OPEC sticks with production output, Apple (AAPL) to help smartphone sales hit record high and more recalls tied to Takata

Bourbon & Bayonets / Friday, November 28th, 2014

Markets were relatively flat on Friday as an announcement made by OPEC put a damper on energy companies. The report said that they would maintain the current oil production rate instead of decreasing. Many economists were expecting the announcement to produce a decision of drastically cutting production since the price per barrel has dropped from nearly $100 this summer to about $73 per barrel as of recent. Their reasoning for the decision is that they do not want to hurt producers that have been inundating the market with both crude oil and natural gas. Oil prices on Friday have sunk to nearly $2 shy of levels not seen since September 2009. Bill Hubard, chief economist at Markets.com, said, “We are seeing continued over supply. I think $70 a barrel will be the new norm. We could see oil go considerably lower.”

Shares of Apple Inc. (AAPL) were sinking slightly after a report was announced that smartphone shipments are on track to hit a record high this year. The industry is set to reach nearly $300 billion in wholesale shipments this year. This is up from $280 billion last year. The report, which was released by Counterpoint Research, said that wholesale shipment revenue accounts shipments made by the manufacturers to retailers. Apple accounts for nearly a third of the smartphone industry sales. Which is partially attributed to their knockout success of the iPhone 6 series. Neil Shah, research director at Counterpoint Research, said, “Apple is to thank for the new record high.”

News was released today that more recalls may be coming tied to Takata Corp airbags. Both Honda Motor and Mazda Motors could possibly place another recall of 200,000 vehicles in Japan. Certain automakers in the U.S. have recently issued recalls of the airbag in order to investigate why the airbags are exploding with “excessive force.” U.S. safety regulators have since ordered the company to extend the recalls nationwide. Takata was given until Tuesday to respond to the order. If the recall turns nationwide, this would mean an additional 200,000 to the already standing 2.6 million recall of vehicles that were fitted with Takata air bags. Transport Minister, Akihiro Ohta, said, “This is an extremely important issue for automobile safety. Japanese manufacturing enjoys a high level of trust so I am worried this situation will shake that confidence.”

That’s all for today,

Warren Gates, Normandy Research

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