Oil Checkup – this weekend could be very meaningful for crude oil prices, as a Doha meeting between 75% of the world’s producers could determine a new course for production levels. There is increasing evidence that U.S. production has been falling while OPEC leaders have shown increasing indication to potentially “freeze” production at current levels, or at least at some agreed upon level. The oil market is already naturally adjusting to a new dynamic of lower prices and demand constraints, so it’s inconclusive whether a freeze would actually have meaningful impact at this stage. But, it would at least mean that the opposite (increased production) wouldn’t be true. Iran and Russia remain the wildcards ahead of the meeting (surprise, surprise), where anything they may promise is shaky at best.
Don’t Cry for Me, Brazil? – Brazil is inching its way to impeaching their current president, Dilma Rousseff. Earlier this week, a committee in the lower house of Brazil’s Congress voted to recommend President Rousseff’s impeachment, and the Supreme Court followed suit by denying a request to suspend the impeachment process. Rousseff is on the chopping block for her alleged involvement in the Petrobras scandal and allegedly manipulating public finances. Her approval rating is now in the single digits and Brazilians frequently take to the streets to demand her removal. A vote in the full lower house is expected to take place on Sunday, followed by proceedings in Brazil’s Senate, where the chamber could use a simple majority to put Rousseff on trial. Doing so would suspend her position for up to six months, making Vice President Michel Temer acting president.
Shifting Away from Computers? – are we bearing witness to the end of another technology era, this time in personal computers? With increasing use of smartphones and tablets, we’re seeing softer demand for PCs. Global shipments of personal computers fell 9.6% to 64.8M units during the first quarter reaching a landmark decrease in sales as shipments fell below 65M units for the first time since 2007. Here in the U.S., personal computer shipments totaled 13.1M devices, which represented more than a 6% decline from the year earlier and was also the lowest volume seen in three years. A stronger dollar plays a role in falling sales, adding to an already high barrier that some importers face with tariffs.
Developing Nations Increase Borrowing – Developing nations (Emerging Markets countries) have flocked to the World Bank, of late, seeking loans at levels similar to what was seen during the financial crisis. Lending is on track to reach $150B in credit extended between 2013 and the current fiscal year. To ascertain whether this is a good or bad thing, an investor really has to look on a country-specific level. In the case of a country being a commodities exporter seeking loans to adjust ailing balance of payments, it’s more than likely a negative. On the other hand, countries seeking loans to take advantage of an attractive interest rate environment should be seen as advantageous – assuming that the return on borrowed assets is higher than the interest rate paid, borrow away.
Disclosure