The Berkshire Hathaway Portfolio

The Berkshire Hathaway Portfolio

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  • How Goldman Sachs Makes Money: Public and Private Sector Financial Services
    Investopedia2 hours ago

    How Goldman Sachs Makes Money: Public and Private Sector Financial Services

    More than years after the subprime meltdown, Goldman Sachs is a robust multi-billion-dollar company instead of a historical footnote. Here's why.

  • Powell Opens Door to July Rate Cut Amid Trumpian Uncertainty
    Bloomberg2 hours ago

    Powell Opens Door to July Rate Cut Amid Trumpian Uncertainty

    (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan once remarked that uncertainty is the “defining characteristic’’ of monetary policy – and he never had to deal with President Donald Trump.In a reversal of monetary policy, current Fed chief Jerome Powell on Wednesday opened the door to an interest rate cut as early as next month.He made clear that uncertainty -- primarily about the president’s trade battles and their potentially corrosive impact on the U.S. and other economies -- was a major factor behind the shift, along with weaker-than-wanted inflation.“While the baseline outlook remains favorable, the question is whether these uncertainties will continue to weigh on the outlook and thus call for additional monetary policy accommodation,’’ he told reporters after the Fed left rates unchanged.Those uncertainties may not lift any time soon. While Trump is slated to meet Chinese President Xi Jinping later this month at the G-20 summit in Japan to discuss their ongoing trade war, the president’s proclivity to abruptly shift his tariff strategy could keep corporate decision makers on edge for a while. It’s also put the European Central Bank on alert for a potential easing of its monetary policy.The trade tensions “are undercutting confidence and that is slowly spreading throughout the economy,’’ said Ethan Harris, head of global economics research at Bank of America Merrill Lynch. “The tariff termites are chewing quietly under the surface.’’Trump, for his part, has been far from quiet. He’s repeatedly criticized Powell and the Fed for keeping credit too tight and complained that the central bank is undercutting efforts to win his battles with China and other trading partners.The president asked White House lawyers earlier this year to explore options for removing Powell as Fed chair, and Trump told confidants as recently as Wednesday that he believes he has the authority to replace him, Bloomberg reported this week.Powell, who’s vowed to protect the Fed’s independence, said on Wednesday that he expects to get a clearer a read on whether the economy needs easier credit “in the very near term.’’ He also refused to rule out the possibility of a half percentage point reduction.“That’s just something we haven’t really engaged with yet,’’ he said when asked about a 25 or 50 basis point move. “It will depend very heavily on incoming data and the evolving risk picture as we move forward.’’“You can’t rule out a 50 basis point move in July,” said John Herrmann, director of U.S. rate strategy at MUFG Securities Americas. “He sounded at least willing to entertain the idea, which is more aggressive than markets were thinking.’’Goldman Sachs Group Inc. now expects the Fed to cut by 25 basis points in both July and September and isn’t ruling out the possibility of a move of 50 basis points “if the news flow disappoints.” The need to get ahead of the bond market could be another reason to push Fed officials toward a bigger reduction, economists including Jan Hatzius wrote in a note.The Fed’s statement Wednesday and Powell’s remarks in the subsequent press conference were well received by investors, with both stock and bond prices rising. Markets have sometimes expressed disappointment at Powell’s communications.Inflation MutedThe Fed can afford to be aggressive because inflationary pressures are muted. Indeed, Powell suggested that sluggish price pressures could be a reason on their own for the central bank to reduce rates.“We are well aware that inflation weakness that persists even in a healthy economy could precipitate a difficult-to-arrest downward drift in longer run inflation expectations,’’ he said.The Fed has failed to convincingly hit its 2% inflation objective since 2012. What’s more, inflation expectations, particularly in financial markets, have fallen recently and Fed officials themselves marked down their forecast of price rises this year, to 1.5%, from 1.8% in March.Powell also suggested that the labor markets might not yet be tight enough to generate the sort of the wage-driven rise in inflation that the Fed is seeking.While salaries are increasing, they’re not growing “at a pace that would provide much upward impetus to inflation,’’ he said.That’s despite the fact unemployment is near a half century low of 3.6%.The Federal Open Market Committee’s vote on Wednesday to leave rates unchanged -- in a 2.25% to 2.5% range -- was not unanimous, with St. Louis Fed President James Bullard seeking a quarter-point rate cut. His vote marked the first dissent of Powell’s 16-month tenure as chairman.While officials were divided on the path for policy -- eight of 17 penciled in a reduction by the end of the year as another eight saw no change and one forecast a hike -- Powell said most agreed that the possibility of a move has risen.The risks “have called a number of us to write down rate cuts, and a number of those who haven’t to see that the case has strengthened,” he said.“The main message we heard from Powell’s press conference was that the only argument against cutting rates today was a desire to wait a little to learn a lot,’’ JPMorgan Chase & Co. chief U.S. economist Michael Feroli said in a note to clients.“The burden is on the data looking quite solid and trade policy turning more growth favorable to defuse the case for cutting at the next meeting,” he added.(Updates with Goldman rates call in 12th paragraph.)\--With assistance from Craig Torres and Malcolm Scott.To contact the reporters on this story: Rich Miller in Washington at rmiller28@bloomberg.net;Christopher Condon in Washington at ccondon4@bloomberg.netTo contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Alister BullFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Embraer Nabs Yet Another Regional Jet Order in the U.S.
    Motley Fool5 hours ago

