Can the US Become an Energy Superpower in 2017 (Bloomberg). Article discusses the logistical and market hurdles for US companies to become players on the world stage of natural gas mining. This topic came up as a question in one of IOI’s recent Office Hour sessions.
Oil Surges as Saudis Eye Deeper Cuts While Non-OPEC Joins Deal (Bloomberg). Oil prices are now trading about 15% less than the best-case scenario we used in our model of National-Oilwell Varco ($NOV), published earlier this year. We’ll be updating our National-Oilwell Varco valuation and option strategy soon.
After Trump’s win, China and Mexico move to deepen ties (Reuters). China has been making more overtures to Mexico since the Trump election, and the Chinese national oil company, CNOOC, won two deepwater Gulf of Mexico concessions from the Mexican government. China stepping into the international trade void threatened to be opened with President-elect Trump’s policies is one of the risks identified in our detailed report on investing in the Trump era that we recently published to IOI members.
China warns of anti-monopoly penalty for US carmaker (FT). The Financial Times speculates that recent communication between President-elect Trump and his questioning of the “One China” policy may be prompting this government investigation of a US carmaker in China. The possibility of a trade war with China – or at least a mutually detrimental period of trade frictions – is an issue we raised in a report to IOI members regarding investing in the Trump era.
Carrier to ultimately cut some of jobs Trump saved (CNN). One of the main arguments of the analysis of Trump’s Manufacturing Renaissance plan was that forcing the onshoring of jobs would spur the use of automation. This story suggests that dynamic is happening in the Indiana Carrier plant and provides some interesting data on manufacturing productivity to which we also alluded to in a recent Forbes article.
World Energy Hits a Turning Point: Solar That’s Cheaper Than Wind (Bloomberg). Read this in conjunction with our comments on the future of coal in the US (Investing in the Trump Era report available to IOI members). Here’s a quote that stood out to me:
It started with a contract in January to produce electricity for $64 per megawatt-hour in India; then a deal in August pegging $29.10 per megawatt hour in Chile. That’s record-cheap electricity—roughly half the price of competing coal power.
Another thing that surprised me about this article was the claim that developing countries spent more on renewable energy investments than did OECD ones.
Pentagon Demands China Return Intercepted U.S. Navy Vessel (Bloomberg). China’s strategy of building up coral outcroppings and claiming the new land for China is a cost-effective way to build aircraft carriers that cannot be sunk. We think the chance for a more serious confrontation between China and the US is more likely under a Trump administration and will be discussing this and other sources of uncertainty with IOI members during this week’s Office Hour sessions.