene Cheong, Dan Murtaugh, Stephen Stapczynski, Ramsey Al-Rikabi, Saket Sundria, Ann Koh, Andrew Janes, Heesu Lee, Sarah Chen, Sharon Cho and Ben Sharples.To contact the reporter on this story: Sheela Tobben in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: David Marino at email@example.com, Joe Carroll, Mike JeffersFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Saudi Arabia said preliminary findings show Iranian weapons were used in the attack on one of its key oil installations, but stopped short of directly blaming the Islamic Republic for the strikes that cut its crude output by half and rattled oil markets.Ongoing investigations of “debris and wreckage” show “it belongs to the Iranian regime,” Turki al-Maliki, a spokesman for the Saudi-led coalition in Yemen, told reporters in Riyadh on Monday. He said initial findings suggest the attack was not launched from Yemen, contradicting claims by Iranian-backed Houthi rebels that they carried out the attack using a swarm of long-range drones with more sophisticated engines.“We are working right now to spot the launch point of those attacks,” he said.Saturday’s attacks caused an unprecedented surge in oil prices and cast a shadow over preparations for the sale of a stake in Saudi Aramco that could be the world’s biggest initial public offering.While President Donald Trump hasn’t directly blamed Iran for the attacks, Secretary of State Michael Pompeo has. Two U.S. officials said the location of the damage and weapons used suggest the attack was not launched by the Houthis, who have been fighting the Saudi-led coalition in Yemen for four bruising years.Al-Maliki said evidence of Iranian involvement would be released, without saying when. Iran denied involvement.“Accusing Iran of the attacks is in line with the U.S.’s maximum-lies policy,” said Abbas Mousavi, spokesman at the foreign ministry in Tehran. “Such accusations are unsurprising, unacceptable and baseless.”Russia, a leading Iranian ally in the Middle East, called on countries not to rush to conclusions over who was responsible, Kremlin spokesman Dmitry Peskov said.In a tweet on Monday, Trump cast doubt on Iran’s denials of responsibility, citing the Islamic Republic’s claim that a U.S. drone shot down over the Persian Gulf in June was actually over Iranian waters.“Remember when Iran shot down a drone, saying knowingly that it was in their “airspace” when, in fact, it was nowhere close,” Trump wrote. “They stuck strongly to that story knowing that it was a very big lie. Now they say that they had nothing to do with the attack on Saudi Arabia. We’ll see?”During that incident, Trump said he called off a retaliatory military strike on Iran at the last minute, after learning about potential casualties that he said would be out of proportion to the destruction of a U.S. drone.Yet over the weekend Trump raised the specter of a military confrontation with Iran, saying that the U.S. is “locked and loaded depending on verification” that Tehran staged the attack. He then said he’d wait for Saudi comments on who was responsible.There were a total of 19 impact points at the world’s biggest crude-processing facility at Abqaiq and at an oil field in Khurais, and equipment used in the incidents that’s been recovered so far was inconsistent with the Houthi claims, the U.S. officials said. The Houthis had said they used unmanned aerial vehicles in the attack.Oil posted its biggest ever intraday jump, briefly surging above $71 a barrel after the strike removed about 5% of global supplies and raised the specter of more destabilization in the region.The U.S. president promised to help allies following the attacks, saying he’d do so despite America not being as reliant on Middle East oil. The crisis comes as Trump’s White House operates without a national security adviser. John Bolton, who had the post, was dismissed last week.The Houthis on Monday said oil installations in Saudi Arabia remained a target for weapons that could reach anywhere in the kingdom.“We assure the Saudi regime that our long hand can reach wherever we want, and whenever we want,” Houthi spokesman Yahya Saree said in a statement. “We warn companies and foreigners not to be present in the facilities that were hit in the strikes because they are still within range and may be targeted at any moment.”Difficult ChoiceThe Trump administration and Saudi leaders now face a difficult choice in how to respond to Iran or its proxies without triggering a broader conflict that could spiral out of control with potentially devastating consequences for global oil markets and the world economy. Neither country has tipped its hand.Trump will “be quite reluctant to start a war with Iran over Saudi Arabia,” said Ali Vaez, Iran Project Director at the International Crisis Group. “But Iran has increasingly less to lose and so is becoming less risk averse which means Trump’s policy of maximum pressure has backfired. At this stage, if there were a direct retaliation against Iran, the Iranians would find the draw of retaliation irresistible and we could enter a tit-for-tat situation that could easily spiral.”Trump officials had recently floated the idea of talks between the president and his Iranian counterpart Hassan Rouhani at the United Nations General Assembly this month, after more than a year of escalating tensions between the two countries following the U.S. withdrawal from the 2015 nuclear deal.Mousavi on Monday confirmed Rouhani would travel to New York, but said he had “no plans” to meet Trump. Iran has consistently said that no progress was likely in improving ties without the U.S. first removing sanctions on Iranian oil exports.While analysts estimate Saudi Arabia may be able to restore half of the lost production as early as Monday, Trump said on Twitter Sunday that he’s authorized the release of oil from the Strategic Petroleum Reserve if needed “in a to-be-determined amount sufficient to keep the markets well-supplied.”The stock of about 645 million barrels of crude and petroleum products could help meet demand during the time it would take for the Saudis to repair the facilities. Trump also told U.S. agencies to expedite permitting approvals of oil pipelines.\--With assistance from Lin Noueihed.To contact the reporters on this story: Vivian Nereim in Riyadh at firstname.lastname@example.org;Abbas Al Lawati in Dubai at email@example.com;Bill Faries in Washington at firstname.lastname@example.orgTo contact the editors responsible for this story: Alaa Shahine at email@example.com, ;Lin Noueihed at firstname.lastname@example.org, Mark WilliamsFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- One of Patrick Byrne’s last acts at Overstock.com Inc. is making life difficult for the short sellers he was forever battling.Shares of the online merchant are on a tear, up about 60% in two weeks. The rally coincides with a flurry of short covering that comes a week before the record date for an exotic dividend the company unveiled to much fanfare and confusion last month.Overstock’s flamboyant founder may be gone, having stepped down Aug. 22 after saying he got enmeshed in a government spy probe, but vestiges of his two-decade-long war with detractors linger. The latest twists have been manna for the stock’s true-believer longs, kicking up Twitter skirmishes while pushing the envelope of another Byrne obsession, blockchain.Data from S3 Partners, a financial analytics firm, show that about 6% of the 13.2 million shares borrowed by people betting against Overstock have been bought back in the past three business days. Shares fell for the first time in eight days Friday in volume that was three times the recent average.“There’s been a serious acceleration of short covering just recently,” said Ihor Dusaniwsky, managing director of S3. “To have that much short covering in that amount of time is responding to an event that’s changing people’s trading strategies.”In a short sale, a bearish trader sells borrowed stock, hoping to buy it back at a lower price, return it and pocket the difference. Frantic buying to close such positions is termed a “squeeze” and can boost shares rapidly.While other reasons may exist for the rally, one explanation centers on a blockchain-based “digital security” that Overstock said on July 30 it would grant to shareholders of record on Sept. 23 as a dividend. Because the security could prove hard for others to lay hands on, the potential exists for it to snarl the process by which shorts maintain positions.Stocks all over America have been benefiting last week from rushed purchases by bears as equities marched back toward records. Overstock’s case may be different. Its 65% rally since Sept. 3 stands out even in a market as volatile as this one.The theory behind the squeeze is technical but comes down to the obligation a short seller faces to pass dividends back to whomever lent him shares. That may prove difficult in Overstock’s case because the so-called “Digital Voting Series A-1 Preferred Stock” it promised in July is unregistered, will trade only on a blockchain exchange owned by a subsidiary, and may face restrictions on transfer.