BlackRock CEO Larry Fink explains why the conditions right now are favorable for stock prices.
BlackRock CEO Larry Fink explains why the conditions right now are favorable for stock prices.
By Yasin Ebrahim
By Dhirendra Tripathi
(Bloomberg) -- Iron ore futures surged more than 10% and copper extended its record run amid increasing bets they’ll be among the biggest winners from a commodities boom that’s stoking concerns about inflation around the world.While analysts struggled to pinpoint a trigger for Monday’s gains in iron ore, they cited several trends including optimism that central banks will retain supportive policies even as the global economy recovers. Expectations China will tighten environmental rules have added to the bull case for copper -- seen as vital to the green energy transition -- and fueled speculation that steelmakers may front-load iron ore purchases before new curbs kick in.The gains add to a more than yearlong surge in raw-materials prices that’s shifted into overdrive in recent weeks, with the Bloomberg Commodity Spot Index rising for 14 of the past 15 days to the highest level in almost a decade. Metals including copper pared advances later in Monday’s session as dollar losses ebbed and U.S. Treasury yields advanced.A “Goldilocks scenario” may be forming as strengthening global growth combines with restrained wage pressures and a dovish Federal Reserve, Goldman Sachs Group Inc. commodities analysts said in a May 7 report, the same day weak U.S. jobs figures added to the case for more stimulus. The risk for bulls -- and anyone betting on buoyant returns from stocks and bonds -- is that the surge in raw materials feeds through to broader measures of inflation and eventually forces central banks to tighten.For copper, the long-term outlook is also being bolstered by a likely surge in demand as governments target huge investments in renewables and electric-vehicle infrastructure. While copper’s last march to record highs in 2011 was driven by China’s economic boom, analysts expect this rally to be supported by a much broader rise in metals usage.”We’re in a new world,” Jeffrey Currie, global head of commodities research at Goldman Sachs, said in a Bloomberg TV interview. “We’re seeing a much more balanced growth between the U.S, Europe and China.”The iron ore sector “is very, very hot,” Vivek Dhar, commodities analyst at Commonwealth Bank of Australia, said in Bloomberg Television interview. “Supply is still not able to meet that strong demand.”Iron ore futures in Singapore jumped to a record above $226 a ton. Contracts in Dalian rose by the daily limit when the market opened.Copper, often viewed as a barometer of the global economy’s health, rose as much as 3.2% to a record $10,747.50 a ton on the London Metal Exchange, before erasing gains and settling 0.3% lower at $10,382. Aluminum slipped 0.4% after climbed as much as 2.5%.“Looks like there’s some profit-taking going on in copper and other metals after the big surge,” said Wenyu Yao, senior commodities strategist at ING Bank.Still, “there’s still quite a lot of room to go,” Evy Hambro, global head of thematic investing at BlackRock Inc., said on Bloomberg Television. “What we’re really doing is we’re testing the upper ranges of commodity markets to work out what the new price range is going to be.”There were fresh jitters on the supply side as China’s major copper smelters vowed to reduce purchases of mined concentrate this year as the country seeks to curb carbon emissions. While that could ease strains on mine supply, the smelters will need to boost scrap purchases to avoid a slump in production of refined metal.“It’s notable that the smelters don’t imply a cut to output,” Morgan Stanley analysts Susan Bates and Marius van Straaten said in an emailed note. “They appear comfortable that they can make up the reduction in concentrate purchases with a lift in the use of copper in other forms.”The iron-ore boom comes as China’s steelmakers keep output rates above 1 billion tons a year, despite a swath of production curbs aimed at reducing carbon emissions and reining in supply. Those measures have boosted steel prices and profitability at mills, allowing them to better accommodate higher iron ore costs and potentially front-load output ahead of more environmental restrictions.Steelmakers in the rest of the world, such as ArcelorMittal SA, are also enjoying a boom as demand bounces back from pandemic lows.“There is a chance that ex-China demand can come back to such an extent that we still see steel demand pick up globally and that will see iron ore demand remain at these elevated levels,” CBA’s Dhar said.Traders will be watching closely for how China responds. Shipmakers and household-goods manufacturers will eventually be unable to withstand elevated steel prices, the country’s state-run Xinhua News Agency reported on Sunday, citing analysis from the China Iron & Steel Association. The report said it would be difficult for steel to continue rallying.The government has scheduled nationwide inspections on steel-capacity cuts, with the National Development and Reform Commission calling on the state asset regulator and provincial level working groups to complete self-checks by May 15. Authorities will conduct on-site inspections in June and July, according to a statement Monday.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- A fast and furious rotation into value shares is sweeping Wall Street while long-time market favorites -- technology shares -- are extending their decline.Across the world, shares tied to economic growth are outperforming as the commodity rally helps push bond-market inflation bets toward a 15-year high.A strategy that bets on U.S. equities that look undervalued and against expensive ones is rising again on Tuesday after posting its biggest rally in two months on Monday. The Nasdaq 100 fell as much as 2% at the open, compared with a 1.1% drop for the Dow Jones Industrial Average.“Renewed value leadership at the factor level and the broader risk-on rebound suggest the economic cycle is continuing rather than peaking,” Evercore ISI strategists led by Dennis Debusschere wrote in a note.The Russell 1000 Value Index has jumped more than 1.3% this month while the Nasdaq has lost money. It’s all shaking up the world of exchange-traded funds, where assets in value ETFs have firmly overtaken those of funds tracking the growth investing style, according to smart-beta data compiled by Bloomberg Intelligence.All this means quant investors who stuck with value during its historic pounding in the pandemic are getting their mojo back, while traders crowding into speculative tech-heavy corners of the market including Cathie Wood’s ARK funds are on the back foot.It’s a comeback long in the making. Value shares -- or those with low prices relative to some fundamental indicator like earnings -- are typically more dependent on the business cycle than tech stars like Tesla Inc. They have been persistent laggards in recent years, especially when last year’s lockdowns drove investors further into stay-at-home names like Zoom Video Communications Inc.But while most value revivals have proved fleeting in the post-crisis bull years, a slew of analysts now say the stars are aligned for this one to last.Higher inflation expectations have tended to favor value, since it typically comes with faster economic growth and higher bond yields, hurting tech stocks whose long-term prospects now have to be discounted at higher rates.Over the past month, the energy, materials and financial sectors have led the S&P 500. Tech has been the worst performer.Even former skeptics predict this rotation has further to go. Sanford C. Bernstein strategists, who once joked about value managers having no clients, said in a note on Friday “there is plenty of ammunition left.”