Tag Archives: Saudi Arabia

The Dow Drops more than 6% as “Trump Bump” Vanishes into Thin Air

March 18, 2020 Danny Leeds

End of Day Bounce-back perhaps triggered by Passage of Aid Package

In spite of unprecedented intervention from the Federal Reserve and Congress the markets continue to plunge, generally every other day, in what has become a volatile and, for many, alarming pattern.

Intraday, the Dow dropped to more than 2000 points lower, for the second time this week. At moment in time the level was below where the Dow sat on January 20th, 2017 when Trump was inaugurated.

Neither the two rate cuts, the second one being a massive 1% “surprise” (which sent rates to zero for the first time in history) intervention on Sunday, nor the trillion dollar stimulus package pushed forward by the White House, appears to have had any significant effect on the consistently declining share prices.

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The Senate today passed the congress approved relief package, which provides for free coronavirus testing and paid emergency leave, and is expected to be signed into law by the President.

As we have pointed out in previous posts, while the novel coronavirus is getting 100% of the credit for the unwelcome bear market and the attendant fears, the market swoon and the pandemic could also be parallel events without any direct causal connection.

Naturally the companies and sectors such as travel which are directly and negatively affected have had large hits to their stock prices based on the catastrophic business outlook.

On the other hand there are companies and business that could even benefit from the shift of economic activity necessitated by the preventive measures that are being universally implemented. For those companies it is the underlying bear market sentiment that can and will, in all likelihood, drag them down along with the rest.

Oil Continues to Plummet as Likely Halt to the Travel Industry Looms Large

The oil shock as mirrored in Exon (XOM) and U.S. Oil (USO) shares continues in spectacular fashion falling over 10% and 16% respectively. This can be seen as a secondary shock in the cascading price depressions influences initially by the production increases used by Saudi Arabia and Russia to start an all out price war, and now being hit by the virtual shutdown of the travel industry. The initial shockwaves reverberated sending the crude prices down 30% while the losses in the socks (and ETF) above are adding to the depressed levels.

Delta Airlines (DAL) was down even more on the outlook for the travel industry dropping an incredible 26.73% today alone. At $23.02 it is hard to believe that the stock was over $63 two days ago. Pending bailout aside, this is indicating that airline bankruptcies are now beyond probable and verging on a strong likelihood. Presumably a bailout would turn the stock price around, but potentially not shield it completely from the bear market across-the-board progression.

Naturally, after crowing and bragging at every uptick and new all-time high in the markets for more than three years, Trump is placing the “blame” for current intensely downward trajectory squarely on the “chinese” coronavirus and attempting to avoid any responsibility for the state of the markets, economy or anything at all on planet earth for that matter.

Naturally, in an election year this is to be expected. At the same time the reality that this bear market has only just begun, the all time high was little more than a month ago on February 12th, does not bode well for his chances, likely against Joe Biden, in the general election this November.

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Politics, Tech

Twitter has Deleted almost 6000 Saudi-State Backed Accounts for Violating Platform Manipulation Policies

December 20, 2019 Kat Lee

The Six Thousand Accounts were part of a Larger Spam Network of 88,000

On casual observation, there appears to be a surge in bogus accounts attempting to manipulate on Twitter recently and now this has been confirmed, partially, with six thousand accounts deleted with Twitter disclosing the inauthentic behavior and violations as well as the State-backed Source (Saudia Arabia) in its blog today.

The disclosure shows some very interesting tricks that various bad actors are using to try and mask their true intent in order to “survive” longer on the platform without having their accounts deleted.

According to the Twitter blog the Saudi Arabian government backed accounts were engaging in retweeting, liking and replying, using automation, in order to mask tweets with a political agenda favorable to Saudi Interests.

The method of masking the true goal of an account that is an automated spam bot is becoming more common based on our observations of the platform. Accounts favorable to Trump, that appear inauthentic (robots) will retweet and even retweet liberal content, such as tweets favorable to AOC, to mask their intent. Then, if the account is followed, pro-Trump spam is sent via private direct messages, for example.

As the Tricks get Deeper and the Stakes Higher, Twitter must also Evolve in its Response

It appears that , with this report on the eighty-eight thousand account take down, Twitter is learning and following as these attempts to avoid detection are created, developed and implemented.

Twitter also disclosed that a social media marketing and management company based in Saudi Arabia called Smaat was behind the platform manipulation. The company has also been “permanently” banned from using Twitter due to the activity. In an interesting additional action, the accounts of senior executives of the company were also deleted and the persons banned.