    Embraer Nabs Yet Another Regional Jet Order in the U.S.

    The Brazilian aircraft manufacturer has taken the U.S. regional airline sector by storm since 2013.

  • Exclusive: T-Mobile prepares for Boost auction if Dish Network talks stall - sources
    Reuters9 hours ago

    Exclusive: T-Mobile prepares for Boost auction if Dish Network talks stall - sources

    Investment bank Goldman Sachs Group Inc , which is advising T-Mobile, the third largest U.S. wireless carrier, on selling prepaid brand Boost Mobile as part of the company’s concession to gain regulatory approval to buy Sprint Corp, is expected to send out books to prospective buyers in two weeks, one source familiar with the matter said. While satellite television provider Dish Network remains the front-runner to acquire the Boost assets, Goldman has told prospective buyers as late as Tuesday that it is preparing for an upcoming auction of Boost. Another source characterized the process being run by Goldman as moving slowly.

  • Looking Ahead to the Q2 Earnings Season
    Zacks9 hours ago

    Looking Ahead to the Q2 Earnings Season

    Looking Ahead to the Q2 Earnings Season

  • Wells Fargo (WFC) Stock Sinks As Market Gains: What You Should Know
    Zacks10 hours ago

    Wells Fargo (WFC) Stock Sinks As Market Gains: What You Should Know

    In the latest trading session, Wells Fargo (WFC) closed at $45.65, marking a -0.98% move from the previous day.

  • Ripple executive on blockchain startup’s outlook: ‘We’re planning aggressive growth’
    American City Business Journals10 hours ago

    Ripple executive on blockchain startup’s outlook: ‘We’re planning aggressive growth’

    San Francisco-based Ripple sees a deal to buy about 10 percent of MoneyGram for $30 million as a means to expand a key part of its operations.

  • Slack Hustles to Avoid Day One Pop as Next Unicorn to List
    Bloomberg10 hours ago

