A Divided OPEC Meets in Vienna

Automatic TRANSCRIPT

Wall Street Journal listeners. Come from all walks of life and business and no matter what type of business urine eighty P is here to help you achieve what you're working king for with. HR talent time benefits and payroll informed by data and designed for people learn more at design done eighty p dot com a divided OPEC meets in Vienna today. The Saudis have grown pretty tight of shouldering more than our share of these catch on Iran and companies are quietly fixing accounting errors all without alerting investors. What we're seeing is an increasing racing trend for companies when they discover errors rather than doing full restatements to revise? The past numbers class could more. We're American troops be sent to the Middle East. This is what's news from the Wall Street Journal on Kim Get Allston. Let's get started now before we take a closer look at OPEC's meeting and what it could mean for how much we all pay at the pump. Here's what you missed. Were reporting that the trump administration is considering considering expanding the US military presence in the Middle East. It's to counter the threat posed by Iran. US officials told us the expansion could include dozens more ships other military hardware and as many as fourteen thousand additional troops in a tweet. The Pentagon denied that troop figure officials told us that no decision in has been made and that the president could approve a smaller deployment. He's expected to make a decision as soon as this month. While way is fighting back we told you last week that the Chinese telecom giant is challenging a ruling by the Federal Communications Commission the ruling from last month blocked rural. US wireless carriers from using an eight point five billion dollar a year fund to buy equipment from Welwyn today while way officially filed its lawsuit. Here's the company's chief. The legal officer song looping at a press conference at the company's headquarters this morning when passing this decision. They've did not offer alway due process or verify the facts but they very loudly and very publicly labored. All Company is a national security threat. There's easiest older violates the constitution and we have has no choice but to seek remedy the FCC had no comment what's rounding error. We report that more. Companies are quietly lightly fixing accounting errors without reissuing financial statements like Papa. John's Gene Eagle Shem Explains Puppy Jones found an accounting arrowed. Meant it affected its years of its balance sheet and earnings but they decided that the Arrow wasn't serious enough for them to have to warn investors and restate the state that the numbers the SEC. Question them why they sought. The eras weren't so serious that they had to restate the financial statements and Investors Papa. John's gave a very long expedition detailed explanation and has accepted that gene says Papa. John's isn't alone. A growing number of companies. These are just revising pass numbers instead of restating earnings. She says it's not illegal. That's partially because the Securities and Exchange Commission doesn't have a hard and fast astral about what counts as a significant revision. The SEC does polices. What's interesting is it doesn't question that many of these companies but he's decisions so other research showed only about four percent of these the? SEC says physics by why I think the SEC one concern they have is potentially essentially if too many companies do big our statements it could sort of flood investors with information and it devalued them so also I think. SEC thinks companies mishap degree of discretion. Over this none of these sort of hard and fast rules so what when is an associate -nificant that it warrants a bigger statement that set something. That's a matter of judgment the SE and Papa. John's declined to comment Mood now our main story this morning CAPAC the oil cartel members and partners are all gathered in Vienna today for the start of a two-day meeting. It's a big moment for the past few months. It's members have cut oil production all in an effort to increase oil prices. Now the question is if the prolong those cuts or if the let them expire. Ask planned in March David. Dari is at the meeting in Vienna. So David Walk me through the backdrop of these talks. What have we seen in terms of oil prices and oil production so the backdrop of this meeting is over the past few years OPEC and its allies have been implementing oil production cuts? This time around is is An expected increase in supply in the first quarter of twenty twenty including but not limited to rising. US show production on also. They're all all fares about demand not limited to uncertain economic data in part linked to the China trade war oil prices. I would pass you. Today's have resumed on hopes. That OPEC may deepen its but they are historically speaking relatively low on one extra element of this. That meeting is that Saudi Aramco the world's most profitable company is going to be announcing a IPO price on Saudis. Best interests to support prices because in some part the success of the I I is linked to stupidity of oil prices. So who are the factions factions at this meeting the factions at this meeting four and two maybe three broad categories. You've got the Saudis and it's in their best interests to to support or prices as much as possible They've got the ARAMCO. IPO TO PROTECT On they've been over complying with The cut quotas. They agreed to pardon pretty much full. Most of the period of time. This deals being in place. You've got the Russians who are the leaders of the plus function and In OPEC plus on data really want to cut from much longer on a certain debt. Really want more deeply They are working on concessions from the rest of our plus for that content sites they just want enormous new pipeline with China on the base wants to produce as much as they can but they see the benefit in supporting our