“Value stocks remain the most uncrowded part of the market,” the team wrote in a note. “In the longer run, this rotation is but a blip in the persistent underperformance of value versus growth.”Because of value’s historic drawdown last year, its recent recovery has only narrowed its discount slightly, with the spread still at double the 10-year average and triple the 20-year. At Barclays Plc, strategists led by Emmanuel Cau noted value sectors like mining and financials might even be getting relatively cheaper, since their earnings -- the denominator of those multiples -- are rising faster than prices.At Versor Investments, which is among the quant funds that predicted a value comeback, founders Deepak Gurnani and Ludger Hentschel pointed out that after the dot-com bubble burst, the strategy posted strong performance between 2000 and 2004.“The positive value returns in 2021, so far, have done little to shrink the extreme value spreads created by the previous negative returns,” they wrote in a report.Meanwhile, the market shift means that investors in momentum -- an allocation style that buys recent top performers -- have been putting more money into value, after bidding up tech names in recent years. The semi-annual rebalancing of the $14 billion iShares MSCI USA Momentum Factor ETF (ticker MTUM), for instance, is expected to see a big rotation into cyclical and riskier names this month.At least one large cohort of money managers has yet to join the rally. Bank of America Corp. noted last week that the value rotation has yet to exert much influence on the returns posted by active funds. That suggests these investors may be braced for pain if instead they chased the likes of Big Tech and renewable energy at the market top.“Portfolios are still majorly composed of long duration growth assets and hence would be prone to losses if macro/inflation dynamics continue to improve,” strategists at Barclays wrote. “Cheap, economically sensitive, and an inflation hedge, value seems like the natural place to position a portfolio.”(Updates prices for U.S. market open)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Reuters) -AstraZeneca said a "meaningful proportion" of its shareholders voted against CEO Pascal Soriot's improved pay package on Tuesday, exposing a rift as the drugmaker deals with problems surrounding its COVID-19 vaccine. At its annual investor meeting, 60.19% of votes cast were in favour, AstraZeneca said, adding that it would "engage and listen to ensure investors' concerns regarding the approach to executive remuneration are understood." Large corporations typically win about 90% support for their pay in annual advisory votes, compensation consultants say, making narrow-win results such as AstraZeneca's effectively a call to review the programme and talk to shareholders.
(Bloomberg) -- Canada sold $3.5 billion of bonds in its largest sale in the U.S. dollar debt market in more than six years.The North American country priced five-year bonds to yield 6 basis points over U.S. Treasuries, in line with its most recent sale in January 2020, according to people with knowledge of the matter. The transaction received more than $7 billion of orders, said the people, who asked not to be identified because the details are private.The “bond provides funds to supplement and diversify Canada’s liquid foreign reserves,” the Department of Finance said in an statement Monday before the terms of the deal were set.The country, which retains top investment-grade ratings from two out of the three largest credit rating companies, is returning to the international debt markets for the first time since the start of the pandemic as its central bank adopts a relatively hawkish tone. Bank of Canada reduced the pace of its government bond purchases last month, and plans even less intervention later this year, according to projections by market analysts.The central bank cut its federal government bond purchases by C$1 billion ($827 million) to C$3 billion per week in April, and may slow to C$2 billion at its July monetary policy meeting and C$1 billion in September, Laurentian Bank Securities’ economists Sebastien Lavoie and Dominique Lapointe said in a note to investors Tuesday.Canada’s economy is expected to grow 6.1% this year, up from a 5.4% decline in 2020, according to analysts’ consensus compiled by Bloomberg. The survey sees the U.S. economy, Canada’s largest trade and investment partner, expanding by 6.3% in 2021 after a 3.5% contraction in 2020. Even as the economy recovers, Canada’s labor market hit a snag in April as a third wave of lockdowns and Covid-19 restrictions led to job losses.Canada’s bond deal is also the first transaction in the U.S. dollar currency since Fitch Ratings downgraded it to its second highest investment-grade level, citing higher public debt ratios. Canada sold $3.5 billion of 3-year bonds in March 2015.BMO Capital Markets, BofA Securities, J.P. Morgan Chase & Co., Scotiabank and TD Securities arranged today’s deal.(Updates to say the deal is priced.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Exec departs after a 14-year career.
Chipotle just dropped the hammer on its rivals by lifting its hourly minimum wage to $15 an hour.
(Bloomberg) -- Cathie Wood’s miserable month continued on Tuesday, as her flagship exchange-traded fund extended declines and its assets dropped below $20 billion to the lowest since January.The Ark Innovation ETF (ticker ARKK) slid 1% as of 9:47 a.m. in New York. Caught in a broad tech selloff, the product has fallen for nine of the past 10 sessions, a retreat that accelerated on Monday in the biggest slide in about seven weeks.Tesla Inc., the fund’s biggest holding, was down 3.5% on Tuesday. Teladoc Inc., also heavily weighted in the ETF, dropped less than 1%.The stock rotation out of expensive-looking tech names is proving tough for Wood and her firm, Ark Investment Management, with investors pulling more than $500 million from the main fund in May so far.Big bets on the likes of Tesla and Bitcoin lured billions to Ark’s products, but more recently investors have been souring on the kind of pricey shares the money manager favors in companies with often unproven technologies. Other speculative corners of the market have also suffered, with an ETF tracking special-purpose acquisition companies slumping 20% this year.Read more: Rout Lands on Nasdaq Where Shorts Are Massing, Bulls Getting OutWith ARKK down some 34% from its February peak, options activity paints an increasingly gloomy picture. The number of bearish put contracts outstanding has jumped to a record. Short interest remains near an all-time high, according to data from IHS Markit Ltd.(Updates price moves throughout)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
A tech stock rout has swept through Wall Street this week. Here's why.
Businesses have a record 8.1 million jobs to fill. The problem, they say, is getting enough people to fill them.
‘I bought the house for $125,000 and it is now worth approximately $285,000, with a total owed of $185,000.’
The U.S. cannabis deal would give Florida’s dominant player a notable southwestern U.S. footprint. Trulieve (ticker: TCNNF) and Harvest Health (HRVSF) combined would be one of the largest cannabis companies in the world, in terms of sales. Combining analyst estimates for both companies puts the estimated 2021 revenue at $1.24 billion, only slightly below consensus estimates for Curaleaf (CURLF) at $1.26 billion.