“You can expect a lot of buy-to-covers before the record day,” said Dusaniwsky. The 764,000 shares bought back since Sept. 10 are “the tip of the iceberg if people are wary of how the dividend settles out,” he said.Pressure on shorts would conceivably ease if the firms that lent shares were to accept something else in lieu of Overstock’s digital security -- cash, for instance. Dusaniwsky said brokerages he’s spoken to “are trying to figure out” how to handle it.A spokeswoman for Nasdaq, the exchange where Overstock shares trade, declined to comment. Overstock didn’t respond to an email seeking comment.“It’s a complex situation and we’re trying to help our clients figure out the best course of action,” said JJ Kinahan, chief market strategist at TD Ameritrade. As for the rally, he said: “If you’re short the stock, how are you going to deliver crypto? You have no way of delivering it, so you’re like, ‘OK, well I have to cover this stock because I can’t deliver the dividend.”’Whatever’s causing it, a rally this extreme puts anyone betting against a stock in difficult straits. That’s unlikely to bother Byrne, the 56-year-old founder who over the years espoused conspiracy theories about Wall Street and the evil “Sith Lord” hedge fund manager who conspired to take him down.Until recently, parts of the bear case on Overstock were Byrne himself. Before stepping down, he claimed in a series of public announcements that entanglements with the “deep state” that included cooperating with law enforcement agents he called “Men in Black” with their “Clinton Investigation” and “Russia Investigation.” Byrne said he’d been romantically involved with Maria Butina, a Russian operative jailed for failing to register as a foreign agent.The digital dividend was mentioned by Saum Noursalehi, CEO of Overstock’s tZero unit, in a Sept. 6 letter to shareholders published on Business Wire.“Given the digital preferred shares trade exclusively on the PRO Securities ATS, broker-dealers representing Overstock common shareholders will need to subscribe to the PRO Securities ATS in order to allow their clients to transact the dividend directly,” he wrote. “Introducing more investors to the platform is a key priority and this announcement should serve as a catalyst for enhancing liquidity.”To contact the reporters on this story: Jeran Wittenstein in San Francisco at email@example.com;Sarah Ponczek in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Jeremy Herron at email@example.com, Chris NagiFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- President Donald Trump promised to help allies following attacks on major Saudi Arabian oil facilities, even though he said the U.S. is no longer directly reliant on Middle Eastern oil and gas and has few tankers there.“We are a net Energy Exporter,” Trump tweeted Monday morning. “We don’t need Middle Eastern Oil & Gas, & in fact have very few tankers there, but will help our Allies!”Brent oil posted its biggest ever intraday jump Monday to more than $71 a barrel. It pared some gains, though both Brent and West Texas crude were still trading about 10% higher as news of the devastating attack on the world’s largest exporter also sent currencies of commodity-linked nations higher.Trump’s statement Monday followed his weekend vow that the U.S. is “locked and loaded depending on verification” that Iran staged the attack on major Saudi Arabian oil facilities, an assertion already made by his secretary of state and backed by administration officials.Trump said he’s awaiting word from Saudi Arabia about who it believed caused the attack and “under what terms we would proceed!”Trump, in another tweet on Monday, said Iran didn’t tell the truth in June after shooting down a U.S. drone in the Strait of Hormuz. “Now they say that they had nothing to do with the attack on Saudi Arabia,” Trump said. “We’ll see?”Several administration officials said Sunday that they had substantial evidence that Iran was behind the oil attack, not the Iranian-backed Houthi rebels in Yemen who claimed responsibility. On Saturday, Secretary of State Michael Pompeo said unequivocally in a tweet that Iran was to blame.Two administration officials who asked not to be identified discussing internal deliberations told reporters that cruise missiles may have been used in the attacks on a Saudi oil field and the world’s biggest crude-processing facility in Abqaiq. The range from Yemen was also far beyond the distance of anything the Houthis have ever done, the officials said.A third administration official, who also asked not to be identified discussing non-public findings, said precision-guided munitions had been used. The U.S. officials didn’t rule out that armed drones were used as well, even as they rejected the Houthi claims that they mounted the attacks using such pilotless aircraft.Now, the challenge that the Trump administration faces is balancing a tough response to what it says is a clear act of of Iranian aggression, against concern that it’s rushing headlong into a conflict that could spiral out of control. Analysts also warn that doing nothing could send a message to Iran or its proxy militias across the Middle East that they can strike their enemies with impunity.“There’s no great response here,” said Aaron David Miller, senior fellow at the Carnegie Endowment for International Peace. “The question becomes how does the U.S. navigate between not allowing this precedent to stand on one hand, and avoiding a punitive escalation or one designed to deter future attacks without an escalation. And the answer is there is no answer.”Still, a major U.S. military response may be unlikely, according to experts who said they doubt Trump will be willing to use force against Tehran or risk escalating violence in the Middle East ahead of the 2020 presidential election. In June, Trump said he considered a military strike on Iran for shooting down a U.S. drone, only to call off the action at the last minute.Analysts also said the attacks may do little to deter the president from seeking a meeting with Iranian President Hassan Rouhani in an effort to broker a new nuclear agreement.Trump hasn’t ruled out a possible meeting with Rouhani when both are in New York in a week for the annual United Nations General Assembly. He tweeted on Sunday that the “Fake News is saying that I am willing to meet with Iran, ‘No Conditions’ That is an incorrect statement (as usual!).” But officials including Pompeo and Treasury Secretary Steven Mnuchin have told reporters publicly that Trump is willing to take a meeting with no conditions.‘Maximum Pressure’The administration’s “maximum pressure” stance against Iran is focused on imposing sanctions and isolating the country over its nuclear ambitions and malign activities in the region. That approach has come under renewed scrutiny at a time the president’s foreign policy team is in flux, after Trump’s firing of hawkish National Security Adviser John Bolton last week.U.S. and Saudi officials say they’re gathering more evidence that Iran was behind the attacks -- some of it on the ground in Saudi Arabia -- that will be released in due time. Iran’s Foreign Ministry described Pompeo’s comments blaming the Islamic Republic as “blind and fruitless accusations.”According to U.S. government information, there were 19 points of attack at state-owned Saudi Aramco’s crude-processing facility at Abqaiq and the Khurais oil field, all on the north or northwest-facing sides -- suggesting that the weaponry used came from that direction. Iraq lies to the north, and the U.S. in the past has accused Iran of stashing explosives with affiliated militias in the country. Yemen, by contrast, is hundreds of miles to the south.Saudi Aramco lost roughly 5.7 million barrels per day of output after the attacks, although officials cited progress in restoring production.Pompeo’s TweetPompeo tweeted Saturday that there is “no evidence the attacks came from Yemen” and accused Iran of being behind “an unprecedented attack on the world’s energy supply.”