Are we best friends

MARKETS

• U.S. markets: Indexes finished slightly down for the week, but the U.S.-China announcement on trade could turn things around this week (more on that later).
• U.S. economy: The dollar has been off to a strong start in Q2.

INTERNATIONAL

Would You Vote for this Guy as Your President?

Strap on your election caps, whip out your "I Voted" sticker, and let's take a trip down south. First stop? Venezuela, where a country in economic turmoil voted for its new leader Sunday—a decision that could determine its direction for years (decades?) to come.

Our odds are on current president, Nicolas Maduro, to win. He didn't force us to say that, but as many experts will tell you, he forced others to.

Quick refresher:

• Nicolas Maduro is the bus driver-turned world leader who took over when Hugo Chavez died in 2013.
• And he's no Ms. Frizzle—Maduro took all the magic out of the school bus when he forced his main competitors to sit this election out.

And that's after leading his country into years of economic hardship

Let's set the mood. Venezuela in the 1990s: an oil-rich nation with a strong middle class. And best of all? Latin America's richest economy.

Then, former prez Chavez turned the country towards socialism. He cut off ties with the U.S., took billions in loans from China and Russia, and went swipe-happy with the country's credit card.

When Maduro finally took the baton in 2013, oil was about to free-fall from ~$100 to ~$40 a barrel, gutting Venezuela of its biggest moneymaker.

Fast forward to 2018:

• GDP has contracted by double digits each of the past two years, and it's on pace to fall 15% this year.
• Inflation hit 2,400% last year, and it's projected to reach 13,000% this year. The bolivar lost 99% of its value.
• Unemployment: Expected to hit 30%.
• Population decline: 600,000 have fled Venezuela over the last couple years, and 5,000 people are getting out daily.

It's so bad, people are dumpster-diving for food, currency exchanges take hours—if not days—to let you take out small portions of cash, and hospitals are short-staffed and overrun with patients.

Bottom line: Maduro blames his problems on the U.S. and other world powers. Which means negotiating with a Maduro-led Venezuela won't come easy. Multinationals are already beginning to feel the pinch on their bottom lines.

+ Next stop on our road trip: Italy, which might also be hopping on board the populist bandwagon. Could its new coalition government lead to Brexit 2.0.?

TRADE

Hit Pause on that Trade War

$150 billion in proposed tariffs on Chinese goods quickly dropped to $0 after Treasury Secretary Mnuchin said the U.S. was shelving those plans (for now). And that trade war? It's "on hold."

Did we just become best friends?

Well, not quite...but China did say it'll boost purchases of U.S.-made goods and services in order to "substantially reduce" the $337 billion trade deficit.

How we got here:

• The Trump administration proposed these tariffs to punish China for unfair trading practices, like stealing tech and undercutting the market on steel prices.
• But after yesterday's announcement, think about the threat of tariffs as a negotiating tactic: you stake out a wildly extreme position ($150 billion in tariffs), forcing the other side to moderate and meet you halfway (boost purchases of your exports).

Bottom line: This is good news for your wallet, for the global economy, and for the majority of U.S. businesses. BUT, this relationship is still rocky.

CONSUMER GOODS

No Soup for Campbell

Once again, Campbell got rejected by the Soup Nazi: it came in short of earnings targets and lowered its full-year guidance.

This was one bad quarter too many:

• CEO Denise Morrison is out after seven years.
• Campbell is reassessing all of its brands. And we mean all (even SpaghettiOs). "There are no sacred cows," said interim boss Keith McLoughlin.

Zoom out: Like other large CPG firms (consumer packaged goods), Campbell is struggling to adjust to changing consumer tastes. It thought it was getting ahead of the trend, buying brands like Bolthouse Farms (healthy beverages) and Snyder's-Lance (salty snacks). But those bets haven't paid off yet.

+ There have been 10 CEO changes in the U.S. packaged food/protein industry since the start of 2017 alone.

+ With Morrison stepping down, that leaves 23 women in charge of S&P 500 companies (4.6% of the total).

PERSONAL FINANCE

A U.S. Household Sometimes Repays Its Debts

Carry the 1, subtract the two, and yup...that brings U.S. household debt to $13.2 trillion in Q1 2018—a record high. Well done America, we've done it again.

So what's the breakdown?

67% mortgages, 10% student loans, 6% credit cards, 9% auto loans, and 8% other.
Now, you may start relapsing into Great Recession talking points: "Sound the alarms, housing bubble, subprime loans, The Big Short." But there's reason to remain level-headed.

Here's what top economists have to say:

• This is normal: Debt levels tend to rise over time with inflation and population growth.
• The average credit score among new mortgage owners has jumped from 755 to 761.
• Mortgage rates just hit a 7-year high, aka fewer people will pull out their checkbooks.

On the flip side: 10% of student loan payments are 90 days overdue, while credit card and auto loan delinquency rates are rising.

Bottom line: The U.S. household debt picture isn't perfect. But it's not broken either.

CALENDAR

The Week Ahead


Monday (May 21): Fortune releases its list of the top 500 American companies; Your long Memorial Day weekend is just 5 days away

Tuesday (May 22): President Trump meets with South Korean President Moon Jae-in; Earnings (TJX, HPE, Intuit)

Wednesday (May 23): French President Macron holds a summit with tech CEOs like Zuck; FOMC minutes; Earnings (Lowe's, Target)

Thursday (May 24): Jobless claims; Earnings (TD Bank, RBC, Gap, Best Buy); Laundry

Friday (May 25): GDPR goes into effect; Solo: A Star Wars Story is released

WHAT ELSE IS BREWING

• President Trump reportedly encouraged the USPS to double rates on packages shipped by Amazon and other companies, per the WaPo.
• Goldman Sachs CEO Lloyd Blankfein is expected to give up his post to David Solomon by the end of this year.
• Starbucks is changing up its bathroom policy in the wake of the recent fiasco involving the arrest of two black men.
• United Technologies is selling its ice cream-machine business for $1 billion in cash.
• More than 100 people died in a plane crash in Cuba on Friday.

BREAKROOM

PRODUCTIVITY TIP
Meditate—You've heard it before from us, and you'll hear it again: taking just 10 minutes each day to meditate can increase your focus and improve your productivity. It's science. Sign up for Headspace and give it a shot.

TRIVIA
Match these brands with their parent companies: Axe, Crest, Neutrogena, Blue Bottle Coffee, Quaker.

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Breakroom Answers


Trivia
Crest - P&G, Axe - Unilever, Neutrogena - Johnson & Johnson, Blue Bottle Coffee - Nestle, Quaker - PepsiCo