In the past week, investors have had to cope with multiple conflicting signals from the markets. The April jobs report, which was expected to show almost 1 million new positions for the month, showed only 266,000. The official unemployment number ticked upward slightly to 6.1%, and hourly wages also gained – by 0.7%. That last would seem to be a positive – except that, combined with the massive government stimulus injecting cash into the economy – higher wages are seen as a portent of inflation. At first glance, it seems like an environment that would have investors cautious. Except – the Fed has signaled that it will not be winding down its easy money policies. Low interest rates have helped to fire up the bull market engine in recent years, for two reasons. First, it keeps the cost of credit low, making it easy to leverage all sorts of purchases – cars, homes… even stocks. And second, with rates low, bond yields have been unable to make any significant rise. For investors seeking a return, this makes stocks the place to go. It also creates an environment that’s conducive to IPO events. Markets have been on a steady, long-term upward trend for months; the S&P 500 has gained 44% over the last 12 months. With a return potential like that, it’s no wonder that companies are turning to the public trading markets to raise capital. When it comes to equities, a rising tide truly will lift all boats. This brings us to JPMorgan. The banking firm’s stock analysts have been looking for the equities primed to gain in current conditions. And they’ve tapped two stocks new to the public markets as likely to jump 80% or more in coming months – a solid return that investors should note. After running both tickers through TipRanks’ database, we found out that the rest of the Street is also standing squarely in the bull camp as each boasts a “Strong Buy” analyst consensus. LAVA Therapeutics (LVTX) We’ll start with a Netherlands-based biotech firm. LAVA Therapeutics has a focus on cancer treatments, and is working to develop what it calls gamma-delta bispecific T cell engagers. These compounds are intended to activate the innate and adaptive immune systems, using the body’s own response to fight tumors. LAVA’s pipeline includes four proprietary compounds, and a fifth that is being investigated in combination with Janssen. All five drug candidates are in preclinical trials. The leading candidate, LAVA-051, is scheduled to begin a Phase 1/2a clinical trial in the first half of this year, while a second candidate, LAVA-1207, will begin a Phase 1/2a trial during 2H21. These drug candidates are being developed as treatments for multiple myeloma and prostate cancer, respectively. LVTX shares entered the public markets on March 25, in an IPO that raised $100.5 million. The shares started trading at $15, and saw 6.7 million shares hit the market. Among the bulls is JPM analyst Jessica Fye, who likes the fundamental of this newly public stock. Fye rates LVTX an Overweight (i.e. Buy), and her $22 price target implies a robust upside potential of ~86% for the year ahead. (To watch Fye’s track record, click here) "Our Overweight rating is based on our positive view of the company’s proprietary platform, gamma-delta bsTCE, which redirects a specific group of T cells called gamma-delta T cells towards tumor cells. We see LAVA’s off-the-shelf bsTCEs, which can conditionally activate gamma-delta T cells in a tumor/antigen directed manner, as differentiated, potentially leading to a safer therapy and more durable benefit. To the extent that initial data for lead asset LAVA-051 begins to derisk the platform, we see upside for shares as soon as early 2022," Fye noted. In its short time on the public market, LAVA’s unique approach to cancer treatment has attracted notice from three Wall Street biotech analysts – and all three agree that this is a stock to buy, making the Strong Buy consensus rating unanimous. The shares are trading for $11.80, and their $23.67 average price target is even more bullish Fye allows, suggesting an upside of ~100% in the next 12 months. (See LVTX stock analysis on TipRanks) Zhihu (ZH) From biotech, let’s shift gears to online content. The net has given content creators a nearly unlimited field to work in, and Zhihu operates in the Chinese online content market. The company’s website is a question-and-answer forum, on the model of Quora, allowing users to pose questions to the community or offer replies. A look at some of the company’s numbers shows its size. By the end of December last year, Zhihu had a total of 43.1 million content creators, who has posted over 315 million questions and answers. The monthly average users (MAU), a key metric for any website, increased from 43.1 million in 4Q19 to 75.7 million in 4Q20. Zhihu held a US IPO on March 26, to raise capital for further operations and expansion. The company put 55 million shares on the American public markets, at $9.50 each. The IPO raised $522.5 million in gross proceeds, and Zhihu now shows a market cap of $4.58 billion. In their early trading, ZH shares faced pressure after a Securities and Exchange Commission ruling on accounting regulations. US law requires that accounting firms permit US regulators to review the financial audits of overseas companies, under threat of potential delisting from the US equity markets. The SEC ruling promises stricter enforcement of this provision. Even under this pressure, however, the Zhihu IPO was the third-largest by a Chinese company in the US markets so far this year. In an initiation of coverage report on Zhihu, JPM analyst Binbin Ding notes several factors that bode well for the stock, with two in particular standing out: “(1) Differentiated positioning. Unlike online content communities that are mostly entertainment-oriented, Zhihu is known for its depth of content and is recognized as the most trustworthy online content community in China (CIC survey). This positioning makes it the go-to platform for users seeking quality answers. (2) Diversified monetization models, including ads, membership, content-commerce solution, ecommerce and education. In particular, we believe Zhihu’s content-commerce solutions is an innovative model with significant potential growth upside…” Ding summed up, "We expect Zhihu to see a 112% top-line CAGR over 2020 to ’22E, driven by a 35% traffic CAGR and a 57% monetization CAGR. Such growth rates make Zhihu the fastest-growing digital content operator in our coverage universe." To this end, Ding gives ZH shares an Overweight (i.e. Buy) rating, along with a $16 price target that suggests room for an impressive 96% growth potential this year. (To watch Ding’s track record, click here) Ding's bullish stance on ZH is in line with Wall Street’s view. The stock has a Strong Buy consensus rating, based on 3 Buy ratings set in recent weeks. The shares are trading for $8.15, and their $15.23 average price target suggests ~87% upside for the year ahead. (See ZH stock analysis on TipRanks) To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
