ShareHub Hotlist 2018 – Week 37

St legers day is out of the way… hooray! But just one day into the new week and it feels dull dull dull again. One new issue to consider… is ESMA.

New rules kicked off in July designed to reduce leverage and exposure to protect the non-professional investor. The rules were supposed to be temporary but in August ESMA renewed the ban. UK regulator the Financial Conduct Authority supports the measures and is open to applying them permanently.

The main bookies feeling the pinch are IG Group, CMC and Plus500. These companies will be forced to seek a different approach to previous market book balance… that’s parlour for your standard bookie/casino manipulation. Volumes drive business. If volume dries up then it becomes difficult to get the liquidity required to generate interest in stocks. I firmly believe that since Mid 2018 (ESMA rules introduced), volumes have reduced. Much of this could be placed into the ‘summer slumber’ period but just looking at the first week after St leger’s and the market still looks weak and sleepy across the small caps and higher risk plays. Bigger investors/II’s are often handcuffed on the weights/volumes that they can invest in smaller caps due to risk profiles. The irony is, many are free to plough billions of individuals’ pensions funds into apparent safer blue chip stocks like… Carillion or AA or Debenhams… the list goes on. No company is safe. Perils are abound. King fund managers like Mr Woodford have lost millions in a bull market which is a feat. Markets have been awash with cash via QE for years now. If Mr Woodford cannot make money in an easy market, heaven help him when the markets turn down… and they will. Long term market icons like Buffet should be applauded and admired. To get through decade after decade of market girations and still turn in the billions is a sign of a genius. TheShareHub has delivered many multibaggers, some 10 baggers and some 20 baggers. But there have been casualties. It’s par for the course. But for some investors who do not manage risk and get into debt – it can be catastrophic. So greater risk constraints are welcome if anything to save us all from ourselves. It might take sometime before the market finds a way around ESMA’s regs but it will. That’s what markets do. They find gaps and holes. They even create gaps and holes. And as seen by Lehmans debacle they even create the invisible. The untradable. And still sell it on. Binary bets or single lined stock has for an age been cited as carrying greater risk. Goldman’s and co have been pushing ETF’s for years now. Spread the risk is the mantra but in truth it actually means spread your cash between equities and your fund managers pockets. The digital age has opened the door to one click trading. One slip of the mouse or fat finger and the DOW Jones can fall by over 1000pts and then fall another 2000pts after that when all the programmed Algo bots start chasing the trend without actually identifying the cause. Scary isn’t it? Highly complex markets with HFT cables dug under the sea apparently designed to nick a 1000th of a second advantage on ‘getting in and getting out’. So where’s this going? What am I getting at? In simple terms… I’m saying the landscape is changing. It’s not the market you thought you knew anymore. It’s becoming something quite different and it’s going to take some understanding. For some retail investors, it’s painful. Less leverage means less opportunity or less ammunition. But look at it another way. US Markets are at all time highs…when the downturn comes you’ll be grateful that you are stopped out or margined out. Had similar rules been in place post OPEC’s decision to flood the market in Dec 2014, I believe quite a few investors would have been in a stronger position today. Since then, many stocks have recovered but the majority are a country mile away from where they once were. High impact exploration stocks like CHAR were trading at £500m market caps ahead of TD. Targeted resources of 200mmboe were given an opportunistic (prospective) valuation of circa $5pb. Today, there are companies selling reserves for $5pb. PetroMatad as an example, has an exploration folio targeting billions and is fully funded yet today’s valuation is just 10% of CHAR’s value from years ago. That’s 90% discount. Or viewed another way… 90% risk off. 90% doubters. 90% of disinterested and once burned investors? One of the main reasons to the disinterest in high impact explorers is down to risk off trading/investing by the larger II’s. Instead of chasing growth stocks, they simply wait for the discoveries (commodities etc) to come in, wait for the share price fever to reduce and then await the predictable cash call or equity placing to raise funds for development. Hurricane Energy is a classic example. Great success story but diluted by a market playing hard ball. The stock was around 50p post placing some years ago and since then has discovered billions of barrels of oil (and proven them up). It is close to generating cash flows from a fully funded phase one production facility and what’s the share price??… 54.5p! The market cap has moved more than 4 or 5 fold. But the share price is virtually at share price IPO entry level. That’s not how exploration or development used to work. But that’s how it works today. Well, for the time being.

