Daily Agenda: Weekend IMF, OPEC Meetings Yield Mixed Results

Rousseff loses impeachment vote; Morgan Stanley profits off sharply but beat estimates; 7.8 earthquake shakes Ecuador.


Nadia Sussman

The meeting of the Organization of Petroleum Exporting Countries (OPEC) in Qatar this past meeting to discuss possible caps for oil production was complicated when Iran withdrew at the last minute, preventing a consensus among the 12 member nations. The next regular OPEC meeting will not be until June. With an economy battered by Western sanctions that have just been lifted, Iran’s government has signaled that it has no intention of freezing production. Despite the assurance of Russian Energy Minister Alexander Novak that his nation — the largest non-OPEC producer after the U.S.— would be amenable to a deal, Iran’s absence created a void that could not be overcome. West Texas Intermediate-grade futures contracts for front-month delivery fell by nearly 3 percent in trading early today, pulling the ruble lower with it. Meanwhile meetings of the International Monetary Fund and the Group of 20 both resulted in warnings that risks to global growth and financial stability have increased since last year, casting a shadow over investor sentiment.

Rousseff loses impeachment vote. The lower house of Brazil’s Congress voted to impeach President Dilma Rousseff during a special session yesterday, after her opponents secured the necessary two-thirds majority. The process will now proceed to the Senate, which will require only a simple majority for conviction. A crowd of some 250,000 anti-Rousseff protesters filled the streets of Sao Paulo to cheer the decision.

Morgan Stanley exceeds estimates. Morgan Stanley released first-quarter 2016 financial results today, which included profits that were more than 50 percent lower than the same period in 2015 but still beat consensus analyst estimates. The company reported net earnings of 55 cents per share versus $1.18 during the first quarter of 2015. The firm reported lower costs, including sharply reduced compensation as well as lower returns on fixed income and equity trading. Revenues for wealth management, a larger focus for the reorganized firm, also dipped by 4 percent year-over-year.

Ecuador suffers earthquake. Over the weekend, Ecuador was hit by a 7.8 Richter-scale earthquake centered near Pedernales. The death toll has risen to more than 250 while the number of reported injured is in the thousands. This marks the worst quake in Ecuador since 1979. The South American country has received offers of aid from governments throughout the region as well as the U.S.

Abu Dhabi says Malaysian state fund in default. Abu Dhabi’s sovereign wealth fund reported today that 1Malaysia Development Bhd (1MDB), the troubled development fund overseen by the Malaysian government, was in default on more than $1 billion in debt, freeing the Gulf state from obligations to further support the fund. The development comes as more international investigations into possible improprieties at 1MDB have created a political quagmire for Malaysia’s Finance Ministry and Prime Minister Najib Razak.

Home prices rise in China. National Bureau of Statistics data released today revealed that new home prices rose in China in March with 62 of the 70 cities analyzed gaining for the month. A rapid rise in costs for key cities is expected by many economists to prompt further intervention by the central bank. In Shenzhen, March prices were more than 60 percent higher than the same month last year.