Saudi allies on the third main function is probably the under complying OPEC nations and particularly the Iraqis on the Nigerians. When when the Iraqi minister arrived in Vienna choosing night he was quite put about about the idea of Deepa cuts? Even Iraq hasn't been fully complained for most of the deal so far. So that's a little bit like saying let's let's go to a more expensive restaurant but the service can pay now. Haven't we been reporting that instead of a cut. Saudi Arabia and the run up to the meeting has been threatening to unleash even more well oil. How does that factor into these discussions? The Saudis have grown. Pretty tight of shouldering more more than that fast. Sheriff these cuts on their own and in the days before this meeting that even threatened to do away with cut soul together ramping up. Production and essentially crushing global news prices. You some of the spoken to so that would be a moral victory for the Saudis. They don't necessarily think it's option though seriously. Consider Okay so the meeting concludes tomorrow. What our market's GonNa make of all of this? There are three possible. Brewed outcomes uh-huh and for markets. At least on Friday number one would be a barish out can probably a rollover of just three months. I taking deal to June twenty twenty. I don't think that would be enough to support oil prices right now and nor does anybody else that seems a middle way option. Might be a a six month rollover with not the cuts and even then some of the people have been. You don't think that would be enough and a sort of third basket of options uh-huh either extending by twelve months or deepening cuts on the figure. Full hundred thousand barrels a day extra has been touted that would take cuts two point six million barrels a day cut. Either of those last two options would probably be taken quite well by markets. You can find Oliver reporting on the OPEC meeting as it progresses up under WSJ DOT Com Wall Street Journal listeners. Come from all walks of life and business and no matter what type of business you're in eighty P is here to help you achieve what you're working for with. HR talent time time benefits and payroll informed by data and designed for people learn more at design done eighty P dot com on to markets. We're going to focus on a particular type of stock. Today value stocks they tend to be confusingly undervalued. So you'd formerly the definition is that they trade with a low price is a multiple of their book value. Now the thing is they may be unloved for reason they could have a lot of debt for instance or be an unpopular sector but historically dave been the stocks that outperform over time in fact it's the investing strategy that helped make Warren Buffett rich rich recently. There's been a lot of debate about whether that's still true. Or if the other category growth stocks are really a better bet but the key thing we're looking at today is the relationship unshipped between value stocks and bonds. Paul Davies says. That could tell us something interesting. About how markets have changed so. What's really interesting is? He's the link over the past ten years. which has gotten much tighter recently? MP We're paying much more attention to recently the link between value stocks and what's going on in bond yields and the simple version of this is when bond yields rise particularly when longer-term bond yields rise relative to short-term yield so ten-year rises arises moving to you for example value. Stokes suddenly perform much better. Paul says there are a couple of things that could be behind. This one is that arise in the ten in your bond yield usually means. Investors are optimistic about the economy. That means that they could also think value stocks will be performing well down the line another has to do with factor investing vesting. It's when you choose stocks in a portfolio based on certain factors such as momentum or company size. It's become more popular and Paul says that may be influencing saying these changes that we've seen so you combine all of these things and the way in which people looking at markets sort of more holistically as a whole. Oh and what we're noticing is that price moves in different areas becoming very closely linked so when the cavs deepens fatty stocks on the APP perform and gross stocks underperform and vice versa. And this kind of tells us something about how crowded markets have become how trendy trendy they've become and how many people are doing very much the same sort of thing with the money which could be dangerous. And here's what else were paying attention to today. We've got a ton of companies is reporting their earnings including many names. You might recognize dollar general and Kroger report today as well as Ulta beauty will also get earnings from tiffany. The Jewelry Company is being acquired by the French luxury conglomerate. LVMH for over sixteen billion dollars that stands to be LVMH's biggest acquisition ever finally. Here's a job that sounds amazing professor to the stars Anita Alberti has built an academic career and a strong instagram following studying the conditions that create the greatest success stories in sports and entertainment at thirty eight became one of the youngest women to earn tenure at Harvard Business School now. She leads an executive course where grammy winners and. MVP's think Carly Kloss. dwayne Wade learn how to put their skills to use in the business. Ns world she says the biggest thing that the stars who take her course tell her is that they wish executives would see them more like human beings. Were curious which success story Roy whether it be a music album famous ad campaign and unstoppable winning sports team. Would you like to learn more about you can tweet us at WSJ podcasts or email us At what's news all one word at Wsj.com your comments might be used in follow up reporting. That's what's news from the Wall Street Journal. Thanks for listening DOC.

Coming up next