Week 37 Review

Some decent news coming in from a number of ShareHub picks. AMER looks to have turned a corner and the new exploration phase should see a share price recovery to the mid 20’s. Any meaningful success could see 30p+. Recoveries from SOLG and WRES have helped the top ten picks move up towards the 8%+ level. CERP and HUM should get a spurt on in Q3/4 as both have news / results due which should be positive. Interest in POG has fallen of late but with Trump mid term elections around the corner, surely it’s time for Gold to return back to this years earlier levels of 1350. The DailyMail picks moves into the green after a few weeks in the red. The Guardian Picks look… doomed!

13 weeks left to Christmas…scary isn’t it? TheShareHub picks should have the muscle and potential to break 15% this year, so roll on the next Santa rally please…

ShareHub Hotlist 2018 – week37
DailyMail top picks 2018 – week37
Guardian top picks 2018 – week37

 

ShareHub Hotlist 2018 Review – Week 36

Summer malaise over? Not quite, St Legers day (Sept 14th) is said to mark the official end to the markets summer slumber so a few picnic days left for traders.

So lets look at some numbers. May 2018, DOW averaging around 24500 level. Sept 2018… DOW edging up to all time high levels last seen in early Jan 2018. Trade wars, Brexit fears, North Korean Nuclear war, Trumpism… all contributed to a massive sell off after the DOW tested 26200 levels. Quite right too. These are big risks and worthy of derisking. Fast forward 6 months and the DOW is just 200pts short of the same highs seen in Jan 2018. So what’s changed? Absolutely nothing! A quick cut and paste…Trade wars, Brexit fears, North Korean Nuclear war, Trumpism… all the same if not worse as there has been little sign of progress on any of these fears. More risks are on the horizon, with US mid term elections underway which officially kicks off the US media mud slinging contest. It’s astonishing that the US markets are doing so well. Of course there is a solid reason for Equities being higher and it’s a simple one. There is nothing else out there at present that remotely offers any kind of decent return for capital. Interest rates woeful. Strong dollar and Gold unwanted – all a classic sign of a one track minded market. Surely it would be sensible to hedge some risk and buy into the go-to safety haven that is GOLD? Problem is, the market is rarely sensible and like all good casino’s prefers volatility and ‘events’ as that’s what generates the best returns. 2% moves over a week or two, back and forth, back and forth is too sensible by far when you can generate 10% or 20% moves like that seen in early Jan 2018. So be sure of one thing, when the ripples on the pond appear at their most tranquil, that’s the time to watch out for the next big tidal wave coming over the hill. And considering the markets are no further derisked than the last wash out from 26200 on the DOW all the way down to 23000, a rinse and repeat should not be unexpected.

Meanwhile, outside the usual bluechip sectors, the commodity sector continues to under perform despite rising prices. PoO looks solid in the mid $70’s for Brent and with Iranian sanctions likely to bite hard in Q3/Q4, levels of $85+ for Brent cannot be ruled out. As mentioned before, the market likes ‘events’ and whilst PoO has recovered over 100% off lows, it has been a slow and deliberate path. A rise to test $100pb for Brent would be an ‘event’ and it only needs $23pb increase. Easily done if US shale numbers continue to decline. US Rig counts are not going anywhere fast – the same could be said for US production. It’s been stuck around 10.9m level for a few months now and only recently tipped the 11m mark. Infrastructure problems being blamed at present but some insiders believe it could be the beginning of a plateau period, something that would please the Saudi’s and Russian’s. The latter two are the only reason why PoO is not $150pb. If either were to hit any production problems whether through sabotage or wars or just natural disasters… the world would be in big trouble. Too much attention is being put on the Saudi’s and Russian’s ‘adding’ production and not enough attention applied to the declining global supplies that rest within OPEC partners and non OPEC suppliers. South America is in turmoil. SE Asia not seeing much investment. The majors are reigning back on big development projects… the list goes on. Yet, here we are with many sector performers like Tullow, Premier Oil, Cairn and others all trading at levels last seen when PoO was in the $40’s. Makes no sense at all. So what’s going to change it? What’s going to get the markets attention back to commodities? One simple answer… M&A. It’s been brewing for sometime now and in the next 6 months it would not surprise at all to see a flurry of M&A activity. It only takes a couple of deals to spark a revaluation of the sector. With summer trading over, perhaps the next few months will see some deals going through. SOLG.L saw BHP buy a minority stake in their Copper/Gold asset in Ecuador. This could be the beginning of the end for SOLG and after a few years of exploration finally deliver shareholders some real profits. SOLG is part of TheShareHub top ten for 2018.