Are we seeing some signs of danger in the markets? At first glance, it wouldn’t seem so. The S&P 500 is sitting just below its record high, as is the Dow Jones average. The big tech giants – Amazon, Apple, Alphabet, Facebook, and Microsoft – all posted great results in their recent earnings reports. And yet, they are leading the declines in the NASDAQ. According to Morgan Stanley equity strategist Michael Wilson, we’re in for a volatile ride, at least in the near-term. "With the S&P 500 making new highs every day, few seem worried... rather than getting excited about reopening, we are getting more concerned about execution risk and what’s already priced in,” Wilson noted. “Whatever correction the market experiences this year, we are likely to make higher highs next year. The goal as an investor is to navigate the... transition, avoid the stocks with the biggest drawdowns and be in position to capture the next leg." So, let’s take this advice, and look for ways to protect the portfolio in the short term while staking a position for the longer term. That’s a strategy which will naturally draw investors toward dividend stocks, the classic defensive play. We’ve used the TipRanks database to pull up two dividend players that combine a Strong Buy sentiment from Wall Street with a yield of at least 7%. Let's take a closer look. New Residential Investment (NRZ) We’ll start with a real estate investment trust (REIT), since these companies have a reputation as solid dividend payers. That’s in part an artifact of their position in regard to tax regulation; they are required to return a certain percentage of profits directly to shareholders, and the dividend is often a convenient vehicle for compliance. New Residential Investment is typical of its sector, holding a $6 billion investment portfolio, of which just over half is mortgage servicing rights. In its recent 1Q21 financial release, New Residential showed a net income of $301 million, up from $101 million at the end of Q4. The company declared a quarterly dividend of 20 cents per share; the payments totaled $82.9 million. At the declared rate, the dividend annualizes to 80 cents per common share, for a yield of 7.5%. This compares favorably to the ~2% yield found among S&P-listed companies. NRZ shares are up 77% in the past 12 months, gaining as the company switched from net losses at the height of the corona crisis to profitability in the last four quarters. To take advantage of the share appreciation, and to raise additional capital, the company announced a public offering of shares in April. The sale generated gross proceeds of $522.4 million on 51.7 million shares sold. The funds raised were used to acquire Caliber Home Loans, with plans to integrate the acquisition into NRZ’s wholly owned mortgage origination service. The transaction is expected to close in Q3 of this year. Covering the stock for BTIG, analyst Eric Hagen writes: “[We] think the company has the capital to be acquisitive in bulk sales transactions as some originators potentially look to offload more thinly capitalized MSRs if origination volume slows more meaningfully. It confirmed the $500 million of capital raised in connection to the Caliber deal was about $0.15 dilutive to NAV, so book is around $11.20. The stock is less than 0.93x book, and about 6.5x forward earnings assuming a 15% ROTCE.” Hagen rates NRZ a Buy, and his $13 price target implies a 25% upside for the year ahead. (To watch Hagen’s track record, click here) Hagen is no outlier in his bullish opinion here. Of the 10 recent analyst commentaries on this stock, 9 recommend it to Buy, against a single Hold. The $12.69 average price target is almost as bullish as Hagen’s, and suggests an upside of ~22% from the current trading price of $10.38. (See NRZ stock analysis on TipRanks) Enterprise Products Partners (EPD) We’ll switch gears now, and take a look at an energy company. Specifically, a midstream company. Enterprise Products Partners controls over 50,000 miles of pipelines, along with facilities capable of storing 160 million barrels worth of oil and 14 billion cubic feet of natural gas. In addition, Enterprise has shipping terminals in the state of Texas, on the Gulf Coast. As the US economy has reopened, demand for fuel has increased – which in turn increased the flow of fuel through Enterprise’s system. The company’s financials have been rebounding since the second half of last year, and the recent 1Q21 report showed $9.1 billion at the top line, the best result in the last two years. EPS came in at 61 cents per share, flat year-over-year, but higher than the last three quarters. Enterprise declared a Q2 dividend of 45 cents per common share, the second quarter in a row at this level. The current payment is backed by the company’s $1.7 billion in distributable cash flow. The annualized payment of $1.80 per common share gives a yield of 7.7%. Among the bulls is Raymond James analyst Justin Jenkins, who sets a Strong Buy rating on EPD shares, along with a $26 price target. (To watch Jenkins’ track record, click here) Backing his stance, Jenkins writes: “While Enterprise (EPD) has not been immune to energy industry challenges, the asset base has continued to show resilience in the difficult environment. Looking forward, EPD's unique combination of integration, balance sheet strength, and ROIC track record remains best in class, in our view. We see EPD as arguably best positioned to withstand the volatile landscape... This is a compelling opportunity for entry into ownership of one of the best positioned MLPs…” Overall, Wall Street’s analysts are sanguine about EPD’s path forward, as evidenced by the unanimous Strong Buy consensus rating, supported by 8 Buy recommendations. The average price target, at $28.75, is more bullish than Jenkins’ and suggests a one-year growth potential of 24% for EPD. (See EPD’s stock analysis at TipRanks) To find good ideas for dividend stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
NEW YORK/LONDON/SINGAPORE (Reuters) -Cryptocurrency ethereum climbed to a new peak for a third straight day on Monday on continued optimism about further growth in decentralized finance or "DeFi", although some analysts said it was overvalued at current levels. Ethereum has soared this year, fuelled by the boom in DeFi, which are platforms that facilitate crypto-denominated lending outside traditional banking. Many DeFi applications are embedded in the ethereum blockchain.
(Bloomberg) -- Robert Fritzshall had to be pushing 80, Bethany McLean thought, so she was a little surprised to hear him talk about expanding his law practice.His office was a bit dusty and cluttered with papers. There were files on the floor. She was concerned that he didn’t see the need to carry malpractice insurance. But she doesn’t remember anything being a red flag.“He was charismatic, enthusiastic,” she said. “A little eccentric.”Besides, she needed the job.The global financial crisis hadn’t eased up. Despite graduating near the top of her class and serving on the law review, she’d been biding her time at a Chicago-area WhirlyBall, booking children’s birthday parties.And he needed some help. Fritzshall & Associates comprised only Fritzshall, a legal intern, and his legal secretary, after the previous associate departed suddenly.McLean was thrilled when he extended her an offer, even if it was part time. When he agreed to get malpractice insurance, she accepted.It looked like her break.But within weeks, McLean would realize that Fritzshall was no longer capable of managing his practice. His cases were in disarray. Expanding was a fantasy. She recognized the signs of dementia from her grandmother’s decline.The experience would be the most harrowing and painful of her career. But it’s one that’s becoming a growing challenge confronting a profession in which many are working into their 70s and 80s.Over the last ten years, the number of lawyers practicing over the age of 65 has increased more than 50%. In 2020, roughly 14% of American lawyers were over 65, compared to 7% of workers generally. Meanwhile, more than one in nine people over 65 are diagnosed with Alzheimer’s, the most common type of dementia. The risk increases dramatically with age.Recent, comprehensive data on how often disciplinary bodies and lawyer assistance programs confront the issue is non-existent, and there’s no way of knowing how often colleagues intervene without assistance from a professional organization.But Diana Uchiyama, executive director of the Illinois Lawyers’ Assistance Program, says she’s seen a significant increase in outreach related to cognitive decline in the last year. She’s had at least two such calls in recent months as lawyers emerge from a year of pandemic-induced isolation.Lawyers who are relatively high functioning in early stages of dementia are often in denial about the need to step down, said Alex Yufik, a forensic psychologist who has worked on such cases. They’re adept at hiding it, tapping their intellectual reservoirs to redirect conversations when they’re confused or unable to answer questions, he said.Lawyers and other professionals often develop “routines, practices, conversational and social skills over many years, which are reinforced and rehearsed over a career to the point where they can function almost automatically,” said Kendra Basner, a partner at O’Rielly & Roche LLP who counsels clients on legal ethics.Colleagues are generally ill-equipped to distinguish between signs of of normal aging and something more. And the decision to intervene can be a heartbreaking and even risky one, especially if the aging lawyer is a friend, mentor, boss, or someone powerful in the profession.Getting involved in a case of substance abuse or mental health problems can mean saving someone’s career. In the case of progressive dementia, intervening almost always means ending one.