“The United States will work with our partners and allies to ensure that energy markets remain well supplied and Iran is held accountable for its aggression,” he added.Paul Pillar, a former U.S. Central Intelligence Agency officer, said the one “policy option left is de-escalation -- of the Saudi air war against Yemen, and of the Trump administration’s economic war against Iran.”Pillar, who’s now a non-resident senior fellow at Georgetown University in Washington, said “further attempts to escalate on either of those war fronts offers no reason to believe that they would be any more successful than the wars have been up to this point.”Trump would risk criticism from many of his Republican allies if he chose to meet with Iran’s leader barely a week after accusing the country of being responsible for a strike that caused a significant disruption to the world’s oil markets. Republican Senator Lindsay Graham of South Carolina has said the U.S. shouldn’t rule out a military strike on Iranian oil facilities in response.Graham Tweet“Iran will not stop their misbehavior until the consequences become more real, like attacking their refineries, which will break the regime’s back,” Graham tweeted Saturday.One Western diplomat, who asked not to be identified, said Trump sees what he wants to see in world events, so if he wanted to meet with Iran’s president, the strikes wouldn’t necessarily deter him. Trump has repeatedly brushed aside short-range missile tests by North Korea as he seeks to broker a historic nuclear pact with leader Kim Jong Un.White House Counselor Kellyanne Conway said on “Fox News Sunday” that the administration will continue its “maximum pressure campaign,” but she added that “the president will always consider his options,” including a meeting with Rouhani. That was hours before Trump seemed to rule out a meeting unless the Iranian president met unspecified conditions.UN MeetingNor is it clear the Iranian leader would be willing to take such a meeting -- even an informal chat on the sidelines of the UN gathering -- without the U.S. making some gesture to ease its sanctions on his country. The strikes in Saudi Arabia may all but rule out such a move anytime soon despite pleas by Western leaders led by French President Emmanuel Macron.The attacks on Saudi Arabia also pose a major test for Pompeo, who has an opportunity to consolidate power after Bolton’s departure.Pompeo and Brian Hook, the State Department’s special representative for Iran, have argued the U.S. could afford to ramp up sanctions and diplomatic pressure on Iran because there’s plenty of global oil supply. But there’s now little cushion in the market with the major disruption caused by the drone attacks, which could force the president and his team to look for ways to relieve the pressure.While analysts estimate Saudi Arabia may be able to restore half of the lost production as early as Monday, Trump said on Twitter Sunday that he’s authorized the release of oil from the Strategic Petroleum Reserve if needed based on the attacks “in a to-be-determined amount sufficient to keep the markets well-supplied.” The stock of about 645 million barrels of crude and petroleum products could help meet demand during the time it would take for the Saudis to repair the facilities. Trump also told U.S. agencies to expedite approvals of oil pipelines in the permitting process.There’s also the question of the administration’s credibility. Some foreign policy analysts said it’s hard to take at face value the claim that Tehran is responsible, given the hard line against Iran advocated by Pompeo, Bolton and others.“The Trump administration appears to have evidence of Iranian responsibility but will face skepticism from others, both because of policy disagreements between the US and its allies, and because declining to attribute an attack provides an excuse not to respond,” tweeted Michael Singh, managing director for the Washington Institute for Near East Policy.(Updates with Trump tweet in sixth paragraph.)\--With assistance from Laura Curtis.To contact the reporters on this story: Jordan Fabian in Washington at firstname.lastname@example.org;Nick Wadhams in Washington at email@example.com;David Wainer in New York at firstname.lastname@example.org;Glen Carey in Washington at email@example.comTo contact the editors responsible for this story: Alex Wayne at firstname.lastname@example.org, ;Bill Faries at email@example.com, Justin Blum, Larry LiebertFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Iranian-backed Yemeni rebels said oil installations in Saudi Arabia remain a target after drone attacks on two major sites slashed the kingdom’s output by half and triggered a record surge in oil prices.The rebel group said its weapons could reach anywhere in Saudi Arabia. Saturday’s strikes were carried out by aircraft equipped with a new type of engine, the Houthi rebel group said.“We assure the Saudi regime that our long hand can reach wherever we want, and whenever we want,” Houthi spokesman Yahya Saree said in a statement. “We warn companies and foreigners not to be present in the facilities that were hit in the strikes because they are still within range and may be targeted at any moment.”U.S. Secretary of State Mike Pompeo said Sunday that there was no evidence the raids were carried out from Yemen. He blamed Iran, as did Secretary of Energy Rick Perry on Monday.“The U.S. wholeheartedly condemns Iran’s attack on the kingdom of Saudi Arabia. We call on other nations to do the same,” Perry said at a meeting of the International Atomic Energy Agency in Vienna. “This behavior is unacceptable. They must be held responsible.”President Donald Trump said the U.S. is “locked and loaded depending on verification” of the culprit. Russia called on countries not to rush to conclusions over who was responsible, Kremlin spokesman Dmitry Peskov said. Iran denied responsibility.“Accusing Iran of the attacks is in line with the U.S.’s maximum-lies policy,” said Abbas Mousavi, spokesman at the foreign ministry in Tehran. “Such accusations are unsurprising, unacceptable and baseless.”Saudi Arabia has yet to assign blame. Its state oil company Saudi Aramco is due to give an update on Monday following the attacks on a major oil field and the world’s biggest crude-processing facility at Abqaiq. Oil posted its biggest ever intraday jump to more than $71 a barrel after the attack knocked out about 5% of global supplies.Oil Jumps Most on Record After Attack Cuts Saudi Arabian SupplyThe Trump administration and Saudi leaders now face a difficult choice in how to respond to Iran or its proxies without triggering a broader conflict that could spiral out of control with potentially devastating consequences for global oil markets and the world economy. Neither country has tipped its hand.“There’s no great response here,” said Aaron David Miller, senior fellow at the Carnegie Endowment for International Peace. “The question becomes how does the U.S. navigate between not allowing this precedent to stand on one hand, and avoiding a punitive escalation or one designed to deter future attacks without an escalation. And the answer is there is no answer.”Trump officials had recently floated the idea of talks between the president and his Iranian counterpart at the United Nations General Assembly this month, after more than a year of escalating tensions between the two countries following the U.S. withdrawal from the 2015 nuclear deal.Mousavi on Monday confirmed Rouhani would travel to New York, but said he had “no plans” to meet Trump. Iran has consistently said that no progress was likely in improving ties without the U.S. first removing sanctions on Iranian oil exports. The downing in June of a U.S. Navy drone by Iranian forces almost triggered a conflict.Its Lifeblood Attacked, What Are Saudi Arabia’s OptionsThe circumstances of Saturday’s attack remain unclear. Two administration officials said on Sunday that cruise missiles may have been used. The officials, who asked not to be identified discussing internal deliberations, didn’t rule out the use of armed drones but said the range was beyond anything the Houthis had carried out in the past.The U.S. government has determined there were 19 points of attack at the crude-processing facility and the Khurais oil field, all on the north or northwest-facing sides -- suggesting the weapons used came from that direction.Iraq lies to the north, and the U.S. in the past has accused Iran of stashing explosives with affiliated militias in the country. Yemen is hundreds of miles to the south.Saudi Arabia entered Yemen’s civil war in 2015 to push back Houthi rebels who captured the capital, Sana’a. Despite devastating aerial bombardment and support for groups on the ground, it has struggled to turn the tide of the war or reinstate the internationally recognized government of Yemen President Abd Rabbuh Mansur Hadi. The Saudi-led coalition has instead watched local allies turn their guns on each other in recent weeks while the U.S. has said it’s looking to talk to the Houthis directly about ending the war.Oil Jumps Most on Record After Attack Cuts Saudi Arabian SupplyWhile analysts estimate Saudi Arabia may be able to restore half of the lost production as early as Monday, Trump said on Twitter Sunday that he’s authorized the release of oil from the Strategic Petroleum Reserve if needed “in a to-be-determined amount sufficient to keep the markets well-supplied.”The stock of about 645 million barrels of crude and petroleum products could help meet demand during the time it would take for the Saudis to repair the facilities. Trump also told U.S. agencies to expedite permitting approvals of oil pipelines.