Venezuelan opposition leader Juan Guaido has had a busy week. After staging what many would call a coup, the new sheriff in town announced that he’d be taking control of government bank accounts abroad.
El (kinda) Presidente also declared that he’d be appointing new board members to Petroleos de Venezuela, and it’s more well known US refining arm, Citgo.
Petroleos de Venezuela, or PDVSA to those in the biz, has long been suspected of embezzling funds from the Venezuelan people at the urging of President Nicolas Maduro.In order to prevent the Russian supported Maduro from attempting to win back his power, the US announced sanctions barring US-based businesses from buying Venezuelan petroleum. Citgo will still be able to do business using oil from PDVSA, but any revenue must be held in an account that Maduro and the boys can’t access until a successor is officially named.
What’s that mean for us?
As one of the US’ top four oil suppliers, sanctions on Venezuela could prove to be the nail in the coffin for Maduro and could cause a spike in black gold prices. Battered oil prices briefly rose after news of the sanctions broke, but major oil benchmarks were still down 2.5%, while US crude closed down 3.2%.
China’s largest technology company Huawei is making it too easy. The “Apple of China” was already atop the United States’ “naughty list” for allegedly selling telecommunications equipment to the Chinese communist party to be used for spying.
Fast forward to yesterday, US persecutors filed criminal charges against the firm for conspiring to violate Iranian sanctions and stealing trade secrets from T-Mobile. Apparently, even Boost Mobile boasts more robust security measures.
It probably sounds worse than it actually is … right?
Wrong. It’s pretty damn bad. Huawei’s CFO, Meng Wanzhou, who just so happens to be the founder’s daughter, is facing extradition to the US from Canada where she was arrested in December for violating trade sanctions with Iran. She lied about Huawei’s relationship with Skycom Tech Co, which is a subsidiary that sought to sell goods to Iran while it was subject to sanctions.
It’s also been revealed that employees violated nondisclosure agreements with T-Mobile by taking photos of confidential information and even stole a piece of T-Mobile’s testing robot. You do not want to see John Legere when he’s mad, Huawei.
And the cherry on top? Employees who stole the trade secrets from competitors were rewarded with bonuses.
“I’m not mad, I’m disappointed.” – every Caterpillar investor yesterday
Shares of Caterpillar took their lumps on Monday, dropping more than 9% on news that the industrial manufacturer suffered its largest earnings miss in a decade. Adjusted EPS came in at $2.55 per share vs. an expected $2.99 per share. Woof.
And what’s a sh*tty earnings report without a hearty helping of blame to go around? All fingers pointed east. China, which represents approximately 5% to 10% of CAT’s worldwide revenue isn’t exactly pulling its weight: APAC sales fell 4% vs. last quarter.
China has been doing its best Venezuela impression as of late. Construction growth in the People’s Republic fell in 2018 and is expected to be roughly flat-ish for 2019. And President Xi’s tariffs aren’t exactly helping CAT’s cause.
But that’s not all that’s plaguing the company behind the preferred big boy toys of guys who clip cell phones to their Carhartts. Overestimates of recoverable assets in its financing division and an increase in material costs stemming from tariffs ate away at Caterpillar’s bottom line.
How is 2019 looking?
A lot like 2018. The company adjusted its 2019 outlook downward. Despite growth expected in the US, because manifest destiny … or something like that, the slowdown in China is expected to continue and the lingering trade war will continue to rain on CAT’s building large metal construction vehicles parade.