“Even when the issue is right in front of their faces, many find excuses to avoid having the uncomfortable conversations and making the hard decisions,” Basner said.Tish Vincent, chair of the American Bar Association’s Commission on Lawyer Assistance Programs, said it’s partly a cultural issue of lawyers tending to think they’re invincible.Lawyers “need to stop encouraging denial,” said Vincent, who is both an attorney and a clinical social worker.Spotting the IssueFrederick Emery Jr., an Assistant U.S. Attorney in Maine, was within a year of retirement when his colleagues started to notice something wrong.When they elevated their concerns to agency officials, they were told that “if there were no appreciable performance issues,” they should just “monitor the situation as the AUSA progressed toward retirement,” according to a 2015 ruling by a U.S. district court in Maine.Much of Emery’s case load was transferred to another attorney within a few months. But it was already too late.He had botched an IRS dispute with a bankrupt taxpayer because of dementia, the government said in an appeal asking the district court to set aside Emery’s loss. The underlying case involved more than $500,000 in tax liabilities.The government eventually confirmed that Emery had been diagnosed with frontotemporal dementia, coupled with amyotrophic lateral sclerosis, or ALS. Three physicians agreed that the onset was prior to the summary judgment proceedings, the court said.But it still declined to undo the bankruptcy court’s summary judgment order discharging the debt. The government’s argument about Emery’s mental decline came too late. The IRS ultimately abandoned its efforts to challenge the bankruptcy court’s ruling.Emery had been “a responsible and highly respected member of the bar and the bankruptcy court for many years,” the court said.Cognitive ReservesForensic psychologist Yufik handled a case involving an 85-year-old attorney, whom he said he couldn’t identify for confidentiality reasons, when he worked at the Elder Abuse Forensic Center in Los Angeles.An auditor reviewing financial documents noticed signs of neglect in an estate the lawyer was managing. The lawyer’s daughter also called the center, saying her father was bouncing checks and falling behind on monthly bills. She was worried that her father might be the victim of financial abuse.She was right: Yufik said he soon discovered that two former clients had persuaded him to sign documents handing over control of his finances. When his daughter presented the documents to her father, he told her he didn’t recognize them.The lawyer could chit chat with strangers and recite poetry—which in his younger days, he composed—and was able to dress himself appropriately and prepare meals. But his bedroom was in “complete disarray,” Yufik said. There was uneaten food accumulating, and dirty laundry strewn about. It smelled of urine.Although the lawyer could explain basic legal concepts and understood things like his obligation to pay taxes and the importance of health insurance, he was unsure of where his money was held, how much income he was earning, or whether his bills were being paid. The cognitive decline rendered him an easy target, Yufik said.RoutinesRobert Fritzshall would put on a suit every day and take the train to downtown Chicago like he had for years.He was a creature of habit, lunching at the same restaurants over and over. He would regale McLean, his new associate, with old stories and introduce her to acquaintances around town.Part of the self-denial common to lawyers in the early stages of dementia has to do with how closely their identities are hewed to their careers and professional status. “It’s where they have found success, it’s where their friends are, it’s where they are comfortable,” Basner said.One’s identity as a lawyer is “so intertwined with their sense of self,” Vincent said, they will cling to their professional identities “until their dying breath.”Fritzshall had been a respected member of the Chicago area’s legal community—the prosecuting attorney for the Village of Skokie for 13 years, an arbitrator for 12 years, and president for a time of the North Suburban Bar Association. He also served on Skokie’s Village Board of Trustees, Planning Commission, and the theater board for the Performing Arts Center.But that had all been before McLean met Fritzshall.SidewaysPersonal injury and workers’ compensation cases were the bread and butter of Fritzshall’s practice when McLean joined in July 2010. She was unfamiliar with those areas of law, but didn’t have to study his files for very long to realize something was wrong.He was missing irretrievable deadlines and failing to tell clients about significant developments. He didn’t know several cases had been dismissed for failure to prosecute.In one instance, after he accepted a settlement and opposing counsel filed an affidavit indicating that the parties had reached agreement, Fritzshall denied it.McLean said she found opposing counsel were often frustrated and seemed to think he was playing games with them.Before long, she discovered that about half a dozen attorneys had preceded her at Fritzshall & Associates and quickly left, some within weeks.When she raised her concerns, Fritzshall was aloof.McLean reached out to the Illinois Lawyers’ Assistance Program. Although there were plenty of resources and protocols for lawyers struggling with substance abuse or mental health disorders, she found the state bar at the time seemed to lack any systematic approach for dealing with Alzheimer’s or age-related dementia.“It would have been easier if he had been a drug addict,” she said.Ethical ResponsibilitiesA lawyer’s duty to report or otherwise intervene when another lawyer is impaired varies by state. At least a dozen states have ethics opinions on the topic, applicable whether the impairment is due to substance abuse, mental health issues, or age-related decline, and the American Bar Association has issued its own guidance. Case law may also come into play, depending on the jurisdiction.The ABA’s Model Rules provide at least a rough proxy for most jurisdictions.Among other things, rules may require lawyers to report misconduct that calls fitness or truthworthiness into question. They also demand that supervising attorneys take reasonable steps to ensure subordinate attorneys comply with ethical rules, while prohibiting blind reliance on a supervising attorney’s direction.Most states have adopted some version of the relevant rules. But there are notable exceptions. California, for example, has rejected the mandatory misconduct reporting requirement, which the state’s bar journal once referred to as the “snitch” rule.Even if not required, larger law firms often have protocols in place, including internal reporting systems and monitoring when necessary. But for lawyers working alone or who only have subordinates, it’s a lot less likely there will be anyone able to intervene informally, if at all, before serious issues arise.The Last ResortMcLean eventually gave up on the lawyers’ assistance program and started calling the Illinois Attorney Registration and Disciplinary Commission’s ethics hotline. But she hit a dead end there, too.She knew filing a formal complaint would likely end Fritzshall’s career, and wondered what the consequences would be for her own future. But his clients were real people, and she said she couldn’t just abandon them.Less than three months after she was hired, McLean mustered the courage to tell Fritzshall she intended to resign and report him to the disciplinary commission.