(Updates with details on U.S.-Iran confrontation)\--With assistance from Jonathan Tirone.To contact the reporter on this story: Abbas Al Lawati in Dubai at firstname.lastname@example.orgTo contact the editors responsible for this story: Alaa Shahine at email@example.com, Mark WilliamsFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- A small squadron of drones — and possibly cruise missiles — penetrated Saudi Arabia’s air defenses on Saturday, laying waste to a significant, valuable portion of two of the world’s most essential oil processing facilities. Amid worries about the impact of the strikes on global oil markets (half the kingdom’s oil output was affected) and fears about broader military confrontations upending a region perennially vexed by crossed swords, ancient religious rifts, geopolitical maneuvering and greed, facts and conjecture began jockeying for attention.Houthi rebels fighting the Saudis in a brutal civil war in Yemen took credit for the strikes. Iran backs the Houthis, and U.S. Secretary of State Mike Pompeo took to Twitter on Saturday afternoon to blame Iran for “an unprecedented attack on the world’s energy supply” and to assert that there “is no evidence the attacks came from Yemen.” Pompeo didn’t specify where the strikes actually originated. The Saudis, backed by the U.S. in Yemen, have yet to pin the strikes on Iran, while the Iranians themselves deny any involvement. On Sunday, the U.S government produced photos that officials said indicated that the drones had to have flown into Saudi Arabia from Iraq or Iran. Iraq denies being involved.Not everyone is telling the truth here (although everyone might think they are) and any prudent response to the attacks hinges on more factual certainty. Patience and foresight are diplomatic virtues in moments like this, even if the correct response ultimately involves more severe economic sanctions on Iran or military actions designed to rein in its rulers.Like any U.S. president, Donald Trump could play a clarifying role and use the power and prestige of his office to bring a sense of order to what is a dangerous dynamic in the Arab world right now. It’s possible that the next few days will build toward the most momentous foreign policy challenge Trump will experience. But we’ve also arrived here precisely because of Trump’s own haphazard and conflicted approach to regimes he claims he wants to upend. Someone who has presided over the most chaotic White House of modern times is unlikely to navigate this complicated crisis with the necessary deftness.The White House issued a statement Saturday confirming that Trump had phoned Saudi Crown Prince Mohammed bin Salman to offer support for the country and oil markets. The president then filled his communication platform of choice, Twitter, with an array of attacks on the media, praise for Supreme Court Justice Brett Kavanaugh, promos for events meant to support black colleges, and a reminder that the “USA is Winning Again!”At about 6 p.m. Sunday, Trump tweeted that he planned to release inventories from the U.S. Strategic Petroleum Reserve to help stabilize oil markets. About an hour later, he weighed in again on behalf of the Saudis.“Saudi Arabia oil supply was attacked,” he tweeted. “There is reason to believe that we know the culprit, are locked and loaded depending on verification, but are waiting to hear from the Kingdom as to who they believe was the cause of this attack, and under what terms we would proceed!”In a flash, and most likely without consulting anyone else on his White House team, Trump indicated he was willing to put the U.S. military at the disposal of the Saudis and that he’d come out, guns blazing, whenever the Saudis thought the time was right.Shortly after that, he noted that there was “PLENTY OF OIL!” and that no one should think that he stumbled in his own dealings with the Iranians — that perhaps the Iranians saw him softening and took advantage of him.“The Fake News is saying that I am willing to meet with Iran, ‘No Conditions.’ That is an incorrect statement (as usual!),” he tweeted just after 7 p.m.The problem with that one is that Trump did, in fact, say in June that he’d be willing to take a meeting with Iran with “no preconditions.” And several days ago Trump said he’d be willing to meet with Iranian President Hassan Rouhani at the upcoming United Nations General Assembly meeting in New York.Did any of that diplomatic signaling ( including the departure of Trump’s hawkish national security adviser John Bolton) coax the Iranians into a more aggressive stance, convincing them to try to disable a crucial oil field controlled by its most powerful foe in the Arab world at a time when that foe was moving toward a public offering of shares in its national oil company, Saudi Aramco? Who knows.What probably hasn’t been lost on Iran is that Trump has postured and blustered about his willingness to use military force to corral countries he considers hostile to the U.S., but then fails to follow through. In June, Trump ordered a military strike on Iran, only to call it off at the last minute.This isn’t new behavior from the president. He spent parts of his business life threatening to vanquish competitors or run circles around them when he was “artofthedealmaking,” only to find himself outmaneuvered or unable to deliver on his warnings (often to his own financial and reputational detriment).The president has likewise boxed himself in with the Saudis. In addition to turning a blind eye to the kingdom’s own military atrocities in Yemen, and to countenancing the murder of the Saudi journalist and dissident Jamal Khashoggi, Trump and his family have myriad financial conflicts of interest involving Saudi money. Trump has left himself little room to find diplomatic solutions that don’t meet the Saudis’ needs first, while he continues to blur the line between serving the U.S. national interest and his own self-interest.And one of the most harrowing aspects of Trump’s presidency — that an inexperienced self-promoter utterly ignorant about much of the world and lacking any real interest in international affairs had assumed power over the mightiest military force on the planet — is now in full relief in the wake of the drone strikes in Saudi Arabia.Character is at play here, too. There’s a presidential election coming and with it the danger that Trump will find military confrontations overseas useful avenues for a political boost. That would suggest he may not be making completely sober-minded decisions. Perhaps the president will rise to the occasion this week, despite the forces he helped set in motion and which are now pulling him in multiple directions. But don’t hold your breath.To contact the author of this story: Timothy L. O'Brien at firstname.lastname@example.orgTo contact the editor responsible for this story: James Boxell at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Timothy L. O’Brien is the executive editor of Bloomberg Opinion. He has been an editor and writer for the New York Times, the Wall Street Journal, HuffPost and Talk magazine. His books include “TrumpNation: The Art of Being The Donald.”For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- U.S. President Donald Trump authorized the release of oil from the nation’s emergency oil reserves after a series of drone attacks in Saudi Arabia knocked out half of the kingdom’s crude output, or about 5% of world supplies.In tweets, the president said the amount of oil released would be determined “sufficient to keep the markets well-supplied.” In a later tweet, he declared: “PLENTY OF OIL!”Trump also suggested in a later Twitter posting that “we know the culprit” and the U.S. is “locked and loaded,” pending a decision by the Saudis on who they think carried out the attack. Saturday’s attacks on Saudi Arabia rattled oil markets at the open, with Brent crude rising $11.73 a barrel, the biggest-ever intraday jump, to as high as $71.95, before falling back to trade at $67.79 a barrel at 6:14 a.m. in Singapore.Energy Secretary Rick Perry ordered officials to work with the International Energy Agency on possible options for coordinated action, according to a statement late Saturday.Whether the Strategic Petroleum Reserve, the world’s largest supply of emergency crude, gets used may depend on how quickly the Saudis can resume production from the world’s biggest crude-processing facility.Set up after the Arab oil embargo in the 1970s sent prices skyrocketing, the stockpile has previously been tapped in response to Operation Desert Storm in 1991, Hurricane Katrina in 2005, and Libyan supply disruptions in 2011.“Until a damage assessment is available, it’s not possible to make high confidence odds on the likelihood it will be tapped,” said Bob McNally, a former energy adviser to President George W. Bush and president of the consulting firm Rapidan Energy Group. “For now, the administration is reassuring the market that the U.S. and other emergency stockholding partners in the IEA are ready to act.”What Trump Could Do With 660 Million Barrels of Oil: QuickTakeMcNally said showing openness to an SPR release would have an impact.