    Slack Hustles to Avoid Day One Pop as Next Unicorn to List

    (Bloomberg) -- As 2019’s bumper crop of initial public offerings either languishes or wildly exceeds expectations, Slack Technologies Inc. is taking a route to the trading floor that it hopes will yield a much more boring outcome.Following in the footsteps of music-streaming service Spotify Technology SA last year, the workplace messaging application is set to start trading on the New York Stock Exchange Thursday via a direct listing. It’s just the second large company to test the unusual method and will be closely watched by other potential candidates to see how successfully the company and its advisers pull it off.Investors got their first hint of how things are going when Slack’s reference price was set at $26 per share on Wednesday. Unlike the offering price paid by investors in a traditional IPO, the reference price doesn’t establish the valuation, though it’s partly based on recent trading in private markets. Its main purpose is to provide a starting point to allow trading to begin under New York Stock Exchange rules.With IPO heavyweight advisers from Goldman Sachs Group Inc., Morgan Stanley and Allen & Co. helping to steer Slack through its listing alongside market maker Citadel Securities, all eyes will be on how the first day of trading plays out. But the company and its investors aren’t looking for a meaningful stock pop -- and want to avoid the volatility -- that often accompanies high-profile share sales, according to a person familiar with the process.On Wednesday, Slack said that its investors had converted additional Class B stock to Class A shares, increasing the number that could be sold to 194 million from 181 million, out of a total of 504.4 million. Especially because there’s no lock-up period, there’s a risk of too few investors wanting to buy or too many wanting to sell.“A direct listing can be considered risky for a variety of reasons," Alejandro Ortiz, an analyst at SharesPost, said in a note. “There is an increased chance of substantially more supply than demand for Slack’s shares. All of this could result in heightened volatility in the early hours and days of trading.”Reference PriceFifteen months after its own direct listing, Spotify trades about 12% above its reference price of $132, at about $148 a share on Wednesday. That’s well below where the stock opened on its first day of trading in April 2018, though, at $165.90 apiece.On Thursday, much of the attention at the exchange will be focused on one man. Pete Giacchi, a longtime market maker at the NYSE for Citadel Securities, will be tasked with opening the stock –- just as he was for Uber Technologies Inc.’s listing in May, people with knowledge of the matter said. It could be a long wait: Spotify’s shares took more than three hours to start trading, and it will take a while to make sure that the pricing and trading volumes coming in are at levels that Slack and its advisers are comfortable with.Supply, DemandMorgan Stanley, as the named adviser to the designated market maker, will be constantly trying to get a sense of supply and demand for the shares to advise on that opening price. The bank’s team includes global head of technology capital markets, Colin Stewart, as well as David Chen, who leads software banking. John Paci, the co-head of U.S. equities trading, will help advise the designated market maker on where the stock should open based on buying and selling interest gleaned from investors, according to people familiar with the details.At Goldman Sachs, the work will be led by Nick Giovanni, co-head of the global technology, media and telecommunications group, equity capital markets head David Ludwig and Will Connolly, co-head of the West Coast financing group and head of technology ECM.One thing Slack’s listing will have in common with an IPO: executives including Chief Executive Officer Stewart Butterfield and finance chief Allen Shim are expected to be pacing the floor of the NYSE for the open. They may not stick around all day, though. They will likely spend some time at the offices of their advisers before celebrating with employees and customers, according to a person with knowledge of the matter.Representatives for Slack, Goldman Sachs, Morgan Stanley and Citadel Securities declined to comment.Private FundsSlack’s decision to bypass a traditional IPO -- and the opportunity it brings to raise funds -- is yet another sign of how benevolent private markets have been to tech startups in recent years. Slack’s earliest major investor, venture capital firm Accel, has directed a fire hose of money at the messaging company over the years, investing from several of its funds to accumulate a 23.8% stake.In addition to Accel, Slack captured the imagination of elite investors such as Andreessen Horowitz and Social Capital. But it was SoftBank Group Corp.’s behemoth Vision Fund, which also owns stakes in Uber and WeWork Cos., that accelerated Slack’s fundraising when it led a $250 million investment in 2017.One of the main reasons that Slack has remained well capitalized, however, is that it burns through less cash than some of SoftBank’s other investments. Uber, for instance, accumulated more than $10 billion in operating losses in three years. While Slack expects higher-than-usual losses in the second quarter, that still amounts to only about $75 million to $77 million for the three months, even including expenses related to the listing.Growth vs. ProfitabilityThe high demand for IPOs by the likes of money-losing companies including Uber, Lyft Inc. and Beyond Meat Inc. proves that investors remain focused on growth prospects over profitability –- in the short term at least.With Uber leading the pack with its $8.1 billion offering, 79 companies have raised $28.88 billion in U.S. IPOs this year, according to data compiled by Bloomberg. That includes five other listings topping $1 billion, including the $2.34 billion IPO by Uber’s ride-hailing rival Lyft.With no lock-up period for a direct listing, Slack investors could be jittery about any updates from the company, perceived competitive threats or other risks.Tiny SpeckIn its filings, Slack has warned investors that it’s a relatively new business, launching only in 2014 after existing for several years as a gaming company called Tiny Speck. Its rocket-ship ascent has attracted plenty of investors, but gives new potential shareholders only a limited trajectory to study.Another challenge for Slack is one that fellow mega startups like Uber have grappled with, namely whether they can move beyond the core offering that their early years of success were built on. While Slack has improved its product so that it can serve larger companies, many customers still consider it an easy-to-use, aesthetically pleasing workplace messaging platform, despite speculation that it could evolve into a catch-all portal for business applications.One thing that could make Slack’s debut more unpredictable than Spotify’s is its investor base. Because the company’s ownership is more concentrated among fewer, larger shareholders, it could be more difficult to gauge the supply of shares that are likely to be traded, one person with knowledge of the process said. Both buyers and sellers may also hang back on day one to see how trading goes before getting involved: Just 30 million of Spotify shares changed hands in its trading debut, less than a third of the total available.\--With assistance from Crystal Tse and William Hobbs.To contact the reporters on this story: Eric Newcomer in San Francisco at enewcomer@bloomberg.net;Sonali Basak in New York at sbasak7@bloomberg.net;Ellen Huet in San Francisco at ehuet4@bloomberg.netTo contact the editors responsible for this story: Mark Milian at mmilian@bloomberg.net, ;Michael J. Moore at mmoore55@bloomberg.net, Elizabeth Fournier, Michael HythaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Dow Jones Today: Stocks Almost Had Some Fed Fun
    InvestorPlace11 hours ago

