Day: December 2, 2023

© Reuters. FILE PHOTO: Berkshire Hathaway Chairman Warren Buffett walks through the exhibit hall as shareholders gather to hear from the billionaire investor at Berkshire Hathaway Inc’s annual shareholder meeting in Omaha, Nebraska, U.S., May 4, 2019. REUTERS/Scott

By Tom Hals

WILMINGTON, Delaware (Reuters) – A Delaware judge said she will grant a January trial requested by Warren Buffett’s Berkshire Hathaway (NYSE:BRKa), if it agrees to certain conditions, to resolve claims that billionaire Jimmy Haslam tried to improperly inflate his stake in a truck stop chain.

Vice Chancellor Morgan Zurn of Delaware’s Court of Chancery said in a Friday ruling that efficiency favored hearing Berkshire’s allegations next month alongside a Jan. 8-9 trial over claims by the Haslam family that Berkshire was deflating the value of Pilot Travel Centers.

The dispute concerns how much Berkshire would owe if the Haslams, including Cleveland Browns owner Jimmy Haslam, exercised their option to sell their 20% stake in the country’s largest truck stop chain to Berkshire in the first two months of 2024.

Zurn gave Berkshire until 9 a.m. ET (1400 GMT) Monday to decide if the company would accept a January trial on the condition that discovery will be limited to what was necessary to defend against the lawsuit filed by the Haslam family.

An attorney for Berkshire did not immediately respond to a request for comment. An attorney for the Haslam family declined to comment.

Berkshire said it would suffer irreparable harm if its case wasn’t resolved before the Haslams exercised their option to sell the stake.

Berkshire owns 80% of Pilot, having paid the Haslams $2.76 billion for a 38.6% stake in 2017 and $8.2 billion for another 41.4% in January.

Each side accuses the other of trying to manipulate Pilot’s earnings, the basis for valuing that stake.

The Haslams sued Omaha, Nebraska-based Berkshire in October, accusing it of seeking a “windfall” by adopting “pushdown” accounting for Pilot.

Berkshire countersued on Nov. 28, saying Jimmy Haslam tried to bribe Pilot executives with millions of dollars to inflate earnings in 2023 at the expense of future years.

According to court papers, the Haslams believe the 20% Pilot stake was worth $3.2 billion before Berkshire’s accounting change, an amount Berkshire disputes.

Pilot is based in Knoxville, Tennessee, and has approximately 800 locations.

Berkshire also owns dozens of other businesses including the BNSF railroad and Geico car insurer.

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© Reuters. FILE PHOTO: People stand next to children sitting in camping carts as they wait for their rides outside a children’s hospital in Beijing, China November 27, 2023. REUTERS/Tingshu Wang/File Photo
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SHENZHEN, China (Reuters) -China’s surge in respiratory illness is caused by known pathogens and there is no sign of new infectious diseases, a health official said on Saturday as the country faces its first full winter since lifting strict COVID-19 restrictions.

The spike in illness in the country where COVID emerged in late 2019 attracted the spotlight when the World Health Organization sought information last week, citing a report on clusters of undiagnosed pneumonia in children.

Chinese authorities will open more paediatric outpatient clinics, seek to ensure more elderly people and children receive flu vaccines and encourage people to wear masks and wash their hands, Mi Feng, an official with China’s National Health Commission, told a press conference.

Doctors in China and experts abroad have not expressed alarm about China’s outbreaks, given that many other countries saw similar increases in respiratory diseases after easing pandemic measures, which China did at the end of last year.

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© Reuters. FILE PHOTO: North Korean leader Kim Jong Un looks on as a rocket carrying a spy satellite Malligyong-1 is launched, as North Korean government claims, in a location given as North Gyeongsang Province, North Korea in this handout picture obtained by Reuter
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By Heekyong Yang

SEOUL (Reuters) -North Korea said on Saturday it would consider any interference with its satellite operations a declaration of war and would mobilise its war deterrence if any attack against its strategic assets were imminent.

Pyongyang would respond to any U.S. interference in space by eliminating the viability of U.S. spy satellites, state media KCNA reported, citing a statement from North Korea’s defence ministry spokesperson.

“In case the U.S. tries to violate the legitimate territory of a sovereign state by weaponizing the latest technologies illegally and unjustly, the DPRK will consider taking responsive action measures for self-defence to undermine or destroy the viability of the U.S. spy satellites,” the statement said.

DPRK are the initials of the North’s official name, the Democratic People’s Republic of Korea.

North Korea says it successfully launched its first military spy satellite on Nov. 21, transmitting photos of military installations in the U.S. mainland, Japan and the U.S. territory of Guam.

A U.S. Space Command spokesman, asked if Washington had the capability to interrupt the North Korean satellite’s reconnaissance operations, said the U.S. could deny an adversary’s space capabilities using a variety of means, according to U.S. broadcaster RFA.

In a statement issued later on Saturday, North Korea’s foreign ministry said it will take countermeasures against individuals and organisations of the U.S. and “its vassal forces” that impose and enforce sanctions against North Korea, adding that U.S. sanctions violate international law.