“Almost no geopolitical risk is priced into oil markets focused solely on trade wars and macro concerns,” said Joe McMonigle, senior energy analyst at Hedgeye Risk Management LLC. “An SPR release, especially if coordinated with IEA action, would mitigate some of the spike in oil prices but would also depend on the ongoing and elevated geopolitical risk.”Salt CavernsThe emergency stockpile is stored in huge underground salt caverns along the U.S. Gulf Coast. Although it was originally created as a backup in case of future supply shocks, the reserve has more recently become Congress’s go-to piggy bank, used to fund everything from roads to drugs to deficit reduction. About 10 million barrels were sold in the latest of a series of congressionally-mandated sales last week.Trump proposed selling off half of the emergency stockpile in his 2017 budget request. His administration argued that record domestic oil production made keeping such a large reserve unnecessary. But the “potential long-term disruption from critical oil facilities” such as the 5 million barrel per-day Abqaiq processing facility hit on Saturday, “is exactly the type of risk the Strategic Petroleum Reserve was designed to mitigate,” McNally said.(Updates with later tweets from Trump.)To contact the reporters on this story: Stephen Cunningham in Washington at firstname.lastname@example.org;Ari Natter in Washington at email@example.comTo contact the editors responsible for this story: Jon Morgan at firstname.lastname@example.org, Ros Krasny, Mark NiquetteFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Indian Prime Minister Narendra Modi’s imminent visit to the U.S. energy capital is fueling speculation the second most-populous nation will further tap America’s shale gas bonanza.Modi is scheduled to address upwards of 50,000 people at a sold-out event at Houston’s NRG Stadium on Sept. 22 that’s billed by organizers as the largest-ever turnout for a foreign elected leader on U.S. soil.Energy investors, however, are keenly focused on what happens behind the scenes. A long-running trade war between Washington and Beijing has meant China hasn’t imported any American supply since February. The dispute has also put plans for new export terminals at risk. By contrast, India is open to making purchases, and the nation is already the sixth-largest buyer of U.S. liquefied natural gas.India “has the potential to become an enormous market” for U.S. gas, said Charlie Riedl, executive director of the Center for Liquefied Natural Gas. “Based on the broader aspiration to move people out of energy poverty and to enhance manufacturing, this all points to emerging opportunities.”The three-hour gathering -- branded as “Howdy Modi!” -- at the home of the National Football League’s Houston Texans is scheduled to include a “cultural program” that will be followed by an address by the Indian leader, according to event organizers. The event comes just weeks after Modi sat with Russia’s Vladimir Putin to explore shipping Arctic natural gas to the subcontinent.Heightening expectations is the timing of Modi’s Texas pilgrimage: it will come only a few days after Gastech, one of the world’s premier methane-industry confabs.Still, India has been slower than some other economies to divorce itself from coal, and that may be a hindrance to gas-import arrangements, said Madeline Jowdy, an analyst at S&P Global Platts.“I am so skeptical of India,” Jowdy said. “’I’m not saying that Indian companies can’t and won’t invest” in gas imports, but coal is entrenched and supports a lot of jobs.Tellurian Inc., which is developing a $28 billion liquefied natural gas terminal in Louisiana, is optimistic. The company is seeking to finalize a deal to sell an equity stake in the project to India’s Petronet LNG Ltd., Chief Executive Officer Meg Gentle said in a Sept. 5 interview in New York. The firms signed a memorandum of understanding in February for the Driftwood LNG terminal.State-controlled Gail India Ltd. was among the early buyers of U.S. LNG, locking in a 20-year contract for supply from Cheniere Energy Inc.’s Sabine Pass terminal in Louisiana. The South Asian nation took in 4.7% of the LNG that has has been exported since early 2016, according to data compiled by Bloomberg.\--With assistance from Kevin Varley.To contact the reporters on this story: Joe Carroll in Houston at email@example.com;Naureen S. Malik in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Simon Casey at email@example.com, Pratish NarayananFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- President Donald Trump said he’s authorized releasing oil from the Strategic Petroleum Reserve following the attacks on Saudi Arabia on Saturday, which sent Brent crude oil prices skyrocketing as much as 19%.In tweets, the president said the amount of oil released would be determined “sufficient to keep the markets well-supplied.”Trump’s comment follows one from the Department of Energy on Saturday, that the U.S. Is ready to “offset any disruptions to oil markets” after the Saudi facilities were attacked.The 630-million-barrel SPR, the world’s largest supply of emergency crude, was set up after the Arab oil embargo in the 1970s. It was last tapped in 2011 in response to Libyan supply disruptions.Trump also took the opportunity of the attacks on Saudi Arabia to push for speedier approval of oil pipelines. Unlike an SPR release, that action would have no immediate impact on prices or the availability of supplies.In the tweet, Trump said he’d asked agencies “to expedite approvals of the oil pipelines currently in the permitting process in Texas and various other states.”To contact the reporters on this story: Matthew G. Miller in New York at firstname.lastname@example.org;Ros Krasny in Washington at email@example.comTo contact the editor responsible for this story: James Ludden at firstname.lastname@example.orgFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Saudi Arabia’s oil production was cut by half after a swarm of explosive drones struck at the heart of the kingdom’s energy industry and set the world’s biggest crude-processing plant ablaze -- an attack blamed on Iran by the top U.S. diplomat.Iran-backed Houthi rebels in Yemen, who’ve launched several drone attacks on Saudi targets in the past, claimed responsibility for the assault on the kingdom’s Abqaiq plant.U.S. Secretary of State Michael Pompeo said in a tweet there’s no evidence the attacks came from Yemen and blamed Iran directly, but didn’t offer evidence for that conclusion either. President Donald Trump spoke with Saudi Crown Prince Mohammed Bin Salman by telephone but hasn’t commented directly. Dow Jones reported that Saudi and U.S. officials are investigating the possibility that cruise missiles were launched from Iraq, which is much closer than Yemen.About 5.7 million barrels per day of output has been suspended, Saudi Aramco said in a statement. “Work is underway to restore production and a progress update will be provided in around 48 hours,” said Amin H. Nasser, Aramco’s president and chief executive officer.That’s affected about half of Saudi Arabia’s oil production. Gas output was also disrupted, with 2 billion cubic feet in daily output, about half of normal production, stopped by the attack, SPA news agency said, citing the kingdom’s Energy Minister Abdulaziz bin Salman. Operations in Abqaiq and Khurais are halted for now.“Abqaiq is the heart of the system and they just had a heart attack,” said Roger Diwan, a veteran OPEC watcher at consultant IHS Markit.The biggest attack on Saudi Arabia’s oil infrastructure since Iraq’s Saddam Hussein fired Scud missiles into the kingdom during the first Gulf War, the drone strike highlights the vulnerability of the network of fields, pipeline and ports that supply 10% of the world’s crude oil. A prolonged outage at Abqaiq, where crude from several of the country’s largest oil fields is processed before being shipped to export terminals, would jolt global energy markets.