    Dow Jones Today: Stocks Almost Had Some Fed Fun

    As was expected, the Federal Reserve left interest rates unchanged following the conclusion of its two-day meeting today. But what market participants wanted was inklings of hope that a rate cut could materialize later this year. That wish was granted, helping stocks rally into the close.Source: Shutterstock Importantly, the word "patient" was not featured in the Federal Open Market Committee (FOMC) statement, indicating the Fed could take a more proactive approach to managing rates if the world's largest economy starts to show signs of weakness."The Committee continues to view sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective as the most likely outcomes, but uncertainties about this outlook have increased," said the FOMC. "In light of these uncertainties and muted inflation pressures, the Committee will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective."InvestorPlace - Stock Market News, Stock Advice & Trading TipsOne Fed member, James Bullard, preferred to lower rates by 25 basis points at this meeting. That was not enough to deliver the coveted rate cut, but it was enough to send the Nasdaq Composite and the S&P 500 higher by 0.42% and 0.3%. The Dow Jones Industrial Average gained 0.15%. Winners, But Were There Enough?Yes, the Dow is home to just 30 stocks and in late trading, two-thirds of those names were higher. But if nitpicking is to occur on an otherwise positive day, it is worth noting that Dow's offenders today were all cyclical names. Going a bit further with the scrutiny, several of the Dow losers today were among the index's biggest components. But to be fair, some of these stocks have been on winning streaks and the Wednesday losses were mostly modest. * 7 Value Stocks to Buy for the Second Half UnitedHealth Group (NYSE:UNH), the Dow Jones' largest healthcare component, was the blue-chip index's biggest winner today, adding 1.82%. Not to play politics here, but UNH's Wednesday rally occurred a day after President Donald Trump kicked off his reelection at a rally in Orlando.Obviously, the election is a long way out, but as has been note here, UNH and rival healthcare providers have been under pressure amid speculation that Medicare For All could become a reality if a Democrat wins the White House. Again, November 2020 is a long way away, but UNH has been trending higher for almost two months and looks poised to wipe out its year-to-date loss.American Express (NYSE:AXP) was one of the best-performing financial services names in the Dow today. The stock, a Warren Buffett favorite, added 1.01% after Bank of America Merrill Lynch analyst Jason Kupferberg put a "buy" rating and a $145 price target on the shares, implying significant upside from Wednesday's close.AXP is a "a worthy investment which offers customers unique experiences beyond traditional rewards points" and "we have been pleasantly surprised to see [American Express] strategically raise card fees to help offset these costs," said the analyst in a note cited by Barron's.Home improvement giant Home Depot (NYSE:HD) ticked higher, aided by the Fed minutes. Lower interest rates often benefit companies with exposure to the residential real estate market, and that rate chatter could aid Home Depot in its quest to break through resistance at the $210 area. If that happens, it could be off to the races for the stock. Bottom Line on the Dow Jones TodayIt is difficult to complain about Wednesday's price action. Sure, stocks could have gained more, but for the most part, investors got what they wanted in terms of dovish Fed commentary. Plus, Fed funds futures are indicating a July rate cut is a real possibility.Fortunately, investors looking to prepare for a rate cut without incurring significantly higher risk can turned to a beloved asset class: dividend stocks and ETFs. Several dividend ETFs hit record highs today and a large batch are withing just a few percentage points of doing the same.As of this writing, Todd Shriber did not own any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Value Stocks to Buy for the Second Half * 7 Hot Stocks to Buy for a Seemingly Sleepy Summer * 6 Chip Stocks Staring At Big Headwinds in 2019 Compare Brokers The post Dow Jones Today: Stocks Almost Had Some Fed Fun appeared first on InvestorPlace.

  • GuruFocus.com11 hours ago

    Mario Gabelli Comments on American Express Co.

    Guru stock highlight

  • Why PG&E, Jabil, and Axalta Coating Systems Jumped Today
    Motley Fool11 hours ago

    Why PG&E, Jabil, and Axalta Coating Systems Jumped Today

    Big news on multiple fronts helped lift these stocks.