The United States on Thursday targeted North Korea with fresh sanctions after the launch, designating foreign-based agents it accused of facilitating sanctions evasion to gather revenue and technology for its weapons of mass destruction programme.

South Korea on Friday blacklisted 11 North Koreans for involvement in the country’s satellite and ballistic missile development, banning them from financial transactions.

North Korean state media issued a commentary by a North Korean international relations analyst, who argued “the United States, the world’s biggest satellite possessor,” should face the United Nations Security Council if sending satellites is considered a crime.

“In case an unexpected clash happens in the Northeast Asian region around the Korean peninsula, the U.S., which has continuously put pressure on the security space of the DPRK by escalating military threat and blackmail, will be held wholly accountable for the catastrophic situation,” the commentary said. It also blamed the United States for joint military exercises with Japan and South Korea, as well as for displaying its nuclear-powered aircraft carriers.

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© Reuters. Palestinians flee their houses due to Israeli strikes, after a temporary truce between Hamas and Israel expired, in the eastern part of Khan Younis in the southern Gaza Strip, December 1, 2023. REUTERS/Ibraheem Abu Mustafa TPX IMAGES OF THE DAY
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By Suhaib Salem and Nidal al-Mughrabi

GAZA (Reuters) -U.S. Vice President Kamala Harris said too many innocent Palestinians had been killed in Gaza as Israeli war planes and artillery bombarded the enclave on Saturday following the collapse of a truce with Hamas militants.

Residents feared the barrages were a prelude to an Israeli ground operation in the south of the Palestinian territory that would pen them into a shrinking area and possibly try to push them across into Egypt.

The Gaza health ministry said at least 193 Palestinians had been killed and 650 wounded since the truce ended on Friday morning – adding to the more than 15,000 Palestinian dead since the start of the war.

Speaking in Dubai, Harris said Israel had a right to defend itself, but international and humanitarian law must be respected and “too many innocent Palestinians have been killed”.

“Frankly, the scale of civilian suffering, and the images and videos coming from Gaza, are devastating,” Harris told reporters.

She also sketched out a U.S. vision for post-conflict Gaza, saying the international community must support recovery and Palestinian security forces must be strengthened.

“We want to see a unified Gaza and West Bank under the Palestinian Authority, and Palestinian voices and aspirations must be at the center of this work,” she said, adding that Hamas must no longer run Gaza.

The Western-backed Palestinian Authority governs parts of the occupied West Bank. Hamas seized control of Gaza in 2007 from Palestinian President Mahmoud Abbas’ mainstream Fatah party and has ruled the enclave ever since.

Israel has vowed to wipe out Hamas once and for all, saying the Islamist group is bent on its destruction.

Mark Regev, a senior adviser to Israeli Prime Minister Benjamin Netanyahu, said Israel did not want to see Gaza’s civilians caught in the crossfire.

ISRAEL SEEKS ‘SECURITY ENVELOPE’

“Israel is targeting Hamas, a brutal terrorist organization that has committed the most horrific violence against innocent civilians. Israel is making a maximum effort to safeguard Gaza’s civilians,” Regev said.

He said that when the war was over, Israel would seek a “security envelope” with special zones and arrangements to prevent Hamas from being positioned on its border.

Throughout Saturday morning, a steady stream of wounded people were carried into the Nasser Hospital in Khan Younis, some receiving treatment on the floor.

The head of the International Committee of the Red Cross said the renewed fighting was intense.

“It’s a new layer of destruction coming on top of massive, unparalleled destruction,” Robert Mardini told Reuters in Dubai.

With conditions inside Gaza reaching “breaking point”, in Mardini’s words, the first aid trucks since the end of the truce entered from Egypt through the Rafah crossing on Saturday, Egyptian security and Red Crescent sources said.

A senior official said Israel would facilitate the provision of humanitarian aid to Gaza’s civilians.

The warring sides blamed each other for the collapse of the seven-day truce, during which Hamas had released hostages in exchange for Palestinian prisoners held in Israeli jails.

Israel said on Saturday it had recalled a team from Qatar, host of indirect negotiations with Hamas, accusing the Palestinian faction of reneging on a deal to free all the women and children it was holding.

French President Francois Macron meanwhile said he was heading to Qatar to work on a new truce.

The conflict broke out on Oct. 7 when Hamas militants crossed into southern Israel and killed 1,200 people, mostly civilians. More than 200 hostages were taken back into Gaza.

Israel responded with a bombing campaign and a ground offensive in the north, destroying swathes of Gaza.

SOUTH TARGETED

The southern part of Gaza including Khan Rounis and Rafah was being pounded on Saturday. Residents said houses had been hit and three mosques destroyed in Khan Younis. Columns of smoke rose into the sky.

Displaced Gazans have been sheltering in Khan Younis and Rafah because of fighting in the north, but residents said they feared Israeli troops were preparing to move south.

“This is the same tactic they used before entering Gaza and the north,” said Yamen, who gave only his first name.