“I figured, if going to the ARDC would do me in, this wasn’t the career for me,” she said.She had him on speaker phone, with his intern at her side. The intern had been working for him for about a year and adored him, McLean said. At her fingertips was a list of his active cases—at least 20—detailing the errors she’d identified, along with approaching deadlines.She told him she was confident that the ARDC would know whether her concerns were warranted.“He turned on me,” she said.DenialIn his formal response denying the allegations, Fritzshall stated, in essence, that McLean was inexperienced and simply didn’t know what she was talking about.She remembers reading it and feeling disheartened, like it had all been “a stressful waste of time.”The ARDC administrator filed a petition against Fritzshall alleging incapacity in August 2011. Fritzshall was initially responsive, but after he stopped appearing at conferences or otherwise complying with the investigation, the allegations were eventually deemed admitted.McLean didn’t hear from the ARDC again until they called to ask her to testify at his hearing in June 2012. By then, Fritzshall had been diagnosed with Alzheimer’s-type dementia, according to a letter from his physician that’s referenced in the hearing board’s report.More issues had surfaced. Another associate quit after three weeks when Fritzshall couldn’t afford to pay her. He’d stopped paying rent on his office space. He’d overdrawn his trust fund account multiple times. He’d even bounced a check for $31.71 to a court clerk.His wife had been encouraging him to retire, to no avail, according to testimony at the hearing.When McLean testified before the hearing board, she remembers one member asked something to the effect of, “You left the clients? You just quit?”I called you first, she said.HindsightIn hindsight, there were perhaps earlier signs of Fritzshall’s cognitive decline.In 2005, he’d been suspended for six months, stayed by probation after one month. He’d mismanaged client funds, failed to pay medical lienholders in a timely manner, and misrepresented to an administrative law judge that he had authority to settle a matter when he didn’t, according to the disciplinary findings.Fritzshall told the hearing board that he didn’t remember making the misrepresentation, but admitted he lacked his client’s authorization at the time.Although the misrepresentation was ultimately found to be dishonest, he wasn’t found to have engaged in any fraud or deceit. His trust account had never gone negative, and he’d never written a bad check. Although there were a handful of significant delays in paying lienholders retained for client cases, they all ultimately received the money they were owed.No clients complained or testified against him. The client whose case he’d settled without permission ultimately accepted the same amount of money. When her bankruptcy estate paid him about $16,600 in fees, he cut her a check for about $10,700. He told the hearing board he just wanted her to have it.His mismanagement of client funds was attributed to bad bookkeeping.The review board cited numerous mitigating factors in issuing him a lighter penalty than the conduct otherwise warranted. It was Fritzshall’s first disciplinary action in his 50 years of practicing law. He had already modified his bookkeeping practices and reduced his caseload.The commission also considered the implications of a lengthier suspension: Fritzshall had told them that at his age, he’d be unable to rebuild his practice if suspended for a year.His probation, which he completed successfully, was conditioned on implementing new trust account procedures.The Last ActIn May 2013, Fritzshall was finally placed on disability inactive status. He died in hospice care in October 2015. He was 86.While the hearing board report and Illinois Supreme Court order adopting the board’s recommendations are public, the underlying record of Fritzshall’s proceeding is sealed. The ARDC, citing confidentiality rules, said it couldn’t comment.By the time of the hearing, Fritzshall—with the help of his wife, who was by then his power of attorney—had sold his practice and moved to Wisconsin.The lawyer who purchased his practice had spoken to him after taking over. She told the board that sometimes he was still “very lucid and at other times not.”Two weeks before Fritzshall’s hearing, the Illinois Supreme Court had modified its rules “to allow lawyers facing minor misconduct charges to petition the Court for permanent retirement status.”The change was made “in response to the challenges presented by an increasing population of aging lawyers” in order to provide “a reasonable and dignified option for senior lawyers who should retire from the practice of law while preserving their dignity and hard-earned reputations,” according to the ARDC’s 2012 annual report.But given the seriousness of the ultimately uncontested allegations against Fritzshall, it’s unclear whether he would have been able to take advantage of the new rule even if he had petitioned for permanent retirement status.‘A Preventable Mess’Bud Rubenstein, now 93, knew Fritzshall for most of their lives. Their fathers were law partners. When they joined the military, they were stationed together in Japan for almost a year. They sold shoes together and even attended the same law school, the University of Illinois at Chicago.Rubenstein said he had no idea that Fritzshall had been living with dementia. Fritzshall visited after Rubenstein moved to Arizona, but he doesn’t think they talked much after 2000.“It’s a terrible thing to practice when you have that disease,” he said, “but you’re not sure when you’re in it.”Rubenstein said he voluntarily retired his own license in 2012.Steven Fritzshall, Robert’s son, still practices law near the same courthouse where his father spent so many years advocating for his clients. Steven didn’t know how his father’s career ended until Bloomberg Law contacted him. He said he was shocked. They had been estranged since 1990, he said.Steven recalled seeing his father on a crowded street near the courthouse once, long after they had stopped talking. Robert didn’t say hello.“He walked right past me,” Steven said. He wondered aloud if his father recognized him.“The whole thing is sad,” he said.“We have an obligation to represent clients to the best of our human ability and with a competent state of mind,” he said. “There’s no excuse, zero tolerance—these are innocent people.”Steven said he hoped his father would have said the same thing.McLean still practices law, as an assistant public defender in Kane County, Ill., just west of Chicago.As frustrating as it was at the time, McLean said she’s not bitter about the ordeal. Ultimately, the ARDC pursued the matter, and she recognizes now that there had to be due process, which takes time. She said she just wishes there had been better resources and another way to intervene quickly.She said she feels badly when she thinks about the impact on Fritzshall’s legacy.