Elsewhere within TheShareHub top ten picks, AMER and CERP have been actively picking up assets cheaply. Both are underperforming sector peers thus far but should be putting in a very strong end to 2018 assuming all goes well with current operations. Big exploration is underway with MATD yet the market is not treating the stock with much enthusiasm after the recent 10p placing took the wind out the sails. Shame, as the stock would surely have been around the 18p mark by now with just days to TD. Certainly one to keep an eye on as back to back drills offer some underpinning to the stocks share price. The second drill ‘Wild Horse’ is listed as one of the world’s top 20 exploration wells so it should see greater interest than the modest ‘Snow leopard’ drill which should be completeed shortly. MATD is part of TheShareHub ‘heads up’ picks for 2018.

Finally, Hummingbird Resources deserves a mention as the stock is surprisingly the worst performer in the ShareHub 2018 picks. There is absolutely no reason what-so-ever for the valuation gap between projected earnings and market cap. The share price of 26.5p today is representative of where the company was last year when they were still in the middle of building the Yanfolila mine. Since then, the Gold price has remained at a similar level, HUM have a fully functional gold mine and cash generation is rolling in. It’s derisking by the day yet the share price remains weak. A puzzle indeed. Next earnings announcement and production update should see some common sense return. With global risks rising (US mid terms) and equities sky high, GOLD must surely be the go-to metal for when the inevitable market correction arrives. All points towards HUM being a very attractive investment for investors interested in gaining some exposure to GOLD whilst gaining good value entry points in share price terms. With GOLD in the 1400’s, HUM is a potential 60p stock. That’s a multibagger inwaiting. No guarantees of course and risks still remain.

Week 36 Status:

TheShareHub picks continue to rule the roost with the DailyMail picks slipping and the Guardian picks dragged down by retail woes at Footasylum. Roll on St Legers day… it’s looking good for a strong finish to 2018 for TheShareHub picks.

TheShareHub picks Week 36 2018
DailyMail picks Week 36 2018
Guardian picks Week 36 2018

 

ShareHub Hotlist 2018 Review – Week 31

It’s hot hot hot out there but cool as ice across the commodity sector. The summer heat has cooled some of this years earlier gains but the ShareHub top ten picks remain firmly in the blue and are out performing the newspaper picks for now. It’s a curious one as the newspaper picks are generally selected by investment guru’s and tend to be safe bets aligned to FTSE100 in many cases. The latter has done reasonably well of late touching 7750pts not long ago, yet the newspaper picks have slumped by roughly 10% which is a hefty slide. The AIM market has seen quite a few fundraising rounds across a number of small miners and oil plays. Frustrating for long term investors but better to tap the market now while the sun is shining than try when clouds are gathering. With the DOW edging closer and closer to pre-trading war levels circa 26000 the question is… what’s changed today? Turn the clocks back just a few months when trade war talk commenced and the DOW dropped from 26500 to 23000 levels causing the usual paid media channels to declare bear markets are upon us, panic panic panic. The usual short sighted media headlines that disappear the next day along with the journo’s and pundits behind them…slipping back into the shadows. So here we are today… Brexit on a knife edge, US and China in full trade war, UK interest rate rises and Elon Musk self capitualating and handing all those Denver firms which fear him most a life line. Like Boris Johnson, the best Elon can hope for from here on is to slip into the shadows. All credibility shot. Boris could have earned some stripes by standing down over Heathrow but instead he opted to use his joker card to add pressure to the PM over Brexit. A cheap shot but befitting of a man that does not keep his word. In a world that lives and breathes on social media, it’s inevitable that many well respected individuals end up shooting themselves in the foot. Twitter is like wearing a mic on a 24 hr basis. Some would do well to ‘drop the mic’ and manage their vocal rants behind closed doors…Trump included.