Yamen fled to Deir Al-Balah in central Gaza from the north after Israel destroyed several districts there.

“Where to after Deir Al-Balah, after Khan Younis? I don’t know where I would take my wife and six children.”

On Saturday morning, Israeli air strikes hit areas close to the Nasser Hospital six times, medics and witnesses said.

The hospital is filled with thousands of displaced and hundreds of wounded, including many of those who had been evacuated from north Gaza hospitals.

“A night of horror,” said Samira, a mother of four. “It was one of the worst nights we spent in Khan Younis in the past six weeks since we arrived here … We are so afraid they will enter Khan Younis.”

Among the dead on Saturday was the president of the territory’s Islamic University, a theoretical physicist and applied mathematician killed with his family when a house was bombed, health officials said.

MILITANT TARGETS

The Israeli military said that in the space of 24 hours its ground, air and naval forces had hit 400 militant targets and killed an unspecified number of Hamas fighters.

These included many in northern Gaza, some in a gun battle at a mosque used by Islamic Jihad militants as a command post.

Hamas said its forces had killed and injured a number of Israeli soldiers in northern Gaza.

Leaflets dropped by Israel on eastern areas of Khan Younis ordered residents of four towns to evacuate – not to other areas in Khan Younis as in the past, but further south to Rafah.

Residents took to the road with belongings heaped up in carts, searching for shelter further west.

Reuters could not confirm the battlefield accounts.

© Reuters

By Yasin Ebrahim

Investing.com – Rate cut bets took a big leap forward this week, with a March cut now more likely than not as the deflationary winds are expected to continue to blow through the economy, forcing the Fed to pivot into easing mode to ensure the economic landing from the fastest pace of rate hikes in four decades is soft rather than unnecessarily bumpy.

“We expect that the continued deceleration in inflation over the next few months will motivate the Fed to cut the funds rate 25 bps at the meeting on March 20,” Jefferies said in a note Friday, as the Fed will be wary of the risk a ‘higher for longer’ rate regime poses for a potential soft landing.

The odds of a March cut jumped to 57.9% from 21.6% the prior week, according to Investing.com’s Fed Rate Monitor Tool.

First cut will blunt real rates, keeping soft landing insight

The need for speed on rate cuts will likely be driven by concerns that a real fed funds rate – adjusted for inflation and a more accurate gauge of how much it costs companies to borrow money – running too hot could bring down growth by more than expected, potentially tipping into recession.

“The first cut will be motivated by an attempt to make sure that the real fed funds rate does not increase too much, and does not apply undue pressure on the economy,” Jefferies adds, forecasting that deeper rate cuts will follow to “prevent significant increases in the unemployment rate.”

“We expect 50 bp rate cuts at the following 4 meetings, with the funds rate bottoming at 2.75-3.0% in September,” Jefferies said. That is well below the Fed’s projections for rates to end 2024 at 5.1%.

Economic strength to fade forcing fed into rescue mode

But the recent wave of positive economic data including the upward revision on Q3 GDP to a 5.2% annualized pace has some struggling to determine how the economy is likely to fall into the kind of trouble that will demand a Fed rescue.

Deutsche Bank, however, believes the full impact of the rate cuts delivered so far, the fastest in more than four decades, is yet to leave big dent in the economy.

“With the lagged impact of rate hikes taking effect, we can already see clear signs of data softening,” Deutsche Bank said, pointing to the October monthly jobs report that showed an uptick in the unemployment rate to highest level since January 2022, a pick-up in credit card delinquencies, and a rise in high yield defaults.

Others agree, and expect that strength in consumer spending, which has continued to confound economists, and underpin economic growth, will likely wane in the weeks ahead.

The turning point in the labor market, which has supported consumer spending, will likely come the end of this year or early 2024, Jefferies estimates, as businesses eventually begin to cut jobs to alleviate costs and lessen margin pressures.

“Businesses will struggle to pass on further price increases to an increasingly strained consumer, and margins will fall as inflation slows, leading to layoffs eventually,” Jefferies in a Thursday note.

Powell pushback fails to deter pivoteers

This newfound optimism among the pivoteers stood firm even as Fed Chairman Jerome Powell on Friday attempted to curb the growing enthusiasm on rate cuts, warning that it would be” premature” to bet when policy might ease.

Powell’s remarks, however, weren’t the telling blow to the pivoteers’ hopes for sooner rather than later rate cuts during a week in which inflation not only continued to cool, but his colleague Fed governor Christopher Waller entertained the idea of rate cuts.

The pushback from Powell was also watered down by further signs the Fed is keeping a more watchful eye on the risk of doing too much – a risk that has seemingly forced them into their current careful approach and encouraged them to keep rates on hold since July.

“Having come so far so quickly, the FOMC is moving forward carefully, as the risks of under- and over-tightening are becoming more balanced,” Powell said in remarks on Friday.

While the Fed isn’t quite ready to break out into a full victory dance on inflation, members are now nonchalantly tapping their feet to the tune of cooling inflation as they head off into the ‘quiet period’ ahead of the December 12-13 meeting.