Afternoon Coffee: Hurricane Laura’s effect on Gulf supply chains; TikTok investors pull for Oracle deal; Exxon Mobil removed from Dow, replaced by Salesforce

slasnyi/Adobe Stock

Tropical storm Laura became a hurricane Tuesday as it makes its way toward the Gulf Coast in what is projected to be a Category 3 hurricane, according to the Associated Press. The one good piece of news is that an earlier storm — Marco — weakened off the Louisiana shore Tuesday.

The two storms have the potential to greatly disrupt the U.S.’s fuel and shipping infrastructure, according to a Northern Arizona University post on Newswise. The Gulf Coast region has the world’s biggest concentration of oil, gasoline and natural gas infrastructure. And the region is also responsible for roughly $1 trillion a year in economic production. Cities and counties throughout the U.S. and in other parts of the world may see increased prices and fuel shortages because of the storms, according to the article, which talked about coping with supply chain disruption.

"If a large fraction of your upstream supply chain is located in the impact area, you should take steps to ensure that you know as quickly as possible how well your suppliers weather these storms, and you should prepare for contingencies in case there are disruptions,” said Ben Ruddell, a professor at Northern Arizona University.

TikTok investors pull for Oracle to buy app

Two major investors in TikTok’s parent company, ByteDance, are vying to be a part of the deal to acquire U.S. operations, promoting Oracle as a good option to buy the social media giant as it seeks to avoid a ban from the Trump administration, according to the Wall Street Journal.

The investment firms General Atlantic and Sequoia Capital already own large stakes in Beijing-based ByteDance and are key drivers behind a possible Oracle-TikTok deal. Oracle recently emerged as an alternative to Microsoft’s bid. General Atlantic and Sequoia Capital are supposedly pushing for the Oracle bid, which also won President Donald Trump's public support, according to the article.

ByteDance has faced pressure to sell TikTok’s U.S. operations after the Trump administration imposed an Aug. 6 executive order threatening to ban the app over national security concerns. However, TikTok filed a lawsuit Monday challenging the initial executive order as Microsoft, Oracle and others try to make a deal, the article said.

Exxon Mobil’s removal from Dow indicates shift in energy sector momentum

Exxon Mobil — which has been part of the Dow Jones Industrial Average since 1928 — had its run as the longest-serving component on the market come to an end, according to CNBC. S&P Dow Jones Indices announced the largest changes to its 30-stock benchmark in seven years on Monday.

The oil and gas giant will be replaced on the Dow by Salesforce, a business software firm that has been expanding its technology footprint. "Salesforce ... has seen its stock jump nearly 220% in the last five years, and currently has a market capitalization around $187.5 billion," the article states.

Some indicated Exxon’s removal is a “sign of the times” as the energy sector has faltered in recent years, especially with the strength of the technology sector. Energy makes up 2.5% of the S&P 500, compared to 6.84% five years ago and 10.89% 10 years ago, according to the article. Technology jumped from 18.48% 10 years ago to 28.17% today.

Jennifer Rowland of Edward Jones told CNBC that five tech stocks — Apple, Microsoft, Amazon, Alphabet and Facebook — are larger than the entirety of the U.S. energy sector. She called this “pretty sobering” and “symbolic of how far the energy sector has fallen over the past few years.”

“In removing Exxon from the DJIA, the index provider is clearly being reactive, and indeed accentuating the extremely negative investor sentiment on just about anything tied to oil and gas,” Raymond James’ Pavel Molchanov wrote in a note to clients, according to the article.

Never miss out on Spend Matters news — sign up for our newsletter!

Share on Procurious

Discuss this:

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.