Week 31 status below – The ShareHub has been quiet during summer period, but will be returning with more regular updates in Mid September. The summer should be enjoyed and the stock market is sloth like during July/Aug. Selling in May and returning on St Legers day is proving a winner at the moment.

ShareHub Hotlist 2018 – Week 31
DailyMail top picks 2018 – Week 31
Guardian top picks 2018 – Week 31

ShareHub Hotlist 2018 Review – Week 26

That’s the end of H1. Performance best summarised as ‘mixed’. Commodities have without a doubt been the main story in first half of 2018 with Oil prices jumping almost 30% in the period from lows of $62pb (wti). You wouldn’t know it looking at some Mid cap Oil producing bellwethers like Tullow although PMO has certainly put on some weight with TheShareHub 2018 pick rising over 65% in the period. The stock is still a country mile away from where it should be with Brent prices at $80pb but what’s the rush? The casino wants to see more evidence of the oil supply issues that have surfaced since Trump’s size elevens kicked the Iranian nuclear deal out the park. What Trump did not see coming was the virtual capitulation of Venezuela, Libya, Nigeria and many other suppliers. What’s worse for Trump and the US is that recent data released by the EIA shows that the US rig count has began to fall at a time when it should be rising. Not only that, but US gross production which was growing at around 100k barrels per week is now treading water at best. Numbers remain unchanged for the 3rd week running. As many know US figures can be fudged or played around with and some more cynical observers out there believe that these figures are often tweaked to suit certain market needs… tut tut. Speculative nonsense aside, the recent numbers look like US shale is stalling or may have peaked or the numbers were inflated in the first place. Take your pick. The problem for the globe now does not rest with OPEC alone. Trump’s inability to understand how the oil market works and his actions on Iran could well see the likes of Vitol and Glencore on his back as these Oil traders will not be able to keep Oil prices low when ‘real supplies’ are becoming scarce. And that’s the reality. The Saudi’s and Russian’s may open the taps but it’s not going to be enough to stop a massive oil spike based on Iranian sanctions fully in place come Nov 2018. Furthermore, the Saudi’s are keen to get the Aramco IPO off in 2019 which means they are in no rush to burn reserves simply to keep prices down. That said, the question lingering now in the market is how fast the likes of Russia and Saudi Arabia can raise supplies? After years of lack of investment, there are no big production projects (non OPEC and OPEC) ready to come back into the supply line. Most are years away from first oil. Many old producing assets are beginning to run dry with decommissioning common place across the north sea and others areas of the globe. If the Saudi’s struggle, then Trump and co will need to work very hard on the likes of Vitol and Glencore if they are to contain or stop Oil hitting $100pb. Do not be surprised if you see Glencore suddenly being sanctioned or pressured by the US. The US are in a desperate position as come Nov 2018, Iranian sanctions kick in and the market might not be in a position to allow it to happen. Vitol and Glencore can’t simply invent the black stuff to massage numbers… well not on the scale that could be required to prevent PoO breaking through $100pb. Should the $100pb barrier be broken, Trump will be the reason why it happened. And that’s going to wear very heavily on his popularity as business and consumer begin to get squeezed at a time when Trade Wars are already hurting.