“He had this whole career, and I was seeing it in its final throes,” McLean said. “It seemed like a preventable mess.”To contact the reporter on this story: Holly Barker in Washington at email@example.comTo contact the editors responsible for this story: Bernie Kohn at firstname.lastname@example.org; Jay-Anne B. Casuga at email@example.comFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Gas stations along the U.S. East Coast are beginning to run out of fuel as North America’s biggest petroleum pipeline races to recover from a paralyzing cyberattack that has kept it shut for days.From Virginia to Florida and Alabama, stations are reporting that they’ve sold out of gasoline as supplies in the region dwindle and panic buying sets in. An estimated 7% of gas stations in Virginia were out of fuel as of late Monday, according to GasBuddy analyst Patrick DeHaan.The White House said in a statement it is monitoring the situation and directing government agencies to help alleviate any shortages. Colonial Pipeline Co. said it’s manually operating a segment of the pipeline running from North Carolina to Maryland and expects to substantially restore all service by the weekend.The Colonial pipeline has been shut down since late Friday. On Monday, the Federal Bureau of Investigation pointed the finger at a ransomware gang known as DarkSide. While President Joe Biden stopped short of blaming the Kremlin for the attack, he said “there is evidence” the hackers or the software they used are “in Russia.”Colonial Chief Executive Officer Joe Blount and a top lieutenant assured Deputy Energy Secretary David Turk and state-level officials that the company has complete operational control of the pipeline and won’t restart shipments until the ransomware has been neutralized.The dwindling supplies come just as the nation’s energy industry was preparing to meet stronger fuel demand from summer travel. Americans are once again commuting to the office and booking flights after a year of restrictions. Depending on the duration of the disruption, retail prices could spike, further stoking fears of inflation as commodity prices rally worldwide.The U.S. East Coast is losing around 1.2 million barrels a day of gasoline supply due to the disruption, according to a note from industry consultant FGE.In Asheville, North Carolina, Aubrey Clements, a clerk at an Exxon Mobil station answered the phone with “Hello, I’m currently out of gas.” The Marathon gas station in Elizabethtown, North Carolina, had roughly two dozen cars waiting to fuel up, said an employee there. Drivers pulling into a station with a sign offering unleaded gasoline for $2.649 per gallon in Manning, South Carolina, were met with pumps covered in yellow and red “out of service” bags.Shortages are also hitting the aviation industry, forcing American Airlines Group Inc. to add additional stops to two long-haul flights originating from Charlotte, North Carolina. Airlines flying out of Philadelphia International Airport are burning through jet-fuel reserves and the airport has enough to last “a couple of weeks,’ a spokeswoman said.In an 18-minute virtual meeting, Blount said Colonial is working with refiners, marketers and retailers to prevent shortages, according to a person involved with the meeting who wasn’t authorized to speak publicly about the discussion. The pipeline serves 90 U.S. military installations and 26 oil refineries, the person said.The shutdown has prompted frenzied moves by traders and retailers to secure alternative supplies. Oil tanker charter rates skyrocketed in the U.S. with refiners scrambling for ships to store fuel that has nowhere to go.Emergency shipments of gasoline and diesel from Texas are already on the way to Atlanta and other southeastern cities via trucks, and at least two Gulf Coast refineries began trimming output amid expectations that supplies will begin backing up in the nation’s oil-refining nexus.The national average retail gasoline price rose to $2.967 a gallon on Monday, a 2.4% increase from Friday, according to AAA. The premium for wholesale gasoline in the New York area expanded to its widest in three months.Gasoline futures that initially surged as much as 4.2% earlier this week have since declined. Futures prices had gained more than 50% this year, helped by the recovery from the pandemic.The event is just the latest example of critical infrastructure being targeted by ransomware. Hackers are increasingly attempting to infiltrate essential services such as electric grids and hospitals. The escalating threats prompted the White House to respond last month with a plan to increase security at utilities and their suppliers. Pipelines are a specific concern because of the central role they play in the U.S. economy.Ransomware cases involve hackers seeding networks with malicious software that encrypts the data and leaves the machines locked until the victims pay the extortion fee. This would be the biggest attack of its kind on a U.S. fuel pipeline.DarkSide said in a post on the dark web that it wasn’t to blame and hinted that an affiliate group may have been behind the attack. The group promised to do a better job of screening customers that buy its malware.Government officials haven’t advised Colonial on whether it ought to pay the ransom, Deputy National Security Adviser for Cyber and Emerging Technologies Anne Neuberger said during a briefing.Learn more about how emergency powers can counter fuel-supply disruptions.“It’s an all-hands-on-deck effort right now,” said U.S. Commerce Secretary Gina Raimondo. “We are working closely with the company, state and local officials to make sure that they get back up to normal operations as quickly as possible and there aren’t disruptions in supply.”The White House pulled together an inter-agency task force to address the breach, including exploring options for lessening its impact, according to an official. Biden can invoke an array of emergency powers to ensure supplies keep flowing to big cities and airports along the East Coast.Some rules curbing domestic transportation of fuel have been eased to help deal with any shortages. That doesn’t extend to waiving the Jones Act, a measure that would allow foreign tankers to help shuffle more petroleum products between U.S. ports.The Northeast can secure gasoline shipments from Europe but it will come at an increasing cost the longer the pipeline stays shut. In the meantime, fuel producers including Marathon Petroleum Corp. are weighing alternatives for how to ship their products to the Northeast.Landlocked cities face the greatest danger of fuel shortages compared with those with access to water-borne deliveries, said Steve Boyd, senior managing director at Houston-based distributor Sun Coast Resources Inc. If the pipeline remains down for many more days, he’s anticipating a “massive surge” in orders.(Adds Virginia situation in second paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Fuel shortages are expanding across several U.S. states in the East Coast and South as filling stations run dry amid the unprecedented pipeline disruption caused by a criminal hack.From Tennessee to Florida, convenience stores and corner gas stations are turning away customers as tanks tap out amid panic buying. Even as the White House relaxed some environmental rules to allow gasoline to flow in from other regions, refiners in Texas and Louisiana are curtailing output to cope with logjams of fuel they can’t ship to eastern markets.Although the shortages have not reached the New York metro area, the premiums demanded for wholesale gasoline and diesel in that market jumped to a two-month high, according to data compiled by Bloomberg.One Washington D.C.-area fuel distributor warned that “catastrophic” shortages are imminent and called on government officials to order school buses to stay off the roads. Four days into the crisis, Colonial Pipeline Co. has only managed to restart a small segment of the pipeline as a stopgap measure and doesn’t expect to be able to substantially restore service before the weekend.Beyond that, Colonial has said very little about its next steps, leaving oil refiners and distributors in the dark about what may happen over the next 48 hours. Companies that rely on the pipeline are increasingly frustrated about the lack of transparency, according to a shipper who asked not to be named discussing commercial conversations.