Technologies
Bank of America Warns Brent May Surpass $150 If Iran-Related Supply Shocks Continue”,”content”:”Bank of America has warned that an extended conflict with Iran could push Brent crude above $150 per barrel, as the bank lifted its oil price outlook amid tightening global supplies from the Middle East and Russia. The bank now sees Brent reaching $95 per barrel in the second half of this year, compared with an earlier estimate of $83, but said prices could climb to $150 or more if supply interruptions extend into next spring or if energy infrastructure is damaged further.\n\nThe tightening has been driven by multiple factors, including the ongoing U.S.-Iran conflict, restricted flows through the Strait of Hormuz and the Bab-el-Mandeb Strait, refinery outages, reduced exports from the Middle East and Russia, and tighter product exports from China.\n\nFrancisco Blanch, a commodity and derivatives strategist at Bank of America, said continued inventory drawdowns support an average Brent price near $80 per barrel in 2027, but the key shift is a growing tail risk. He noted that strategic and commercial inventories are getting thinner while physical crude markets are showing signs of acute near-term scarcity through extreme backwardation.\n\nBlanch said OECD strategic reserves have already declined significantly and physical crude is trading at large premiums to benchmark futures. He added that, although U.S. refiners and fuel exporters have partially offset the shortfall, very low product inventories and high refining margins show the system has little spare capacity. He cautioned that the energy disruptions could develop into a structural shock.\n\nThe bank estimates that disruptions via the Strait of Hormuz peaked at about 14 million barrels per day and have recently averaged 4 million to 8 million barrels per day relative to prewar levels. Blanch also estimates that at least 350 million barrels have been removed from global above-ground oil inventories since the March peak, with stocks now about 200 million barrels below record seasonal lows.”,”excerpt”:”Bank of America raised its Brent crude forecast to $95 per barrel for the second half of this year and warned prices could exceed $150 if Middle East and Russia supply disruptions persist into next spring.”}
Analysts at the Bank of America have raised their outlook if Iran war continues to escalate
A prolonged conflict with Iran could cause Brent crude to spike above $150 a barrel, according to Bank of America. The bankâs prediction comes as it raised its oil price outlook as supply disruptions across the Middle East and Russia tighten global crude and fuel supplies. Bank of America now expects Brent to touch $95 per barrel in the second half of this year, up from a prior forecast of $83 per barrel. But actual prices could skyrocket past that forecast to $150 a barrel or more if supply disruptions continue into next spring or if oil infrastructure suffers further damage, the bank said. Supply has been tightened due to several factors including ongoing U.S.-Iran conflict, constrained shipments through the Strait of Hormuz and Bab-el-Mandeb, refinery outages, lower exports from the Middle East and Russia, and tightened product exports from China. âContinued inventory draws support an average Brent price of around $80/bbl in 2027, but the most important change is an expanding tail risk: strategic and commercial inventories are becoming progressively thinner while physical crude markets are already signaling acute near-term scarcity through extreme backwardation,â Francisco Blanch, commodity and derivatives strategist at the Bank of America, said. Blanch said Organization for Economic Co-operation and Development strategic reserves have already fallen substantially and physical crude is commanding large premiums over the benchmark futures. âAlthough US refiners and fuel exporters have partly filled the gap, ultra-low product stocks and elevated refining margins indicate that the system has very limited spare capacity,â Blanch said, as he warned that the energy disruptions could morph into a âstructural shock.â The bank estimates that disruptions through Hormuz peaked at roughly 14 million barrels per day and have recently averaged between 4 million and 8 million barrels per day compared with prewar levels. Blanch estimates at least 350 million barrels have disappeared from the global above-ground oil inventories since levels peaked in March. He said stocks are about 200 million barrels short of record seasonal lows.
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Technologies
Apple and Meta team up to make Muse AI model run on Mac computers
Apple and Meta are collaborating to make Muse Spark Open easier to run locally on clustered Mac Studio systems, according to the companies.
Tim Cook and Mark Zuckerberg have clashed for years, but with John Ternus taking the reins at Apple
Meta
The collaboration centers on Muse Spark Open, the most capable open-weight model released under a license that allows for limited commercial use, according to Meta. Itâs an 816-billion-parameter model using a so-called mixture-of-experts architecture. As an open-weight model, developers can download the technologyâs parameters, or weights, from the internet and run the model on a wide range of hardware.
Customers will be able to pair between two and four Mac Studio PCs to use Muse Spark to code, analyze video or do other agentic work. The model runs locally, instead of in the cloud, adding a layer of security and saving users money, the companies said.
Thursdayâs announcement, following months of collaboration, is a sign that the AI boom has shifted historical alliances in Silicon Valley. For years, Apple and Meta regarded each other warily and avoided public partnerships, and the relationship hit rock bottom after Apple introduced privacy changes in 2021 that limited the targeting capabilities of digital ad companies.