Moving on to the real ‘global show’ at the moment… the World Cup. For a change the headlines are all about dreamy school boy/girl football. Roy (or now also Jane) of the rovers stuff. Talk about hooligans, fighting, bottle throwing, stabbings etc and you’d be describing a typical average day in London (the new ghetto) rather than a footy tournament in Russia. Hats off to Putin. He’s pulled off the biggest PR stunt that the globe will see for many a year. Russia looks fab and the footy is delivering a change of the old guard on and off the pitch. The names that did not make the cup like Italy and Netherlands raised eyebrows when they failed to qualify for the main group stages. Any trend followers will have looked at those failures and asked the simple question why? If you look at the sides, many of the greats like Pirlo and co have retired. Look at the Spain. A shadow of the great side they once were. Same for Argentina and Germany. Of course these sides will be back but for now the transition from the old guard to the new guard is taking longer than expected. Bit like Brexit. The benefit of younger sides is that they play with no fear. They chase every ball. And they can do it for 120mins. It would not surprise me one bit if the World Cup is lifted by a side not seen before. Could it be Croatia? Could it be Belgium? Or could it be one of the past greats? Last time Uruguay won the World cup was in 1950 (post war). Last time England won the World cup was 1966 of course. All points to ‘change’ when the main event completes on Sunday the 15th.

Week 26 Review:

I mentioned last week that the ‘capital raising’ season was upon us. More and more AIM listed companies are tapping the markets for much needed cash. Some unexpected and some expected. It’s the unexpected ones that feel like a kick in the teeth for long standing pi’s. Some explanations by management are not cutting it either. One hunch is that these companies are being ‘approached’ by IG/City Index and others all keen to manage their book but in need of stock at cheaper prices. The casino can be a pretty ugly place but if true, management teams really need to toughen up and shareholders would be wise to pay attention to salary increases, bonus shares and options that often find seem to get approved before or after a large placing tut tut.

Across the ShareHub picks, HUM.L looks in good shape and cheap at 33p. Exploration has kicked off now and if the results are good, the stock should have a double whammy of great production news and great exploration news. just what the market likes. Add to this the recent 5 month lows hit in PoG and when the latter recovers (and it will) the stock should see additional demand. CERP and AMER should be on the verge of issuing production updates so keep an eye out on those stocks. Both are trading near year lows which suggests there is plenty of upside to come once the good news begins flowing again. AMER have exploration kicking off soon and CERP may well have an acquisition or two lined up that could be transformational.

All top picks from newspapers to theShareHub consolidated in week 26. Not too much to report in terms of performance. H2 does look a better period for commodities although the summer malaise will see lower volumes and reduced interest. One stock that should buck the trend is MATD. After the recent cash raise, it’s not unusual to see some loose stock being sold into market. But with 6 exploration wells lined up of which most are back to back or could be tandem, the news flow and interest in the stock should be massive. The first well is set to kick off next week and the company is set to do a presentation to sellside analysts on July 10th. At 9p, it would not surprise one bit to see the stock in the 20’s or 30’s should the term ‘oil shows’ appear in any interim RNS updates. MATD is part of the ShareHub ‘heads up’ picks for 2018. As with all stocks risks remain so please read the risk warnings in the left sidebar.

TheDailyMail 2018 picks – Week 26
TheShareHub 2018 picks – Week 26
TheGuardian 2018 picks – Week 26

ShareHub Hotlist 2018 Review – Week 25

In two days time England and Belgium will know who their likely opponents will be in the quarterfinals of the world cup which of course assumes all make it through the last 16. Both teams could find themselves in the bizarre situation of not wanting to win. Ironically, England’s 6-1 thrashing of Panama may well have earned them a quarter final fixture against Germany or Brazil, the two most favoured teams in the tournament. For non-footy fans this must be a tedious read, but even the footy haters out there can see the potential comedy ahead in this match. However, there is still one scenario that could play out which would see the winners of England’s group avoiding both Germany and Brazil… until the Final of course (wishful thinking!). Come Thursday morning, England and Belgium could find themselves thinking about a different match entirely… one that they must win.