The company used third party automation services to produce high volumes of activity related to non-political content. This, based on the content, is not necessarily against Twitter policy as such amplification of non-political content in allowed. In this case, however, the high volume of activity was used to mask the political content that was interspersed in the “storm” of activity.

Here is the quote from Twitter that serves as a comment on the action and what they intend for future cases:

“We exist to serve the public conversation around the world. To this end, we’ll continue to take strong enforcement action against any state-backed information campaigns which undermine our company’s mission, principles, and policies.”
– Twitter

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Business, Stock Market

Shifting to a Sustainable Energy Infrastructure: Saudi Aramco’s IPO shares are a bad Investment for the Planet

December 9, 2019 Danny Leeds

Literally Trillions are Staked on a Carbon Nightmare Future

Saudi Aramco is Saudi Arabia’s largest national oil company and one of the wealthiest, if not the wealthiest, corporations in the world. On Sunday, November 30th, 2019, Saudi Arabia’s Capital Market Authority stated that Aramco is going to be turned into a publically traded corporation and start making initial public offers of 1 to 3 percent of its shares sometime in December.

Saudi Arabian Crown Prince Mohammed bin Salman initially boasted the Aramco’s worth at $2 trillion. Further research, however, deems the valuation somewhere between $1.3 and 1.7 trillion. Nevertheless, these enormous figures—mixed with the projected IPO of $8.53 per share—still make Aramco more fiscally valuable than Apple or Microsoft.

Putting Aramco in the public sector is a huge move for Saudi Ariabia’s economy and is inextricably linked to the Crown Prince’s “Vision 2030” socioeconomic reform plan for the kingdom. It will make oil a larger money-maker than it already is for the nation by attracting additional foreign investors and combatting the shift towards alternative energy sources.

At the same time, though, this move is not the most environmentally progressive, and although it creates a short-term economic boost for the country, it may not be sustainable in the long run.

Right now the world is trying desperately to reform its energy practices and emissions standards. The 2015 Paris Climate Accord outlined bold plans to address the global climate crisis and currently, the UN Climate Conference in Madrid is working on updating and evaluating those goals. A big part of these initiatives puts focus on transferring global energy away from fossil fuel burning and towards cleaner and more renewable sources and methods.

While Saudi Arabia has made some investments in alternative energy sources, it remains overwhelmingly focused on oil—its most profitable commodity. The nation’s slight investments in solar power are dwarfed compared to its ongoing oil extraction. Then, even when the country does employ solar energy, it often uses it to fund or power oil wells and refineries.

When asked about Aramco’s response to the Paris Climate Accord, the company’s Chief Executive Amin Nasser practically laughed it off, boasting that with all other parts of the world being held to stringent energy conditions, Aramco would easily become the global leader in gas.

Not a Question of When but rather How Fast can the World Switch off the Oil Pumps?

The corporation should not be so quick to celebrate, though. While the planet still has a long way to go when it comes to environmental protection and security, more investors are turning away from oil and starting to consider alternatives. With the scarcity and conflict surrounding the resource, oil is becoming less reliable. The recent surge in electric vehicle adoption is just one example of alternative energy sources affecting the oil economy.

Nasser responded to this observation by calling it a “crisis of perception” facing oil firms. Cynically, he explains that ideas of oil going away anytime soon is a highly exaggerated theory, and that fossil fuels remain the most secure form of energy.

Perhaps this is the case for now. But if big oil continues to pump the Earth without regard for ecological fragility, then there will eventually be nothing “secure” about the practice at all, and economic influence will mean quite little in the face of Armageddon. All humans will be affected, not just the “green” ones.

Even in less dramatic terms, studies suggest that “Peak Oil” will arrive at some point in the next twenty-five years. When this happens, it will severely hurt Aramco’s prices, as demand will go down and investors will have a greater economic incentive to move on from oil. The company will not seem so high and mighty when that happens. Geopolitical dangers will almost certainly rise.

All of this is not even to mention the socio-political risks that come with investing in Aramco. Environmental issues aside, Aramco still faces international competition with the U.S. and Russia, stagnant output for the past five years, warlike attacks from Iran, and a lack of corporate autonomy against the Saudi Arabian government.

From an immediate money-driven perspective, investing in Aramco might seem like an easy buck and a booming economic development for Saudi Arabia. However, money (like oil wells) can dry up quicker than one thinks, and when that happens, investors might be left with nothing in their pockets but a long list of political, sociological, and environmental problems.