  • Boeing Rival Airbus Teases 'Big Number' To Come At Paris Air Show
    Investor's Business Daily11 hours ago

    Boeing Rival Airbus Teases 'Big Number' To Come At Paris Air Show

    Airbus retook the lead from Boeing with a flurry of A321XLR orders and teased a “big number” for end of the Paris Air Show.

  • Southwest Airlines Raises Revenue Target But Grounded Boeing 737 Max Takes Toll
    Investor's Business Daily11 hours ago

    Southwest Airlines Raises Revenue Target But Grounded Boeing 737 Max Takes Toll

    Southwest Airlines shares fell even after the company raised unit revenue guidance. Its grounded Boeing 737 Max fleet is hitting capacity and seeing rising costs.

  • MarketWatch11 hours ago

    Oreo maker Mondelez to buy nutrition-bar company

    Mondelez International Inc. said late Wednesday it has agreed to buy a majority interest in Perfect Snacks, a maker of refrigerated nutrition bars. Terms of the deal were not disclosed. Perfect Snacks had about $70 million in revenue last year and "strong" double-digit growth year-on-year, Mondelez said. Mondelez, the maker of Oreo cookies, Milka chocolate and other snack brands, said it plans to run Perfect Snacks as a separate business "in order to nurture its entrepreneurial spirit and maintain the authenticity of the brand." The deal is expected to close later this summer, the company said. Shares of Mondelez were flat in the extended session Wednesday after the stock ended the regular session up 0.9%.

  • Here’s What Hedge Funds Think About Liberty Latin America Ltd. (LILAK)
    Insider Monkey12 hours ago

    Here’s What Hedge Funds Think About Liberty Latin America Ltd. (LILAK)

    We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always […]

  • Mr. Peanut goes hip-hop and hoops crazy with new basketball sneaker
    American City Business Journals12 hours ago

    Mr. Peanut goes hip-hop and hoops crazy with new basketball sneaker

    Mr. Peanut, that iconic spokesman for Planters Peanuts, is getting more hip by the moment. After making his Super Bowl debut last February in a television spot with baseball star Alex Rodriguez, Mr. Peanut this week moved to ditch his familiar but rather old-school spats for something a little more hip-hop in the shoe department — a limited edition high-top sneaker from sneaker designers and artists Jeff Cole and Seth Fowler and Philadelphia-based sneaker manufacturer Rich Franklin.

  • Phillips 66 supports further expansion of Dakota Access Pipeline
    American City Business Journals12 hours ago

    Phillips 66 supports further expansion of Dakota Access Pipeline

    The top executive at Houston-based Phillips 66 (NYSE: PSX) sees opportunities to expand his company’s existing pipeline infrastructure. Phillips 66 is one of the joint venture owners behind the Dakota Access Pipeline, which pulls crude oil out of the Bakken shale and sends it south toward coastal refining and export centers. Greg Garland, CEO and chairman of Phillips 66, said that pipeline has been running at capacity, and he thinks it could expand further.

  • Phillips 66 Seeks Texas Terminal Project as Oil Exports Grow
    Bloomberg13 hours ago

    Phillips 66 Seeks Texas Terminal Project as Oil Exports Grow

    (Bloomberg) -- Phillips 66 is looking to build an offshore export terminal in the Gulf of Mexico, a project that would join a growing list of facilities being planned to handle the growing shipments of U.S. shale oil.The proposed deepwater port would be located about 21 nautical miles off the Texas coast, near the Port of Corpus Christi, the company said Wednesday in a statement. Phillips 66, the largest U.S. refining company by market value, would construct two parallel pipelines to carry crude to the facility’s two floating jetties, known as single-point mooring buoys, according to people familiar with the matter, who asked not to be named because the plan hasn’t been announced.Any offshore terminal would require approval from the U.S. Coast Guard and the U.S. Department of Transportation’s Maritime Administration.The proposed project “would provide an additional safe and environmentally sustainable solution for the export of abundant domestic crude oil supplies from major shale basins to global markets,” Dennis Nuss, a spokesman, said in an emailed statement.Phillips is already a partner in a venture to develop a deepwater marine terminal in Ingleside, Texas. Going ahead with an offshore project as well would put the company in direct competition with commodity trading house Trafigura Group Ltd., which is developing its own terminal in the Gulf of Mexico. That proposal has faced opposition from the Port of Corpus Christi, which along with The Carlyle Group is developing an onshore export terminal. (Updates with comment from company beginning in second paragraph.)\--With assistance from Sheela Tobben.To contact the reporters on this story: Rachel Adams-Heard in Houston at radamsheard@bloomberg.net;David Wethe in Houston at dwethe@bloomberg.netTo contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net, Christine BuurmaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • American modernizes fleet with big Airbus order
    American City Business Journals13 hours ago

    American modernizes fleet with big Airbus order

    American Airlines ordered 50 of the new Airbus A321XLR aircraft in a move to upgrade and modernize its fleet of aircraft.