“We have been providing daily and sometimes twice daily updates to our shippers, and have been in close contact with law enforcement and federal agencies to relay information on our restoration efforts,” Colonial’s media relations office said in an email. “We will continue to keep all of our stakeholders informed and appreciate the outpouring of support we have received throughout the industry.”U.S. average retail gasoline prices have risen to their highest since late 2014 due to the disruption, almost touching $3 a gallon. That could add to broader inflationary pressures as commodity prices from timber to copper also surge.Two of the nation’s largest truck-stop owners --- Love’s Travel Stops & Country Stores Inc. and TravelCenters of America Inc. -- confirmed that fuel is scarce is some states. Both companies said they’re taking extraordinary measures to replenish tanks. “It’s going to be catastrophic,” said John Patrick, chief operating officer of Liberty Petroleum LLC. “Governors should declare a state of emergency and ask people chasing tanker trucks to gas stations to stay home. School buses stay put.”Meanwhile, federal transportation regulators took the first step toward waiving rules that prohibit foreign-flagged and -staffed ships from hauling products from one U.S. port to another.Total SE and Citgo Petroleum Corp. are among refiners that have reduced fuel production in response to the pipeline shutdown. Others -- including Valero Energy Corp., Phillips 66 and Marathon Petroleum Corp. -- are renting tankers in the Gulf of Mexico to hold excess gasoline and diesel for as long as 40 days, according to people familiar with the matter.Barges, TrucksGasoline isn’t the only oil-derived product under threat. In an effort to bolster jet-fuel inventories, Southwest Airlines Co. has begun flying supplies to Nashville, Tennessee, and other cities. So far, no Southwest flights have been affected by the pipeline closure; rather the airline said it’s “actively managing” fuel stockpiles.The Colonial pipeline is the most important conduit for distributing gasoline, diesel and jet fuel in the U.S., connecting refineries along the Gulf Coast to population centers from Atlanta to New York and beyond. Each day, it ships about 2.5 million barrels (105 million barrels), an amount that exceeds the entire oil consumption of Germany.Five Hours in Line: Gasoline Shortages Expand Across U.S. SouthThe vital economic lifeline has been shut since late Friday. Without the Colonial system, many cities and airports are forced to seek alternative supplies imported by tanker ships, barges or trucks. Even when the pipeline is restored to full service, it’ll take about two weeks for gasoline stored in Houston to reach East Coast filling stations, according to the most recent schedule sent to shippers.For diesel and jet fuel, the transit time is even longer -- about 19 days -- because they are heavier and move more slowly.What BloombergNEF Is SayingBloombergNEF expects additional supply this week to come primarily from storage inventories, increased East Coast refinery run, other pipelines and shipments from Canada. Cargoes from Europe could also help alleviate lingering shortages next week.-- Anastacia Dialynas, BNEF analystRead the full report here.On Monday, the Federal Bureau of Investigation pointed the finger at a ransomware gang known as DarkSide. While cyberattacks are increasingly used around the world as a weapon against geopolitical rivals, there was no indication that the current crisis could boil over internationally. President Joe Biden stopped short of blaming the Kremlin for the attack, despite some evidence that the hackers or the software they used are “in Russia.”Russia has no connection to the cyberattack, Kremlin spokesman Dmitry Peskov told reporters on Tuesday.Dwindling SuppliesFederal environmental regulators are waiving rules that bar the sale of conventional gasoline in areas where reformulated fuel is required. They also will permit the sale of gasoline that doesn’t satisfy requirements meant to help combat smog. The waivers apply to Maryland, Virginia, Pennsylvania and Washington, D.C., through May 18.In New Jersey, closely held Bolkema Fuel Company began topping off its stockpiles as soon as word spread of the Colonial outage.“There is a panic going out, you know, when you hear something like this,” said Vice President John Bolkema. ”I called in an extra driver and said, just run a few extra loads. Let’s pump up the inventory and wait this out.”His supplier increased prices at least three times on Monday as other businesses sought to stock up, and Bolkema’s commercial clients are asking for extra deliveries to avoid running low.Colonial Chief Executive Officer Joe Blount and a top lieutenant assured Deputy Energy Secretary David Turk and state-level officials on Monday that the company has complete operational control of the pipeline and won’t restart shipments until the ransomware has been neutralized.Website DownOn Tuesday, Colonial’s website was down because of an issue unrelated to the hack, a spokesman said.Fuel supplies are dwindling just as the nation’s energy industry was gearing up to meet stronger demand from summer travel. Americans are once again commuting to the office and booking flights after a year of Covid-19 restrictions. Citigroup Inc. said the East Coast is at risk of a “temporary, but major shortage” of fuels due to the Colonial closure.In the first sign of the potential disruption to air travel, American Airlines Group Inc. said it was adjusting two long-haul routes that originate in Charlotte, North Caroline, to add fuel stops. Flights to Hawaii will call in at Dallas-Forth Worth airport, while London-bound aircraft will make a stop in Boston.The U.S. East Coast is losing around 1.2 million barrels a day of gasoline supply due to the disruption, according to a note from industry consultant FGE.Lining UpIn Asheville, North Carolina, Aubrey Clements, a clerk at an Exxon Mobil Corp. station answered the phone with “Hello, I’m currently out of gas.” The Marathon gas station in Elizabethtown had roughly two dozen cars waiting to fuel up, an employee said.Drivers pulling into a station with a sign offering unleaded gasoline for $2.649 per gallon in Manning, South Carolina, were met with pumps covered in yellow and red “out of service” bags.Emergency shipments of gasoline and diesel from Texas are already on the way to Atlanta and other southeastern cities via trucks, and at least two Gulf Coast refineries began trimming output amid expectations that supplies will begin backing up in the nation’s oil-refining nexus.The national average retail gasoline price rose to $2.985 a gallon, the highest since November 2014, according to the American Automobile Association. The premium for wholesale gasoline in the New York area expanded to its widest in three months.The event is just the latest example of critical infrastructure being targeted by ransomware. Hackers are increasingly attempting to infiltrate essential services such as electric grids and hospitals.Ransomware cases involve hackers seeding networks with malicious software that encrypts the data and leaves the machines locked until the victims pay the extortion fee. This would be the biggest attack of its kind on a U.S. fuel pipeline.Learn more about how emergency powers can counter fuel-supply disruptions.The Northeast can secure gasoline shipments from Europe but it will come at an increasing cost the longer the pipeline stays shut.Landlocked cities face the greatest danger of fuel shortages compared with those with access to water-borne deliveries, said Steve Boyd, senior managing director at Houston-based distributor Sun Coast Resources Inc. If the pipeline remains down for many more days, he’s anticipating a “massive surge” in orders.(Adds truck-stop fuel shortages in eighth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Ether prices on the Ethereum blockchain have been steadily and quietly carving out new highs as buzz in the crypto has centered predominantly on the fervor around more speculative assets like dogecoin in recent weeks.