Another weird ‘sideways’ week for stocks with wider non specific issues taking the headlines such as the ‘leaks’ from a highly confidential UK cabinet meeting. The irony of all this is that the very meeting that resulted in the leak was about the trustworthiness of the Chinese Mobile manufacturer Huawei and their involvement in the UK’s 5G network.
Not many people know this… but… Huawei is the world’s largest telecoms equipment firm and last year it overtook Apple to become the world’s second-largest smartphone seller behind Samsung. So why wouldn’t the UK seek to appoint the world’s leading telecoms equipment firm? There has for sometime been a smear campaign against Chinese brands. It seems to be coming from the US who are clearly against the idea of anyone using telecoms equipment that is not under US control. So the crux of this comes down to who would you rather be ‘controlled’ by? The US or China? Well, neither would be the best answer but I think the UK lost its ability to ‘control’ things when they agreed to the sell off of British technology greats like ARM holdings and Imagination Technologies to foreign owners. Today, the US has a grip in everything that the now and next generation does from Facebook to Google to Apple to Intel to Amazon… the list goes on. So when a chinese brand comes into the picture and starts creating waves, the US throws its toys out of the pram. The question about Huawei should be turned around and applied to all US Tech Brands. Are they trustworthy? Recently, The Data Protection Commissioner has told a US Senate Committee that her office has reason to believe that US technology firms may have breached the European Union’s new data protection rules. Facebook not long ago admitted to data breaches on over 600million passwords. Huawei (to my knowledge) have not had such breaches. Infact, everything points to Huawei being the brand to trust. Perhaps it’s those out there that are more fearful of competition that want to keep up some old cold war communist attitude fear going which has no place in the world that we live in today. Should we be fearful of tech companies? Absolutely. But don’t for one moment trust a US company over a Chinese company. There really is no basis today to trust one more than the other. Bring back typewriters, old fashioned pens, do away with facebook and live life without being tracked and targeted? Well you can try… but ‘they’ really don’t want you too!
In terms of the UK ‘leaks’ apparently by the Defence Secretary. Well – isn’t that the same as Wikileaks? And where is Mr Assange? Behind bars? If this was the middle ages (often it resembles that period more and more these days particularly around Westminister) it would be ‘off with his head’ time.
Moving on (before TheShareHUB gets mysteriously shut down) week 17 delivered more of the same with no real moves worthy of comment. Petra Diamonds continues its recent bounce and is beginning to look in better shape after seeing what looks like the back of Blackrock. Amerisur continues to frustrate as drill plans progress at a snails pace largely due to ONGC (Indian operator). There’s nothing wrong with getting pads ready for drilling, but Sol-1 (the next well) was ready back in Dec 2018 including all permits. The well must be close to spudding now as Calao-1 drill ended over 6 weeks ago. Get on with it! Also in the news was AMER’s recent farm-in partner Occidental (OXY) throwing the cash and shares around in a whopping $55billion bid for Anadarko. It’s good to see M&A back in the limelight and Anadarko has certainly drawn in some key players. First Chevron wanted in. Then Occidental trumped the deal and then Mr Buffet (not known for taking risks) waded in with a 20% stake interest (via $10billion investment). Everyone seems to want a slice of Anadarko which begs the question why doesn’t Anadarko just continue to go it alone. It’s clear that the business is attractive why else would predators be all over it? Occidental looks nailed on to succeed and with Buffet by their side, they have a strong backer. Amazing to think that this huge US commodity company sought out little olde Amerisur Resources when acquiring key acreage in Colombia. Amerisur must be sitting on something pretty interesting for OXY to pay $93m just for the priviledge to explore it (and a 50% stake of course). The market seems to disagree with OXY and is thoroughly disinterested in Amerisur shares with the stock trading at 12.75p just 2p above where it was prior to Indico-1 5.4kbopd flow test news.
Finally, news that the Saudi’s did not discuss oil supplies with Mr Trump is another embarrassment for the President. Mr Trump really ought to stay clear of trying to push OPEC around. Instead, he should concentrate on getting US production data vetted and analysed correctly. The numbers that have been coming out of the US for the last 12 months just don’t stack up. Rig counts are dropping and not rising yet production is apparently rising to all time highs. Builds are appearing when Draws are expected. If it’s not OPEC, then who’s fiddling with the numbers? And why? It might not be too long before the market shows signs of rebalacing but in the meantime, the US production figures suggest that there is still a glut out there. Why would the Saudi’s produce more? Get the US numbers correct and the picture might be very different. If it’s oil traders that are spoofing their way through trading supplies, heaven help us all, if or when, the real picture is revealed. We could have PoO at $100pb again in no time. Historically, it wasn’t that long ago that Oil prices were in the high $130’s so $100pb is nothing to get worked up about… unless you are Mr Trump and you want to turn the screw on Iran.
Week 17 – Status
The Independent maintains control at the top. All picks doing well but week 17 was like a carbon copy of week 16 which confirms the overall markets sideways action.