  • Stocks Bide Time With Fed Meeting In Focus; Will Powell Give The Bulls A Present?
    Investor's Business Daily14 hours ago

    Stocks Bide Time With Fed Meeting In Focus; Will Powell Give The Bulls A Present?

    The Dow Jones and other major stock indexes weren't moving much near midday Wednesday as Wall Street awaited the conclusion of the two-day Fed meeting.

  • Bloomberg14 hours ago

    Billions at Stake in Opioid Suits, But It's No Tobacco Windfall

    (Bloomberg) -- An Oklahoma case, the first of more than 1,600 lawsuits filed by U.S. state and local governments against opioid makers to go to trial, could serve as a key benchmark for governments hoping to recoup costs associated with the public health crisis.However, verdicts and legal settlements resulting from the litigation are likely to be smaller than the 1998 global settlement with tobacco companies and won’t significantly affect government budgets, according to Fitch Ratings.The tobacco settlement with 46 states compensated them with more than $200 billion for decades of tobacco-related health-care costs, but wasn’t enough to alter state and local government credit quality, according to Fitch. The opioid epidemic has taken place over a shorter time span, and hasn’t resulted in as many deaths, according to Marcy Block, a Fitch analyst.“It’s severe, but it’s less if you think about the amount of deaths through tobacco usage,” Block said.Ten TimesMore than 47,000 Americans died from opioid overdoses in 2017, including heroin and fentanyl, a synthetic opioid, according to the National Institute on Drug Abuse. Cigarette smoking is responsible for ten times as many deaths annually, according to the Centers for Disease Control and Prevention.Oklahoma sued Johnson & Johnson, Purdue Pharma LP and Teva Pharmaceutical Industries Ltd. in 2017, alleging the companies deceived the public by overstating the benefits of their drugs while downplaying the risk of addiction. Teva in May agreed to pay $85 million to resolve the suit. Purdue Pharma, the maker of OxyContin, agreed in March to pay $270 million.Read more about how opioid makers are getting squeezed as cities try to form a negotiating groupThe opioid litigation could cost the pharmaceutical industry between $5 billion and $50 billion, based on the 1998 tobacco deal and costs of the abuse epidemic, according to Bloomberg Intelligence analyst Holly Froum. Oklahoma is seeking at least $10 billion in damages and penalties for current and future outlays from Johnson & Johnson.“The depth of evidence against the opioid manufacturers, including any potential evidence of fraudulent marketing, will be a key determinant not only of how this case is decided, but the thousands of additional cases against the industry, “ wrote Rachel Barkley, a senior vice president at Loop Capital Markets earlier this month.“Additionally, the size of any settlement would likely serve as a benchmark in future cases,” she said.Securtitized ProceedsStates and local governments issued tens of billions of dollars in muni bonds backed by the tobacco settlement and some used that money to plug budget gaps. The securities are repaid with the money they receive each year from cigarette companies under the settlement. The amount of the payments is based on annual cigarette shipments. There are currently $85 billion of tobacco bonds outstanding, including debt issued to refinance previously issued securities.At least 42 states and more than 1,900 municipalities have sued opioid manufactures and distributors, blaming them for creating a national public-health crisis and demanding billions of dollars in damages.A U.S. federal judge in Cleveland is overseeing opioid litigation brought by U.S. cities and counties and has set two trials for October. The scope of the litigation could result in a global settlement that mimics the resolution to the tobacco cases in the 1990s.The CDC estimates that the total “economic burden” of prescription opioid misuse alone in the U.S. is $78.5 billion a year, including the costs of health care, lost productivity, addiction treatment and criminal justice involvement.Factoring the economic value of lives lost, the White House’s Council of Economic Advisers estimated the costs of the epidemic in 2015 totaled $504 billion.Related: States Are Suing Opioid Makers But Their Pensions Embrace ThemTo contact the reporter on this story: Martin Z. Braun in New York at mbraun6@bloomberg.netTo contact the editors responsible for this story: James Crombie at jcrombie8@bloomberg.net, Michael B. Marois, Shannon D. HarringtonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.