“For the oil market, if not the global economy, Abqaiq is the single most valuable piece of real estate on planet earth,” Bob McNally, head of Rapid Energy Group in Washington.Aramco is working to compensate clients for some of the shortfall from its reserves. Emergency crews have contained the fires, Aramco said.Trump expressed support for the kingdom’s self-defense during a phone call with Saudi’s Bin Salman after the attack, the White House said.Saudi Aramco, which pumped about 9.8 million barrels a day in August, will be able to keep customers supplied for several weeks by drawing on a global storage network. The Saudis hold millions of barrels in tanks in the kingdom itself, plus three strategic locations around the world: Rotterdam in the Netherlands, Okinawa in Japan, and Sidi Kerir on the Mediterranean coast of Egypt.The U.S. Department of Energy said it’s prepared to dip into the Strategic Petroleum Oil Reserves if necessary to offset any market disruption.The International Energy Agency, responsible for managing the oil reserves of the world’s industrialized economies, said it was monitoring the situation, but the world was well-supplied with commercial stockpiles.Facilities at Abqaiq and the nearby Khurais oil field were hit at 4 a.m. local time, SPA reported.A satellite picture from a NASA near real-time imaging system published early on Saturday showed a huge smoke plume extending more than 50 miles over Abqaiq. Four additional plumes to the south-west appear close to the Ghawar oilfield, the world’s largest. While that field wasn’t attacked, its crude is sent to Abqaiq and the smoke could indicate flaring. When a facility stops suddenly, excess oil and natural gas is safely burned in large flaring stacks.The attacks were carried out with 10 unmanned aerial vehicles -- drones -- and came after intelligence cooperation from people inside Saudi Arabia, Yemen’s rebel-run Saba news agency reported, citing Houthi spokesman Yahya Saree.“Our upcoming operations will expand and would be more painful as long as the Saudi regime continues its aggression and blockade” on Yemen, he said.Saudi Arabia’s oil fields and pipeline have been the target of attacks over the past year, often using drones, with the incidents mostly claimed by Yemeni rebels. Tensions in the Persian Gulf -- pitting Saudi Arabia and its allies, including the United Arab Emirates, against regional foe Iran -- have highlighted the risk to global oil supply.Saturday’s attack is the largest and most sophisticated yet. The Houthi forces have used small and medium-sized unmanned aerial vehicles in various roles, according to a United Nations report. Some are loaded with munitions for use as “kamikaze drones” with a range of up to 1,500 kilometers (932 miles).Yemen’s Houthi rebels have been battling a Saudi-led coalition since 2015, when mainly Gulf forces intervened to restore the rule of President Abd Rabbuh Mansur Hadi and his government after the Houthis captured the capital, Sana’a. The conflict has killed thousands of people and caused one of the world’s worst humanitarian crises.Red LinesIn recent months, Iran has become increasingly aggressive, regionally and over the issue of oil, attacking and hijacking tankers especially near the Straits of Hormuz. Yet they’ve seemed careful about crossing perceived “red lines” as they protest U.S. sanctions against their own oil.At the same time, the Trump administration’s own impulses have seemed to vary: Trump has warned Iran against escalation, yet pulled back on a planned retaliatory attack, and fell out with his former National Security Adviser John Bolton, in part because of Bolton’s militancy against Iran.The attacks come as Aramco, officially known as Saudi Arabian Oil Co., is speeding up preparations for an initial public offering. The energy giant has selected banks for the share sale and may list as soon as November, people familiar with the matter have said.Khurais is the location of Saudi Arabia’s second-biggest oil field, with a production capacity of 1.45 million barrels a day.Abqaiq has a crude oil processing capacity of more than 7 million barrels a day, according to the U.S. Energy Information Administration.(Updates with Aramco CEO’s comments on output in fourth paragraph.)\--With assistance from Nour Al Ali, Mohammed Hatem, Nadeem Hamid, Zainab Fattah, Sebastian Tong, Maria Jose Valero and Serene Cheong.To contact the reporters on this story: Nayla Razzouk in Dubai at email@example.com;Javier Blas in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Nayla Razzouk at email@example.com, Ros Krasny, James LuddenFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- Vinyl records, paper books, glossy magazines – all should be long dead, but they’re refusing to go away and even showing some surprising growth. It’s probably safe to assume that people will always consume content in some kind of physical shell – not just because we instinctively attach more value to physical goods than to digital ones, but because there’ll always be demand for independence from the huge corporations that push digital content on us.According to the Recording Industry Association of America, vinyl album sales grew 12.9% in dollar terms to $224 million and 6% in unit terms to 8.6 million in the first half of 2019, compared with the first six months of 2018. Compact disc sales held steady, and if the current dynamic holds, old-fashioned records will overtake CDs soon, offsetting the decline in other physical music sales. Streaming revenue grew faster for obvious reasons: It’s cheaper and more convenient. But people are clearly not about to give up a technology that hasn’t changed much since the 1960s.In 2018, hardcover book sales in the U.S. increased by 6.9%, paperback sales went up 1.1% and eBook sales dropped 3.6%. The number of print magazine titles published in the U.S. rose to 7,218 from 7,176, according to the Association of Magazine Media. That’s more magazines than the U.S. had in 2009. For all the havoc the digital revolution is wreaking on newsrooms, people are still starting new titles – and 96% of the magazine industry’s subscription revenue still came from the print editions, with digital providing the rest.One explanation could be that, as Ozgun Atasoy from the University of Basel and Carey Morewedge from Boston University wrote in a paper based on a series of experiments, people are more willing to buy physical goods than equivalent digital ones, and they’re likely to pay a higher price for them. Offered an easy choice, people would rather have a vinyl LP than its digital image in the cloud somewhere; it’s just that the choice isn’t there most of the time. Atasoy and Morewedge wrote that the effect is mostly explained by “psychological ownership”: It’s hard for people to feel they own something they can’t physically touch.They wrote, however, that other, unidentified factors were also at play, since psychological ownership didn’t fully explain the difference in people’s willingness to pay for the two kinds of products. I think Michael Palm from University of North Carolina-Chapel Hill put a finger on those factors in a paper published earlier this year. He suggested that physical vs. digital, or new vs. old, could be a less relevant differentiation point than corporate culture vs. independent culture.The record industry got rid of vinyl fabrication when CDs appeared. Big store chains stopped selling LPs. But small producers and record stores that also function as community centers have kept the culture and the format alive. Now, the big companies see a commercial potential again – but they’re ordering vinyl records from independent producers, who can’t always keep up with the orders, and distributing to small stores, not just to giant chains like Best Buy, which are also stocking vinyl records again.“To combat the corporate incursion into vinyl markets, some independent labels are vertically integrating and beginning to manufacture as well as distribute and sell their own records,” Palm wrote. “The stakes of vinyl’s future involve the viability of an independent supply chain for popular music, and these stakes are raised in a media landscape dominated by online access to content controlled by corporate gatekeepers.”A similar logic applies to books. According to the American Booksellers’ Association, independent bookstores’ sales went up about 5% in 2018. These stores are where people hang out, discuss their discoveries, receive recommendations and advice. They are also where the products of small publishing houses can get more attention than they do in major bookstores or on Amazon.The increase in the number of print magazines also isn’t occurring thanks to major launches by big industrial publishers. There’s space in this industry for niche publications that want intimate contact with readers, not a tiny share of the attention squandered on the internet. The Association of Magazine Media claims the average time to read an issue of a magazine published in the U.S. is almost 50 minutes. A magazine is the same kind of alternative to Instagram or Twitter as a vinyl record is to Spotify or Apple Music.This may be the last line of defense for old content formats – a line they could be able to hold forever: The preserve for independent creation, manufacturing and distribution in a world that belongs to giant corporations that mass-produce content and mass-distribute it through the cloud. The old-new dichotomy may well turn out to be misleading; there's nothing “old” about trying to go beyond the mass market.To contact the author of this story: Leonid Bershidsky at firstname.lastname@example.orgTo contact the editor responsible for this story: Tobin Harshaw at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Leonid Bershidsky is Bloomberg Opinion's Europe columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Outspoken former White House Communications Director Anthony Scaramucci claims the president is 'unhinged' and in 'steady decline.'
