Bloomberg
“Oil Faces a Month of Mayhem as Geopolitical Risks Proliferate.”
Plunging Venezuelan crude production; sanctions disrupting Iranian oil exports; Saudi Arabia pushing for even higher prices; North Korea peace talks — the coming weeks bring an abundance of risks for the oil market.
The geopolitical premium has already helped lift crude prices to a three-year high. There are several dates coming up which could have a significant impact on global oil supply and demand, or at the very least elevate the risk of a market-moving presidential tweet.
Within five days, U.S. President Donald Trump must choose whether to pull out of the Iran nuclear deal and reimpose restrictions on oil shipments from the Organization of Petroleum Exporting Countries’ third-largest producer. It’s a decision that could remove a big chunk of supply from the market — about 1 million barrels a day under the previous sanctions regime — and risk further escalating regional tensions.
A collapsing economy has already taken a huge toll on this South American OPEC member’s oil production. Things could get even worse if the U.S. finds cause to question the legitimacy of the presidential election on May 20 and imposes oil sanctions.
The sudden detente between Trump and North Korean leader Kim Jong-Un doesn’t directly affect the oil market, but the stakes are high for a region that’s still the largest source of demand growth.
There’s little risk priced in currently and the summit between the two leaders planned for early June would only move the market if it’s a spectacular failure, said McNally. If Trump were to walk out saying Kim was being unreasonable and “we are going to have do this the hard way” then it would be bearish for crude, he said. Northeast Asia generates 20 percent of global GDP and a significant amount of oil demand growth.
Reuters
“Buffett bashes bitcoin as nonproductive, thriving on mystique.”
Billionaire investor Warren Buffett on Monday said buyers of bitcoin, which he has characterized as “rat poison squared,” thrive on the hope they’ll find other people who will pay more for it.
Likening bitcoin demand to the tulip mania in 17th century Holland, Buffett, the chairman and chief executive of Berkshire Hathaway Inc, said the mystique behind the cryptocurrency has driven a surge in its price.
“It does create a rising price, creates more buyers … If you don’t understand it, you get much more excited,” Buffett said on CNBC television. “People like to speculate, they like to gamble.”
Charlie Munger, Buffett’s longtime business partner and a Berkshire vice chairman, described bitcoin as “worthless artificial gold.” He likened it to Oscar Wilde’s definition of fox hunting, calling it “the pursuit of the uneatable by the unspeakable.”
Buffett said investors would instead be much better off investing in U.S. stocks, which in turn are also a far better investment than 10- or 30-year U.S. government bonds. Buffett said stock prices are elevated but not in a bubble.
He said he would much rather have Berkshire’s pile of cash and equivalents be $30 billion, rather than the $108.6 billion it was at the end of March, but good deals have not emerged.
BBC News
“Trump backs CIA nominee Gina Haspel after she offered to quit.”
President Donald Trump has defended his nominee to head the CIA after she offered to withdraw amid concern over her role in harsh interrogation techniques widely seen as torture.
Mr Trump said Gina Haspel had «come under fire because she was too tough on terrorists». Ms Haspel, who faces a tough Senate confirmation hearing on Wednesday, has now decided not to withdraw. The tight 51-49 party split in the Senate makes confirmation uncertain. The post became vacant after Mike Pompeo was appointed secretary of state last month. Ms Haspel would be the first woman to head the CIA if confirmed.
She has been at the CIA for 33 years, almost entirely undercover but most recently as deputy director, and her time at the agency covered the period when techniques that included waterboarding were used in a controversial interrogation programme for terrorist suspects.
Ms Haspel herself ran a so-called «black site» in Thailand, a secretive overseas prison where such interrogations were carried out. She also apparently feared repeating the fate of Ronny Jackson, who withdrew his nomination for Veterans Affairs secretary amid questions over alleged past misconduct.
Her misgivings prompted senior White House aides, including press secretary Sarah Huckabee Sanders, to rush later on Friday to meet her at CIA HQ in Langley, Virginia. The Post said it was not until Saturday that Ms Haspel decided to remain the nominee.
Bloomberg
“Nestle Bets $7 Billion on Starbucks to Revive Coffee Sales.”
For years, a smoldering George Clooney would sip his espresso and ask: “Nespresso…what else?” Turns out the answer is: Starbucks.
In the third-biggest transaction in Nestle SA’s 152-year history, the Swiss food giant will spend $7.15 billion for the right to market Starbucks Corp. products from beans to capsules, marrying its international distribution network with the allure of arguably the biggest name in java.
Nestle won’t get any physical assets in the deal. Instead, Chief Executive Officer Mark Schneider is harnessing the name recognition of Starbucks, with its 28,000 outlets around the globe and massive draw in the U.S. Nestle has struggled there for years with its own products like Nespresso and Dolce Gusto.
Nestle could use a jolt — sales rose at their weakest pace in more than two decades last year. By entering a marketing pact with Starbucks, the Swiss company is revealing the limits to growing with Nescafe and Nespresso.
Starbucks shares rose less than 1 percent in New York trading. The company said it will use the deal proceeds to accelerate stock buybacks. Nestle gained as much as 1.8 percent in Zurich. Its shares have dropped about 7 percent this year.