At the beginning of the week, shares on equity markets on a global scale headed down. This was the result of the news that the 15 largest exporters of oil both in and outside of OPEC (Organization of the Petroleum Exporting Countries), failed to reach an agreement in Doha, Qatar over the past weekend. Together, they represent 75% of global output. Crude prices dipped 3.1% as a result.
The attempt to freeze production, was undermined because of the ongoing dispute between the de facto leader of the group Saudi Arabia and Iran. Russia is the third major player of the group.
The Iranians refuse to freeze output at January levels, because this would keep their production near sanction era levels. At the last minute, the Iranians refused to attend the meeting,reducing the number to 14 countries represented.
Kuwait Towers, the country’s most famous landmark
Oil prices would stabilize, as a result of a oil workers strike in Kuwait that would last for 3 days. Crude output was temporarily reduced 1.7 million barrels a day, from the normal 2.8 million. At the same time Russia stated they intend to increase production, but some analysts doubt they will be able to increase output by a substantial amount.
World shares would recover on Tuesday after oil prices stabilized, allowing the major exchange in the United States known as the Dow Jones Industrials (Dow) to break through 18,000 again. This was the first time this has happened, since July of 2015.
The poor corporate earnings result expected for the first business quarter, was also not as bad as expected. However by weeks end, the Dow would fall back below this benchmark once again.
The IMF (International Monetary Fund) is urging member nations to boost growth through additional spending and other measures to deal with the slowing global economy.
The organization cut world growth predictions last week, for the 4th time in a year. It is now forecast to be a mere 3.2%. This is just 0.2% above what the organization considers to be recessionary.
In a related story, there is an attempt to help bring a new consensus between Europe and the IMF over the issue of Greek debt. The creditors of Greece are considering extra austerity measures that would come into play, if the country failed to reach fiscal targets that the IMF feel are unobtainable.
Angela Merkel
Chancellor of Germany
Business activity in the Euro-zone slowed in April. GDP (Gross Domestic Product) for the second quarter will be just 0.3%. This is disappointing news to the ECB (European Central Bank)
The ECB did hold interest rates steady at 0% and -0.4% for the rate charged to banks to keep money at the central bank. The ECB did hint at even more stimulus, causing more tensions with Germany. German Chancellor Merkel stated that not all economic problems associated with the lack of growth, can be solved by monetary policy.
Also in Europe, the United Kingdom (UK) according to government studies, would be left permanently poorer if the country leaves the European Union (EU). The domestic economy would end up being 6% smaller by 2030, at the cost of the equivalent of $6,106 USD (United States Dollar) per household.
Swedish National Bank
German investor confidence rose for the second month in a row in April. However, the slowing Chinese economy and a possible UK exit from the EU, is putting a drag on Europe’s largest economy.
The central bank of Sweden is now buying more bonds, to help drive down longer term yields in the fight against deflation. Although interest rates will remain at -0.5%, an additional $5.6 billion USD in more quantitative easing is now being deployed.
Saudi Arabia has threatened the United States (US) that it intends to sell up to $750 billion USD in American treasuries and other assets, if the US Congress passes legislation permitting the kingdom to be held responsible for any role in the 09/11 attack.
Nikkei headquarters in Ōtemachi, Chiyoda, Tokyo
Saudi Arabia is raising $10 billion USD from international banks. This is the first debt issuance for the kingdom in 25 years. The money is needed to help balance the national budget, in the face of declining oil revenues and reserves.
The Japanese market (Nikkei) took two hits on Monday. A stronger yen, the result of the failure at Doha and the production interruption coming on the heels of a major earthquake. Two major exporters Toyota and Sony have both suspended production temporarily.
On Tuesday, stocks in Japan would spike with a declining currency valuation and a rebound in crude prices. The Nikkei would see the largest daily gain (3.7%) since early February.
It was reported this week that Japanese exports would fall for the 6th month in a row in March, due to three major factors. They are slowing economy in China, a strengthening yen and lower overall global growth. Exports are down 6.8% from a year earlier. This puts more pressure on the Bank of Japan and the government to stimulate growth even further.
In China, the central bank is pumping into the system this week through the sale of bonds, the equivalent of ($37 billion USD). It is the largest amount of cash in 3 months.
Dilma Rousseff
President of Brazil
In Brazil, hopes of political change have helped to propel domestic markets higher. The lower house of Congress has voted to back impeachment of embattled President Dilma Rousseff. The Senate will now vote by a simple majority next month, whether to proceed or not with the trial.
In an effort to rally international support against her possible removal from office, Ms. Rousseff will be at the United Nations today in New York City. She is attempting to frame the impeachment as a coup.
Argentina officially returns to the global bond markets following a 15 year absence this week. It is the biggest sovereign bond issuance for an emerging market in 2 decades. It is expected that a total of $15 billion USD will be raised.
The IEA (International Energy Agency) predicts the biggest fall in non-OPEC production this year that has taken place in a quarter of a century. This is forecast to be 700 thousand barrels a day. At the same time global demand expected to rise in China, India and many emerging market nations.
Three West Lothian shale mounds, evidence of the early paraffin oil industry in the 19th century Scotland
The global glut in oil remains somewhere between 1 to 2 million barrels a day.
In related news, it was announced that oil output in the United States has now dipped below 9 million barrels a day. This helped to boost prices of American produced oil again this week.
On Friday morning, American West Texas Intermediate (WTI) oil increased 0.76% to $43.51 USD, less than $3.00 above where prices stood last week. International priced Brent is also up +0.47% at $44.74 USD.
In major corporate news, Google is being scrutinized by European regulators again. The American technology internet giant, is being accused of promoting its own shopping service at the expense of rivals and abusing the dominant position of Android in Europe.
The Investment Newsletter had 5 target fills to report this week, and 0 early stock fills
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