Meta estimated in early 2022 that the change would cut its revenue that year by $10 billion.
Representatives from Apple and Meta declined to say if the Muse Spark Open collaboration was the start of a deeper relationship.
Zuckerberg posted a picture on X showing the Meta agent working on a Mac computer. He wrote, âMuse Spark Open — weights releasing today — runs great on new Mac Studios thanks to work with @johnternus and Apple.â
Ternus responded, âCongrats to the team! Amazing to run a model of Muse Spark Openâs caliber and scale this efficiently, right from your desk. Mac Studio keeps pushing the boundaries of on-device AI!â
Meta AI chief Alexandr Wang said in an interview that many powerful open-weight models are too big to be run on the majority of personal computers, but Appleâs Mac Studios make enough memory available to users so that itâs practical to run Muse Spark Open.
The move represents an important show of confidence in Metaâs rebooted AI efforts and could pose a challenge to OpenAI and Anthropic. It could also signal Appleâs growing strength in AI chips, a market that Nvidia
âłWe worked with Apple to bring leading Agent capabilities to your desktop for the first time on the Apple M5 Ultra Mac Studios, so you know weâre really excited about this,â Wang said. Developers can download a version of the AI model from websites like Hugging Face without extra configuration for Appleâs silicon.
Muse Spark Open has also been tuned to run faster on Appleâs hardware, and the iPhone maker revealed new benchmarks for its chips and published technical documentation about its MLX AI frameworkâs ability to split open-source models across multiple machines.
Mac Studios arenât cheap though, and this AI model requires the fastest Apple chips and as much memory as possible.
Currently, a Mac Studio with the required M5 Ultra chip and 256GB of memory costs at least $10,799. A more expensive version with 512GB of RAM will be released later this month.
Plus, users will need to buy multiple machines.
Common ground on open source
The two companies are collaborating on open-source AI, which has become a point of contention in Washington as politicians worry that free Chinese models could undercut American AI.
Although Meta once centered its AI strategy on its older open-weight Llama family of models, it has since focused on creating proprietary models under the leadership of Wang, who joined Meta when the company invested more than $14 billion into his former startup Scale AI last year.
While Apple and Meta, then known as Facebook, partnered on iPhone extensions over a decade ago, they havenât struck any public partnerships since 2017 after Apple removed system-level Facebook integration from the iPhone.
âMost of the animosity predates my tenure at the company, but obviously thereâs been a long history between Meta and Apple,â Wang said, pointing to one member of his team, AI researcher and former Apple director Daniel Gross, as a reason for the collaboration. Gross, along with former GitHub CEO Nat Friedman, was a major Zuckerberg hire last year as the Facebook founder was overhauling his companyâs AI strategy.
Their leaders have also traded harsh words.
Cook, who was Apple CEO until Ternus succeeded him last month, took a shot at Zuckerberg in 2018, during the Cambridge Analytica scandal, saying, âI wouldnât be in this situation.â Cook often criticized Meta for compromising user privacy.
Ternus, a hardware engineer, has already started changing things at Apple, including when it releases products.
And Metaâs developers havenât been able to resist Appleâs products. The company bought hundreds of Mac computers so its Superintelligence team could experiment with local AI and agents earlier this year.
Appleâs multiple partners
Meta is just the latest AI model developer to team up with Apple.
In 2024, Apple announced a partnership with OpenAI to integrate ChatGPT into Siri, although the integration âdramatically underperformedâ and didnât lead to OpenAI user growth, OpenAI said in a filing thatâs part of a legal dispute with Elon Muskâs xAI. Apple sued OpenAI in July, alleging trade secret theft, a claim OpenAI denied.
Earlier this year, Apple announced a deal with Google
Still, Appleâs AI strategy has drawn criticism from investors and customers in part because its new version of Siri, released last month, isnât as advanced as chatbots and agents from leading labs.
Meanwhile, Meta has bet big on becoming a leading lab but has struggled to keep up with the competition and its business remains almost entirely reliant on ads. Recent developments, such as Metaâs Muse personal agent app and its latest proprietary foundation model, Muse Wonder, released earlier this week, have begun to excite investors who are optimistic about new AI business opportunities.
Open source remains part of Zuckerbergâs AI strategy. In August, Meta debuted a small open-weight AI model dubbed Muse Glimmer, with Zuckerberg pledging to eventually release something bigger and more powerful.
Muse Spark Open isnât as advanced as Muse Wonder, a proprietary offering, but Wang said itâs good enough to potentially entice more coders to upgrade.
âThese arenât the most capable models that weâve developed or released,â Wang said. âBut we think that there will be a lot of companies and developers who sort of use this model and tinker with it at small scale and then seek to ramp up and scale up their usage.â
WATCH: Apple makes its biggest smart-home push yet under CEO John Ternus.
Technologies
CoreWeave credit default swaps hit distress levels as investors sour on AI debt
Signs of distressed deepened in CoreWeave on Thursday.