(Bloomberg) -- In July, the ruler of Dubai promised to reveal the country’s worst- and best-performing government-service providers. On Saturday, he carried out his pledge.Sheikh Mohammed Bin Rashid Al Maktoum, acting in his capacity as United Arab Emirates prime minister, tweeted a list of the nation’s five worst and best centers. Managers at the worst will be immediately replaced, while teams at the best will get two-month bonuses.It isn’t Sheikh Mohammed’s first attempt at improving government performance. In 2016, after receiving complaints about deteriorating services, he surprised workers at Dubai’s Land Department by walking into sparsely populated offices in the morning. It was followed by the dismissal of several top officials.The Worst:Emirates Post Group (Al Khan center, Sharjah)Federal Authority for Identity & Citizenship (Muhaisnah preventive medicine center, Dubai)General Pension & Social Security Authority (Sharjah center) Ministry of Community Development (Bani Yas social affairs center, Abu Dhabi)Ministry of Human Resources & Emiratisation (Tawteen center, Fujairah)The Best:Federal Authority for Identity & Citizenship (Fujairah center)Ministry of Education (Ajman center)Ministry of Interior (Traffic and licensing center, Ajman)Ministry of Interior (Wasit police station, Sharjah)Sheikh Zayed Housing Programme (Ras Al Khaimah center) To contact the reporter on this story: Zainab Fattah in Dubai at firstname.lastname@example.orgTo contact the editors responsible for this story: Lin Noueihed at email@example.com, Shaji MathewFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Canadian stocks have broken out of their summer stupor, handing investors September’s best first half in seven years as they finally reached a record high.Now things are about to get interesting, according to strategists who predicted the rally.The S&P/TSX Composite Index rose 0.2% Friday, capping the week at a new peak of 16,682.42 as both the U.S. and China made moves to ease tensions ahead of talks expected in the coming weeks. After hitting a previous peak in April, stocks traded in a narrow range through summer even as volatility soared amid concerns surrounding global economic growth.What market watchers said last month and now:In August, Brian Belski, chief investment strategist at BMO Capital Markets, said he was staying “very bullish on Canada” with a 17,000 year-end target for the key equity gauge. He now expects more new highs for the benchmark but added that things could get choppy.Candice Bangsund, portfolio manager at Fiera Capital, urged investors in mid-August to “resist the temptation to panic and recommend staying invested at this time.” She’s continuing that theme, though “periodic bouts of volatility are surely to prevail.” Longer term fundamentals for the global economy remain largely intact and Canadian stocks should outperform due to the bias toward larger value-oriented sectors of the market such as financials and banks and resources, which should catch up.Eight Capital’s technical research analyst Tina Normann had said that a more attractive entry point would present itself for investors in mid-September.“Investor sentiment had become overly negative even though growth numbers are still good,” said Hans Albrecht, fund manager at Toronto-based Horizons ETFs Management Canada Inc. “It could be a resumption of more of what we’ve seen earlier in the year.”Smooth Ride?Like Belski, Horizons’ Albrecht doesn’t expect the stock rally to be smooth. “I wouldn’t discount a bit more volatility over the next month or so,” he said.October has been somewhat of a volatile month and that could play out this year with trade talks expected, the Bank of Canada’s set to make a decision on interest rates (will they or won’t they cut?) and elections. Polls showing that Prime Minister Justin Trudeau’s Liberals are locked in a tight race with the opposition ahead of the vote next month may have investors on edge.“Although politics rarely plays a meaningful role in equity performance, we found there is some evidence to suggest minority governments can be positive for markets, particularly when the valuation starting point is low, as it is currently,” said BMO’s Belski in an a Sept. 12 report.“At the same time, it’s a low yield world again and equities is one of the places we can be,” Albrecht said.Markets -- Just The NumbersChart of The WeekPolitics & EconomyCanada’s election campaign enters its second week after Trudeau kicked it off on Wednesday in Ottawa. He then traveled to British Columbia where he pledged to impose a federal speculation housing tax for non-residents.Trudeau Enters Campaign Playing on a Steady Economic BackdropAugust inflation figures are expected on Sept. 18 and August existing homes sales, July manufacturing and retail sales are also due next week.TrendingInCanada1\. Two-time Canadian Olympic champion Kaillie Humphries sues ‘Bobsleigh Canada’ and wants to start training with the U.S. team.2\. Themes of financial malfeasance and class struggle were more prominent in movies at the Toronto International Film Festival this year.Read more: Class Warfare Is the Running Theme of This Fall’s Best MoviesTo contact the reporter on this story: Divya Balji in Toronto at firstname.lastname@example.orgTo contact the editors responsible for this story: Madeleine Lim at email@example.com, ;David Scanlan at firstname.lastname@example.org, Jacqueline ThorpeFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- T. Boone Pickens, the legendary American oil entrepreneur who died this week at 91, was known for his aggressive corporate plays in the 1980s and the oil and gas investing strategies that earned (and sometimes lost) him billions since the 1990s. He also had a vision for America’s energy future. His 2008 Pickens Plan thoughtfully delineated which resources needed to flow, and where, to make the U.S. energy-independent.Last week, as it happened, I was at Pickens’s Mesa Vista Ranch to talk to investors and industry executives about how fast the energy system is changing, thanks to new technology — some of it envisioned by Pickens, and some not. Reflecting now on Pickens and his plan, I’m struck, first, by his boldness in imagining a changed energy future and, second, by how quickly things shifted in ways even such a visionary could not foresee.At almost the exact moment the Pickens Plan debuted, oil prices hit their all-time peak of $147 a barrel. They’re now hovering about $90 a barrel lower.As Pickens mentioned in his whiteboard presentation, the U.S. was then importing most of the oil it consumed. U.S. production amounted to a little over 5 million barrels a day. Since then, thanks to the hydraulic fracturing revolution, oil production has more than doubled.And natural gas production has risen almost 60%.In 2008, as Pickens noted, half of America’s electricity supply came from coal, a share that has since fallen to 27%. In the Pickens Plan, wind and nuclear power were expected to displace gas-fired power, so that gas could be shifted into transportation. Solar energy and electric vehicles were not even mentioned. Now, both natural gas and wind have become alternatives to coal, while the biggest disruption for oil has been new technology in the oil business itself.Pickens got the wind industry wrong, by his own rather salty admission. But, that’s not a criticism of his plan. (As he pointed out, he wasn’t really wrong, just early.) It’s a testament to the man’s forward thinking that he could see natural gas as an alternative to oil, and wind as a major source of power. A new research paper from the World Economic Forum has an elegant framework for thinking about such energy transitions: They differ according to whether you consider the big picture of global supply and demand, or the change that happens at the margins of both. The authors describe these two narratives as “gradual” and “rapid.”The gradual narrative, the authors say,… is that the energy world of tomorrow will look roughly the same as that of today. Gradual scenarios extrapolate current patterns of policy, industry, consumption and investment, thus supporting planned carbon-intensive investment decisions and implying that the global energy system has an inertia incompatible with the Paris Agreement.The rapid narrative, on the other hand,… is that new energy technologies are rapidly supplying all the growth in energy demand, leading to peak fossil fuel demand in the course of the 2020s. Rapid scenarios suggest that current technologies and new policies will reshape markets, business models and patterns of consumption, challenging planned carbon-intensive investment