ME - Wall Street Breakfast Podcast: G7 Oil Price Cap Falters In First Year

2023-12-06 06:41:59 ET

Summary

• G7 oil price cap on Russian oil has failed to live up to its potential, cutting export profits by 14% but lacking consistent enforcement.
• 23andMe faces legal challenges and a one-time charge of $1-2 million due to a major hacking incident.
• SEC extends decision timeline on Grayscale's spot ether ETF application by 45 days to January 25, 2024.

Listen below or on the go on Apple Podcasts and Spotify

G7 oil price cap mostly a failure after one year, report says. (00:28) 23andMe ( ME ) facing mounting litigation over hacking incident. (01:49) SEC extends deadline to decide on Grayscale's ( ETHE ) spot ether ETF application. (03:03)

This is an abridged transcript of the podcast.

It has been a year since the launch of the G-7 price cap on Russian oil and though the measure has managed to curb some of the country's export revenues, it has "failed to live up to its potential," according to a new report issued Tuesday by the Centre for Research on Energy and Clean Air.

The report said the oil price cap has cut Russia's oil export profits by 14%, or nearly $37B, but most of the reductions were concentrated in the first half of the year, leaving the impact " far short of what could have been achieved."

It went on to say that "a failure to enforce, strengthen and consistently monitor the price cap has allowed Russia to undo the impact in the second half of the year."

The report recommended cutting the capped price in half to just $30/bbl and imposing stronger penalties on violators, such as a 90-day ban on using Western maritime services.

U.S. and European Union leaders are considering tougher enforcement of the cap, and the U.S. recently has sanctioned some vessels and their owners for violations.

Crude oil futures posted their lowest settlements in five months on Tuesday, with front-month Nymex crude ( CL1:COM ) for January delivery closing -1% to $72.32/bbl and front-month February Brent crude ( CO1:COM ) also ending -1% to $77.20/bbl, the fourth straight daily decline for both benchmarks.

23andMe (NASDAQ: ME ) disclosed in an SEC filing that it was facing multiple class action claims related to a major hacking incident last fall.

In a filing made Friday, 23andMe said it plans to take a one-time charge of $1M to $2M due to the incident. The charge would consist of expenses for technology consulting services, legal fees and third-party advisors.

The DNA testing company also said it believes direct or indirect impacts from the breach could negatively affect its financial results for the fiscal year ending March 31, 2024.

23andMe also said that as a result of the hacking incident, multiple class action claims have been filed against the company in federal and state court in California and Illinois, and in courts in Ontario and British Columbia, Canada. It added the lawsuits were at the early stage and that it “couldn’t predict the outcome.”

“The full scope of the costs and related impacts of this incident and related litigation, including, without limitation, the availability of insurance to offset some of these costs, cannot be estimated at this time,” the company added.

In related news, TechCrunch reported that 23andMe confirmed the data breach impacted around 6.9M of its users .

The U.S. Securities and Exchange Commission said Tuesday it's pushing the deadline to decide on whether to approve Grayscale's proposed spot ethereum ( ETH-USD ) exchange-traded fund.

The timeline for a decision on the fund has been extended by 45 days to Jan. 25, 2024, according to an SEC filing.

"The Commission finds it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised therein," the regulator said .

In October, Grayscale filed an application to convert its Grayscale Ethereum Trust ( OTCQX:ETHE ), launched in March 2019, to a spot ETF. Firms including Grayscale have also been seeking SEC approval for what would be the first-ever spot bitcoin ( BTC-USD ) trust in the U.S.

Other articles to look out for on Seeking Alpha:

Five9 falls after hours on disclosure that it's not pursuing any transaction

Elon Musk's xAI startup files to raise up to $1B in equity offering

Apple climbs back above $3T amid smartphone optimism

On our catalyst watch for the day,

• The Morgan Stanley Global Consumer and Retail Conference will include presentations from Delta Air Lines ( DAL ), Revolve Group ( RVLV ), and Rent the Runway ( RENT ).

• The Senate Committee on Banking, Housing, and Urban Affairs will hold its annual oversight hearing on Wall Street firms. Witnesses will include Wells Fargo ( WFC ) CEO Charles Scharf, Bank of America ( BAC ) CEO Brian Thomas Moynihan, JPMorgan Chase ( JPM ) CEO Jamie Dimon, Citigroup ( C ) CEO Jane Fraser, State Street ( STT ) CEO Ronald O’Hanley, BNY Mellon ( BK ) CEO Robin Vince, Goldman Sachs ( GS ) CEO David Solomon, and Morgan Stanley ( MS ) CEO James Gorman.

• The Barclays Global Technology, Media and Telecommunications Conference will feature presentations from a long list of companies that includes executives from Intel ( INTC ), Lyft ( LYFT ), and Microsoft ( MSFT ). Workday ( WDAY ) Co-CEO Carl Eschenbach will deliver a keynote address at the event.

• The two-day AI Summit New York will begin. Speakers on various AI topics include representatives from Microsoft ( MSFT ), CVS Health ( CVS ), FedEx ( FDX ), Lockheed Martin ( LMT ), and Wells Fargo ( WFC ).

• Exxon Mobil ( XOM ) will host its 2023 Corporate Plan Update video call.

Tuesday’s trading:

The Nasdaq ( COMP.IND ) advanced 0.31%. The S&P 500 ( SP500 ) inched lower by 0.06%, while the Dow ( DJI ) slipped 0.22%.

Of the 11 S&P sectors, eight ended in the red, led by Energy and Materials. Growth sectors were the three gainers.

The 10-year yield ( US10Y ) was down 11 basis points to 4.18%. The 2-year yield ( US2Y ) was down 7 basis points to 4.59%.

Now let’s take a look at the markets as of 6 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are in the green . The Dow is up 0.2%, the S & P 500 is up 0.3% and the Nasdaq is up 0.3%. Crude oil is down 1.1% at more than $71 per barrel. Bitcoin is up 5.4% and above $43,000.

In the world markets, the FTSE 100 is up 0.4% and the DAX is up 0.3%.

The biggest movers for the day premarket: SentinelOne (NYSE: S ) is up more than 18% after the cybersecurity firm exceeded Q3 expectations and raised its FY2024 revenue outlook with an upbeat Q4 sales forecast. Box (NYSE: BOX ) is down more than 12% as the company revised its FY2024 EPS forecast .

On today’s economic calendar:

• 815 am ADP jobs report

• 10:30am EIA petroleum inventories

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