Power Sheet – May 31, 2016

-We’re almost done with the primaries! And it can’t happen soon enough. Virtually nothing happens this week (the Virgin Islands hold a Democratic primary). Interest, what’s left of it, will focus on June 7, a week from today, when California, Montana, New Jersey, New Mexico, and South Dakota hold primaries for both parties, and North Dakota holds Democratic caucuses.

Why should anyone care? After all, Donald Trump has clinched the Republican nomination, and Hillary Clinton has a virtual lock on the Democratic nomination. The remaining issue is how strongly Bernie Sanders performs. It’s still practically impossible for him to be the nominee, but if he again embarrasses Clinton with a win or a close finish in California, or more than one of the other states, he’ll take more power into the convention. There he could wield additional clout in writing the platform and potentially divide the party further if his supporters raise a ruckus. But if Clinton steamrollers him in all those primaries, her road becomes far smoother.

-Volkswagen reports earnings Tuesday, and we’ll see whether damage from the scandal is growing or fading. Events have not been going well for CEO Matthias Müller, who badly needs a bit of good news.

-OPEC meets Thursday in Vienna. Remember when the world used to tremble in anticipation of these meetings? No more. The oil cartel once again will not perform its only reason for being, which is to restrict production and thus raise prices. Of course OPEC’s largest member, Saudi Arabia, can argue that this is exactly what it wants – to keep pumping like mad in order to force prices down and drive high-cost producers, such as U.S. shale-oil companies, out of the market. As supply shrinks, prices will rise naturally. The Saudi’s can even argue that their strategy is working; U.S. producers have indeed been cutting production, and prices have risen. But – as prices rise, some of those producers will re-enter the market, putting new downward pressure on prices, and then what has OPEC accomplished?

The larger reality is that OPEC is losing power and relevance. The reasons: multiplying sources of non-OPEC hydrocarbon supply, plus weakening discipline within the cartel as members secretly or openly produce more than their quotas. OPEC’s moment has passed, and it isn’t coming back.

-The Libertarian Party nominated its presidential ticket over the weekend, and for the first time in the party’s history it could actually be relevant. That’s because it nominated former New Mexico Governor Gary Johnson for president and former Massachusetts Governor William Weld for vice president, by far the most strongly credentialed ticket it has ever put forward. They have no chance of winning, but large numbers of voters say they’re open to a third-party candidate, and this will likely be the only third-party ticket on the ballot in all 50 states. It’s just possible that it could deny a state or two to Trump.

It will be instructive to see how the party handles more potential power than it has ever held. Step one is probably persuading candidates for party chairman not to take their clothes off onstage at the nationally televised convention.

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