and leading to a low-carbon global economy while creating considerable economic and social benefits.The difference is explained by the fact that total global energy supply is immense and grows only about 1 to 2% per year. In 2017, total primary energy supply was 13,475 million metric tons of oil equivalent; the change in supply was 246 million metric tons of oil equivalent. A focus on the former makes it hard to see not only that change is happening but also that change is possible.Last year’s growth in supply was unusually high, but more than a third of it came from renewable energy. If total supply had grown only as much as it did in 2015, then renewables would have been all new supply. In other words, the implications of rapid change are significant. No one sets out to get things wrong, of course, least of all Pickens, who spent $100 million of his own money on his plan. Some questions have yet to be answered — and big changes are underway — even in large and established systems like energy. Rapid changes are happening even faster than their proponents expected.Pickens was also an avid Twitter user to the very end. Seven years ago, the recording artist Drake tweeted that “The first million is the hardest.” Pickens, who had made and lost far larger amounts many times over, had this response:Weekend readingJoe Nocera bids fond farewell to T. Boone Pickens.We are in the era of four gas mega-players, says Nikos Tsafos — Russia, the U.S. and Qatar as exporters, and China as importer.The shipping industry’s dream of carbon neutrality is drifting away.Investment manager David Swensen made Yale fabulously rich.In markets gone mad, investors find rare comfort in data science.Karl Smith has some good news about income inequality.WeWork’s planned IPO marks the end of the unicorn era.Felix Salmon outlines MIT’s expanding Jeffrey Epstein scandal.Insurers are dropping home coverage in Berkeley, California, due to fire risk.A new poll finds that Democrats and Republicans both say humans are causing climate change, though they differ in their certainty about human causes.Last month, Porsche set a four-door electric car record at the Nürburgring. Tesla now plans to beat that record, with former Formula One champion Nico Rosberg driving.To contact the author of this story: Nathaniel Bullard at email@example.comTo contact the editor responsible for this story: Mary Duenwald at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Nathaniel Bullard is a BloombergNEF energy analyst, covering technology and business model innovation and system-wide resource transitions.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Donald Trump’s big idea to refinance America’s burgeoning debt by selling ultra-long-term bonds, locking in historically low interest rates for a half-century or more, has never been all that popular on Wall Street.But even if he goes through with it, there’s little chance it will actually save taxpayers much money as the deficit spirals toward $1 trillion.The Treasury Department shelved the idea of ultra-long bonds after a tepid reception just two years ago. But it resurfaced during an economic briefing in the Oval Office on Aug. 14 -- the day that rates on 10-year U.S. debt fell below those due in two years, according to one person familiar with the matter. Treasury Secretary Steven Mnuchin and his top economic adviser Larry Kudlow suggested ultra-longs to Trump, who wanted to learn more, the person said. Two days later, Mnuchin announced the government was once again considering issuing 50- or even 100-year bonds.The flaws in their plan, at least among those on Wall Street, are obvious. First, with a public debt burden of $16 trillion and rising, it’s unlikely the U.S. could ever sell enough of the securities to shift the interest burden from its shorter-term obligations in any meaningful way. Second, investors would likely ask for higher yields to hold onto ultra-long obligations vis-à-vis shorter-term debt. That could easily raise -- rather than lower -- the government’s overall costs.“This wouldn’t really move the needle,” said Praveen Korapaty, chief global rates strategist at Goldman Sachs. “So it’s questionable if it’s even worth your energy trying to potentially save -- and it’s not a guaranteed saving.”That hasn’t stopped the administration from pressing its case. Since that August meeting, Trump has hinted at his interest in long bonds.On Thursday, Mnuchin said he would issue ultra-long bonds as soon as next year if there is investor appetite. His team has already reached out to the Treasury Borrowing Advisory Committee and other market participants on the issue, and will soon do the same with foreign governments as well.“It’s quite attractive for us to extend and de-risk the U.S. Treasuries borrowing,” he said on CNBC.The numbers suggest that might be easier said than done.Currently, the U.S. government pays roughly $300 billion a year in net interest expenses, which includes the coupon payments on its Treasury debt. That amount is set to more than double over the next decade as Trump’s tax cuts and increased spending on Social Security and Medicare push the government even deeper into the red -- boosting its debt load by trillions.So even if the Treasury sold $50 billion in 50-year bonds next year at a small premium to the 2.3% yield on 30-year bonds -- which some have pegged as a best-case scenario -- it wouldn’t move the needle on interest costs.True, it would defer the need to repay that amount far into the future and avoid potentially higher refinancing costs in the short-term. But it would be a drop in the bucket compared with the over $10 trillion increase in the nation’s debt burden that the Congressional Budget Office forecasts for the next decade. That growth is the main force driving up U.S. interest expenses.And TBAC, a committee of large bond dealers and investors that advises the Treasury on debt-management matters, has in recent years indicated that shifting issuance more heavily to securities with maturities of five years or less is the most attractive mix to meet the government’s debt-financing goals.Granted, “there is a rare opportunity to get low interest rates and also lower roll-over risk,” said Marc Goldwein, senior policy director at the nonpartisan budget watchdog Committee for a Responsible Federal Budget. “But to think that issuing ultra-long term debt is a sort of cheating way out of our fiscal problems is pretty naïve. Our interest costs are surging fundamentally because the amount of our debt is rising.”The Treasury’s longstanding preference for regular and predictable debt issuance may also complicate matters. While there have been any number of cases in recent years of governments (see Austria, Belgium and even Argentina) selling 100-year bonds to take advantage of the global decline on borrowing costs, they’ve all been largely opportunistic one-offs.To inundate the market with regular sales would be quite another thing. It’s one reason Wall Street predicts demand for ultra-long Treasuries would be limited and lead the Treasury to pay more in interest to attract buyers. According to a JPMorgan Chase & Co. client survey, a 50-year bond would likely yield 10 to 20 basis points more than the 30-year.Another is the added risk of owning such long-maturing debt, prices on which are more sensitive to swings in interest rates. A small increase in yields can lead to large losses for investors on their principal. Those risks were never more clear than on Sept. 5, when optimism about the trade war drove longer-term Treasuries to their biggest intraday rout since the day after Trump’s election in 2016. Austria’s 100-year bonds also suffered losses, leading commentators to point out just how quickly gains on ultra-longs can evaporate.Of course, nobody is doubting Uncle Sam’s ability to auction its debt, regardless of maturity. And some see good reasons for issuing longer-term debt, in particular that it reduces roll-over risk -- the chance that when the government’s obligations mature Treasury has to refinance at higher rates.But to many observers, adding 50-year securities isn’t an effective way give taxpayers a break.“You do have an aging population, so demand for long-term fixed-income instruments will go up over the next decade,” said Chirag Mirani, head of U.S. rates strategy at UBS. “But given that our debt outstanding is so high, even sales of $20 or $30 billion of 50-year bonds a year doesn’t give any real clear marginal gain given we have to finance a near $1 trillion deficit.”(Updates yields, adds context on issuance projections.)\--With assistance from Alex Wayne.To contact the reporters on this story: Liz Capo McCormick in New York at email@example.com;Saleha Mohsin in Washington at firstname.lastname@example.orgTo contact the editors responsible for this story: David Gillen at email@example.com, Michael Tsang, Mark TannenbaumFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.