Giving the World cup a run for its money in ‘media headlines’ is the Global Trade War which Mr Trump kicked off a month or two ago. The only problem here is that there are no winners. There is no golden boot to award or trophy at the end of this. Just bloody noses, lower GDP’s and a potential recession awaiting around the corner. It’s well known in various circles that you must get your interest rates higher first if you know you’ll be needing the cuts as stimulus further down the line. It’s no surprise to see the Fed Reserve hiking at every given opportunity. The UK and EU will surely follow but have their own ‘Brexit’ headwinds to contend with. The mantra is to hike rates now so you have something to cut in the future. Mmmm doesn’t fill one with a lot of confidence going into 2020 does it?

The ‘cap in hand’ season is well under way across the AIM index in particular. A number of minnows have raised cash via placings which on the whole are 20% to 25% discounted. Some have been opportunistic and not really justified. Which begs the question in some cases why they were done in the first place. It becomes an uneven playing field if the spread betting firms can simply call up a company and get a wedge of stock at 25% discount to cover their over exposed derrieres. Punters have made a few quid out of these companies and of late a ‘new’ way of ‘covering’ risk seems to be underway. In simple terms, if AIM listed companies are not careful, the retail investor will shun them for good. This is the life blood of AIM and spreadbetting firms. The easiest way to please all involved would be to provide investors with ‘open offers’. Allow existing investors to take some 25% reduced stock. In most cases, cash is not required in an emergency situation and as such allows for longer timeframes required to enable OO’s. So no excuses there. AIM Style management teams out there… listen up… don’t abuse your life blood and make sure you give ‘all’ stakeholders a bite of cherry.

Another tough week for commodities with Oil jumping about like a VAR referral system and Gold beginning to look cheaper than Vanilla pods (not quite). Of course, it’s not as simple as fundamental valuations in today’s casino. Too many hedges, Algo’s and products sold 10 x over results in a futures market that actually looks more like the past. The dollar is the main culprit and the sooner the PetroYuan gets established the better. The world needs to move away from pegging to the Dollar and it’s no wonder that the likes of crypto currencies have Wallstreet and co seriously worried. The future is likely to be a world where Oil consumption is replaced with clean fuels and the dollar replaced with digital currency. Between now and then, it’s going to be a battle for all involved – choppy and messy.

Finally, if you want to join Mr Trump in his Trade war games, all you have to do is avoid buying US products and Brands. If EU based, just buy the UK or EU equivalent. The more consumers buy ‘local’ the better. Avoid companies like Amazon and Apple who pay minimal tax to EU/UK. Avoid american beers. Buy craft beers that are wholly owned by homegrown independent brewers but check to make sure even these are not owned by large corporations. Have your say via your wallet.

Week 25 Review – Daily Mail stays firm while Sharehub picks drift lower. The Guardian picks suffered more than most and is now underwater for 2018. Roll on H2 as H1 is ending with a whimper. Most stocks are in a summer haze and news is thin on the ground. There’s not much to add at present. H2 should see a plethora of news from all ShareHub picks with production updates expected from AMER, HUM and CERP in next week or so.

DailyMail 2018 Picks – Week 25
ShareHUB 2018 Picks – Week 25
Guardian 2018 Picks – Week 25

 

 

 

ShareHub Hotlist 2018 Review – Week 24

Week 24 certainly didn’t lack spice. Exactly what the casino needed as things were becoming a little dull.  Dull makes small coin… Volatility makes big coin. H1 enters its final phase of 2018 bringing with it, Mega Trade wars, Footy fever and Tesla paranoia. Apparently Elon Musk and Tesla are under attack…

“As you know, there are a long list of organizations that want Tesla to die,” Musk said. He referenced Wall Street short sellers “who have already lost billions of dollars,” oil and gas companies that “don’t love” to see solar power and electric cars advancing, and automakers that produce gasoline and diesel vehicles. “If they’re willing to cheat so much about emissions, maybe they’re willing to cheat in other ways?” he said.

