Swiss Cheese Tariffs
Although there have been scurrilous historic accusations against President Trump regarding his private life, his latest moves on tariffs over the weekend mean that rather than allegedly dropping his trousers in private, he has managed to do so on the world stage with regard to his USA protectionist strategy.
Excepting certain items such as iPhones and computers has rather made a farce of the idea of bringing manufacturing and investment home, and effectively means that the policy has been shot down. Presumably, there has been massive lobbying behind the scenes. But of course, the best lobbyists are the financial markets, and the bond markets in particular. Over the weekend we have the FTSE 100 indicated as being near 8,200, as opposed to below 8,000 as its Friday close. While we are not back where we were before all the excitement began a couple of weeks ago, it looks as though the tariff strategy is going the way of the Gaza and Ukraine moves. As stated before, Trump has apparently done a Truss, trying to do too much too soon. The problem may turn out to be that America’s equivalent of the Blob have all united against him, rather underlining not the strength of the US, but actually its weakness. As things stand, it is just another county, not THE country leading the “free world”.
The London Market
Closer to home, the AIM market effectively double bottomed just above the 600 level, and just above the pandemic lows. A plus point for investors is that the UK market becoming as oversold as it was when COVID struck meant that they had the opportunity to buy shares ahead of the next tax year when they were at historically oversold levels. And of course given the exodus, there are rather fewer companies on this market than there were five years ago, so fewer to choose from. While we have a few new contenders entering the fray, these brave souls are the exception and not the rule. In a way the Trump tariff debacle is a distraction to the fact that nothing apart from huff and puff is emerging from those who are in charge of the junior market. It would appear that like most of us they are merely hoping something might happen. Certainly, being CEO of a listed company, even if that company is doing well, must feel like public service, rather than a serious entrepreneurial need.
Taxing For Growth
The hope that we are perhaps all relying on, whether on the stock market or otherwise, is that the government’s policies will somehow deliver a magic bullet for growth. This meant that the 0.5% growth number for the UK economy in February did feel like magic. Perhaps the tax for growth policy which has effectively been the policy since the election in July might be working? Perhaps being taxed to death makes people work harder, and the 10,000 millionaires who have left the country were not actually contributing very much at all? It might be opportune to raise taxes even further if they make such a positive contribution to the economy!
This Week’s Risers On News
The most obvious candidate for a rebound this week was Atome Energy (ATOM). With the company having had a brutal few years on the market, it managed to produce a rabbit out of the hat worthy of Watership Down. Indeed, the market being the market, the 12% rise on the day of the announcement, and the 55% rise on the week, was a rather modest performance. One would have expected that signing a signs a $465 million definitive engineering, procurement and construction deal with Casale SA would have caused the shares to multi-bag. Perhaps the market is allowing long term shorters to get out?
Although it still seems like the company is shuffling deckchairs around on the Titanic, there was a decent 44% rebound for cannabis group Celadon (CEL). While the company’s future remains a binary bet, maybe not so binary to some, it can be seen that every effort is being made to at least try and sort out its funding requirements. Of course, de-listing is a great way of saving cash.
Star of the show by some distance this week was Thor Explorations (THX), which announced FY 2024 net profit of US$91.1 million (FY 2023: US$10.8 million), and a maiden dividend. I spoke to CEO Segun Lawson, who offered up his usual highly impressive appraisal of his company and the outlook. While the market has typically been rather slow to appreciate even this stock, it looks as though the momentum is starting to build.
The market was also rather slow on the uptake with Metals One (MET1), which is advancing strategic minerals projects in Finland and Norway. On Friday the company announced that together with the Retail Offer, the Equity Fundraise (including the CLN) has delivered net proceeds of £3.1 million. Of course, the stock dropped sharply in January and the company was poo-pooed at the time (by people who love poo-pooing everything for clickbait and shorting purposes). But now a couple of months later the shares are trading at 26p versus the 2p low. This is particularly satisfying given the technical call here at the low, and the way that even now hardly anyone talks about the company.
On Thursday United Oil & Gas (UOG) announced a technical and operational overview on the Walton Morant Licence offshore Jamaica. This detail followed the Company’s recent announcement confirming an early two-year licence extension to 31 January 2028, and renewed momentum in the farm-out process with multiple parties now under NDA. The market has taken this week, the chart looks as good as it ever has, and it would appear that after several years the company has a chance of delivering.
Stocks Rising On No News
A situation where the bears have never known what they are talking about and consistently delivered personal attacks on a small cap company is Georgina Energy (GEX), which rose 55% on no new news this week. Last month the company delivered an operation update regarding Hussar and Mt Winter. One of the blights of the London market continues to be the ability of bad actors to throw mud at small cap companies, knowing full well that those under say, £20m have very little resources to fight back, legal or otherwise. This remains a scandalous state of affairs, even more scandalous as it appears no one is prepared to act on behalf of such targeted companies. Even at the best of times running a public company is like walking up a down escalator, and we are certainly not in the best of times.
Supply@Me (SYME) is another company which has had a string of insults over the years. At the start of this month the Inventory Monetisation group announced a funding update. It shares rose 95% this week, despite the ongoing insults. What the bears seem to forget rather conveniently is that listed companies are subject to rather more regulatory rigour than they are.
Disclaimer & Declaration of Interest:
The information, investment views, and recommendations in this Zaks Traders Cafe interview are provided for general information purposes only. Nothing in this interview should be construed as a promotion or solicitation to buy or sell any financial product relating to any companies under discussion or referred to or to engage in or refrain from doing so or engage in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the commentator but no responsibility is accepted for actions based on such opinions or comments. The commentators may or may not hold investments in the companies under discussion.
