OPEC Rumbles, Reinsurance Stumbles
OPEC leaders disparage the dollar, and oil rises. Reinsurance giant Swiss Re takes a $1 billion hit from the U.S. subprime meltdown. And biotech company Celgene buys Pharmion.
EWS AT A GLANCE
OPEC dollar comments hit oil
Oil prices reversed their recent decline today, inching upward after OPEC heads of state said the oil cartel could ditch the sinking dollar. At the end of a rare OPEC leaders’ summit in Saudi Arabia yesterday, Iranian President Mahmoud Ahmadinejad blamed rising oil prices on the weak dollar, which he called a “worthless piece of paper,” and said that member states were interested in converting their dollar reserves to another currency. (AP in Yahoo! Finance) OPEC declined to raise output until at least December, further pressuring prices. (Bloomberg) The average price of gas jumped 13 cents to $3.09 a gallon, close to the record high set in May, according to the Lundberg survey. (CNN)
Swiss Re takes $1.1 billion subprime hit
Swiss Reinsurance, the world’s largest reinsurer, reported a $1.1 billion pretax charge tied to U.S. subprime losses. Swiss Re is the first reinsurer to report a hit from the subprime crisis. (Reuters) Its shares were trading down 5.2 percent early today. (MarketWatch) Helvea analyst Tim Dawson said Swiss Re’s financial services operations, which booked the loss, has been “a bit of a black box.” He added, “The question is, since they can make tons of money in reinsurance, what were they doing with all this stuff?” (Bloomberg) Also in Switzerland, leading insurer Swiss Life said it was selling its Dutch and Belgian units to Dutch bank SNS Reaal for $2.2 billion. (Reuters)
Biotech, beer buyouts
Biotech company Celgene agreed to buy Pharmion, a producer of blood-cancer treatments, for $2.9 billion. The $72-a-share deal represents a 46 percent premium on Pharmion’s Nov. 16 closing price. Pharmion already has four drugs on the market, including Vidaza, a popular treatment for the pre-leukemia disease myelodysplastic syndrome. (The Wall Street Journal) “It’s a great move for Celgene,” said Rodman & Renshaw analyst Michael King. “Vidaza has the potential to be a billion-dollar product.” (Bloomberg) In other merger news, beer giant SABMiller said it is buying Dutch brewer Grolsch for $1.2 billion in cash. (Reuters)
The luck of the . . . Brazilians?
Brazil became a net energy exporter just last year, relying on sugar-cane ethanol production and hydroelectric power. But the recent discovery of a huge oil and natural gas reserves—5 billion to 8 billion barrels—could propel Brazil into the big time. The light-crude discovery could put Brazil between Nigeria and Venezuela in oil reserves. And Peter Hakim of the Inter-American Dialogue notes that unlike Nigeria and Venezuela, Brazil is diversified enough to avoid the single-resource “oil curse.” (BusinessWeek.com) “Everything they have developed, from soybeans to sugar to oil is suddenly working,” he said. “They have had amazing luck.” (The New York Times, free registration required)
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
MOST POPULAR ON THE WEEK
- How to be the most productive person in your office — and still get home by 5:30 p.m.
- Ted Cruz is the new Sarah Palin
- 43 TV shows to watch in 2014
- How liberals are unwittingly paving the way for the legalization of adult incest
- How the Simpsons/Family Guy crossover revealed the worst of both shows
- Watch out, China — America is working on dogfighting drones
- 6 things the happiest families all have in common
- Fall film guide: All the movies you should see in October
- Why you probably don't have Ebola — even if you shook hands with America's 'patient zero'
- You're reheating pizza wrong
Subscribe to the Week