Too true Elon. The world is a tricky place when you are single handedly driving change – change for the good. It’s astonishing in this modern day that the likes of VW have not been banged up and the company closed down after Dieselgate. It puzzles me why the US are able to rack up a $30bln bill and force VW to pay it but in Europe (and particularly the UK) litigation is almost unheard of. Well not quite… Slater & Gordon are on the brink of getting VW into court on behalf of over 60,000 owners. UK lawyers are bringing a series of allegations, including that Volkswagen manufacturers defrauded drivers, and that “defeat devices” broke EU rules. Subsequent VW software fixes have from what it seems caused other problems with cars. All in all drivers overpaid for vehicles and are left with a Brand that is no longer trusted.

‘Trust’ is fast becoming the trending word of late as North Korea and US puts its trust in getting a deal agreed which ironically may see a similar scenario to that of Iran. And we all know how that ended up. The trouble with ‘trust’ is that it is only worth a 4/5 year US election term and that’s assuming the acting President isn’t impeached along the way. ‘Trust’ often comes from proven results. Delivering on ones promise. Confidence. But it only takes a wobble here and there and ‘Trust’ goes out of the window. Just ask David De Gea. Do you stick with a butterfingered goalie or replace him with a new one? Trump has achieved some decent deals of late through a bully boy approach but his recent battle with China could be his butterfingered moment. Markets were bolstered by Trump’s America First and keen business drive. The DOW has indeed risen from 18k levels to test 26k levels earlier in the year. But in a trade war, especially one that is protracted, business ultimately suffers due to uncertainty. Just look at Brexit and the subsequent collapse of the UK economy. Markets are right to be concerned as Trump v China will ripple across the globe. Some will benefit from the tariffs and others will suffer. Trumps previous strategies has been to turn on the Tariff taps and then wait for negotiations. Usually these take place pretty swiftly. Then turn off the taps. But here’s the problem. China may not be able to match US $200bln tariff’s as their US quota is more like $130bln at best. But what China can do is drag it out. A long trade war would likely see Trump fall on his sword. China know how to hurt the US, but thankfully are holding fire in the hope that ‘negotiations’ can be completed in the near future. In the meantime, the longer it goes on, the worse it will get. The DOW will find support at 23,500 levels but below 23k and it’s going to be bear market time. In that scenario, 18k is more than possible and the Casino likes that.

Commodities yet again were clouted in week 24. A combination of OPEC fears combined with rising Dollar has put an end to the recent bullish sentiment. OPEC are set to meet tomorrow through to 22nd June to agree output increases. A modest increase of 600kbopd is not exactly going to fill the void left by Iran or Venezuela. Furthermore, After months and months of higher oil prices, the US rig count is beginning to look weak. Where are the new rigs? On a scrap heap somewhere after Dec 2014 OPEC actions is one guess. The reality is US production has increased to record breaking levels but there comes a point where the infrastructure simply cannot keep up. Workforces become hard to recruit. Rigs hard to find. Pipeline materials and backlogs all keep advances in check. The next few months will test out US shale’s ability to scale up in a space that has very little room left. That in itself may well enable OPEC to increase production again in Dec 2018 without making a dent in demand.

Week 24 Current positions:

The DailyMail continues to do well. The ShareHub top ten commodity picks are suffering. It’s astonishing that Gold has not spiked higher on risk off trades. It’s normally the go-to metal when equities look bearish. HUM are well placed to benefit from POG’s rises in the future and the stock is long overdue a return to test 40p levels. AMER has struggled with lower production and delays on exploration plans. The latter should be finally kicking off in July (H2) which should place a rocket under the share price upon any good news. Trading and volumes of late have been higher than usual on AMER which could suggest that the long term large HNWI seller may be nearing an end.

Heads up stock picks PDL, OPHR and MATD are doing ok with MATD having just raised £13.7m in a placing. The first of 6 high impact exploration wells should spud in July which has been a long time coming. Exciting times ahead for MATD holders.

For now, all eyes on OPEC this week!

DailyMail 2018 Week 24
ShareHub hotlist 2018 week 24
Guardian 2018 week 24