CoreWeaveâs credit stress continued to spiral on Thursday amid a broader sell-off in AI-related names.
CoreWeave â a so-called neocloud company â has taken on more than $51 billion of debt and obligations to finance its AI infrastructure build-out. Itâs now facing a rebellion from stock and bond investors as concerns mount about AI overspending and debt levels.
Yields on CoreWeave debt have continued to climb, with the yield to maturity on its 9.75% bond due in 2031 reaching 15.78%. Bond yields move inversely to prices. Meanwhile, the spread on its five-year credit default swaps, which are insurance against default, at one point soared above 1,140 basis points. It last stood at nearly 1,038 bps â a 16% week-over-week jump and 164% higher than a year ago.
Credit concerns are spreading into AI equities too. CoreWeaveâs stock dropped during trading Thursday before recovering and closing 5.94% higher. The moved followed Wednesdayâs 15.5% nosedive.
Other neocloud stocks were under similar pressure. Nebius also sank before climbing higher to close 1.29% and and Iren ultimately ended the day down less than 1%.
Anxiety about AI overspending is also spreading. For instance, shares of Micron Technology and Advanced Micro Devices sold off following a big sell-off in South Korean chip stocks. Micron closed up 1.87%, while AMD fell 1.5%.
While AI debt worries have been rising steadily, investors have suddenly grown skittish about the underlying finances of companies borrowing heavily to buy chips, build data centers, and rent out computing power.
Coreweaveâs credit default swaps are one place to see that stress.
Credit default swaps are contracts where buyers pay for protection in case the borrower canât repay its debt. The spread widening in CoreWeaveâs CDS means investors view the debt as riskier.
The market is âbasically saying âno masâ to AI debt without operating cash flow support,â the Evercore ISI trading desk said.
A spread level of 1,000 basis points or above is generally a sign of credit distress, said Gavan Nolan, executive director of fixed income pricing at S&P Global Market Intelligence.
No one is questioning whether demand for CoreWeaveâs services is real, since the company has contracts with all the big hyperscalers, Nolan said. The question is whether the cash flows will ultimately arrive.
âItâs obviously heavily negative free cash flow at the moment, and it needs that cash flow to arrive really to justify all the capex that itâs spending,â Nolan said.
âSelf-fulfilling prophecyâ
CEO Mike Intrator dismissed the market moves on Wednesday, according to a memo obtained by CNBC.
âWhen you are building a new type of technology company there will be periods of time when the market misunderstands and acts irrationally,â he wrote. âWe are confident in our backlog which more than supports all of our debt obligations.â
The backlog is over $100 billion, with around two-thirds of it with investment-grade counterparts including Microsoft, Meta, IBM and Caterpillar, Deutsche Bank said in a note Thursday. The firm reiterated its buy-rating on the stock Wednesday, calling the dislocation a buying opportunity.
âThe problem is this kind of concern can prove to be a self-fulfilling prophecy, and risks triggering broader issues in other AI-related names,â said Jim Reid, global head of macro and thematic research.
Domino effects may already be happening. Oracleâs five-year CDS spread also spiked this week. It was last at 282 basis points, a roughly 10% increase in one week.
âA downgrade from its BBB rating would risk pressuring IG-only investors into forced sales,â Reid said.
Technologies
Netflix Chief Content Officer Bela Bajaria is leaving, will be replaced by Peter Rice
Netflix announced Bela Bajaria will be replaced by former Disney exec Peter Rice as the company’s chief content officer.
Netflix on Thursday announced Bela Bajaria will be replaced as the companyâs chief content officer by former Disney exec Peter Rice, effective Oct. 26.
Rice most recently oversaw Disneyâs cable channels, news programming and coverage of major sporting events.
âPeter is one of the most effective at-scale operators in the entertainment industry,â co-CEO Ted Sarandos said in a statement. âIâm excited to welcome him to Netflix as Chief Content Officer as we continue to scale and deliver members more of the stories they love.â
Before Rice was at Disney, he held roles 21st Century Fox and Fox Searchlight Pictures. Netflix in its announcement called him âone of the entertainment industryâs most respected creative executives.â In his new role, Rice will oversee the companyâs global content organization, including scripted and unscripted series, film and live events.
âł[Netflix has] shown again and again that theyâre willing to take chances on distinctive voices and fresh ideas, and Iâm excited to work with the team to help bring even more great stories to members everywhere,â he said in a statement.
Bajaria, who is leaving Netflix after nearly 10 years, most recently worked as the companyâs global content team. She had been focused on the companyâs live sports strategy, looking to create events out of buzzy games and tournaments.
âIâm incredibly grateful for everything sheâs done to help Netflix entertain the world,â Sarandos said in a statement.
The announcement comes a day after Netflix instituted layoffs across its organization, eliminating approximately 6% of its workforce, or roughly 1,000 jobs.
The media company will report its next quarterly earnings on Tuesday.
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