The Emerging Megatrend Coming To Oil & Gas – 07-16-15

Salient to Investors:

The FAA appears willing to allow drones to be used in the energy sector and is expected to release drone use rules in the next twelve months.

Large companies like Google, Boeing, and Northrup Grumman, have significant drone businesses and will benefit from wider use of drones across the entire global economy, though unlikely to lead to a dramatic change in revenues or profits.

Several smaller firms offer investors either a more direct play on drones or on the suppliers of parts for drones.

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Fareed Zakaria GPS – CNN 06-21-15

Salient to Investors:

Fareed Zakaria said:

  • Energy-related emissions were flat in 2014 for the first time in 40 years.
  • Technology and policy innovations in energy are not happening on the scale that they need to.
  • In 2011, federal spending on R&D as a percentage of GDP in 2011 was half what it was in 1960, 30% of global R&D spending vs. 37% in 2001 – China is projected to pass the US by 2019. The world is copying the US model while the US has lost the smarts or the will to keep up.
  • NASA no longer has the ability to independently put an astronaut into space, instead relying on private companies or foreign governments. China does have the ability and intends to build a new space station, go to the moon, and go to Mars.

Richard Clarke said:

  • The whack-a-mole strategy has disruptive value if done persistently but until we have a political solution involving an ideological counter weight to the terrorist view of Islam, we will be doing this forever. Has to be part of a bigger strategy.
  • A major American military operation is not required, but getting all of the other players to act together.
  • After 9/11, we told ourselves we would never allow a terrorist sanctuary to exist again – now we have the greatest terror sanctuary.

Leroy Chiao  said:

  • China’s space program is long-term and culturally consistent with their other views. China wants to put astronauts on the moon, which the US can no longer do. The moon is only three days away so can be used to make sure your stuff works before you send it to Mars.
  • A country gets into the human space flight business for the primary reason of national prestige.

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Fareed Zakaria GPS – CNN 05-31-15

Salient to Investors:

Fareed Zakaria said:

  • Iraq no longer exists. Many of the Arab states around Iraq are more anti-Shiite than they are anti-ISIS. ISIS gets support from the discontent of Sunnis who feel persecuted by the Shiite and Alawite governments of Iraq and Syria.
  • Britain that has lost its special relationship with the US for complicated reasons, including the increasing importance of Asia, and a Europe not in as much crisis as it was in the Cold War.

Iraqi pollster Munqith al-Dagher says over 90% of Iraqis in Sunni predominant areas regard ISIS as a terrorist organization but ISIS has capitalized on the discontent Sunnis felt with the central Iraqi government.

Mark Hertling at CNN said ISIS’s use of infiltration, assassination, and intimidation in big cities and smaller towns allows them to get a support structure where they will continue to flow their logistics which supports their operations.

Michael O’Hanlon at Brookings said the most fanatical guys win – and that is ISIS and not the Iraqi army.

The Pew Research Center reports:

  • Self-described Christians in the US declined from 78.4% of the population to 70.6% in just 7 years, while atheists and agnostics et al increased to 22.8% from 16.1%. The decline was across the board in age, race, education and geography. By 2050, the proportion of Christians in the US will have declined but remain the majority, while the number of non-religious Americans will rise to over 25%.
  • By 2050, Christians in developed countries, including the UK and Australia, will significantly decline to below majority status: in France and New Zealand, the religiously unaffiliated will become the largest sector.
  • Worldwide, the numbers of Christians and Muslims will keep up with population growth or better, while the non-religious share will decline due to religion thriving in developing countries, like sub-Saharan Africa, where birthrates are high.
  • In 2010, Christianity was the most popular religion followed by Islam. In 2050, Islam will almost equal Christianity.
  • In 2050, only 10% of Europe’s population will be Muslim.
  • Outside of the US and Europe, economic development has not contributed to a drop in religious faith.

The Week reports that only 18% of Catholics in Ireland attended mass every week in 2011, versus almost 90% in 1984.

Jan Eliasson at the UN said:

  • Global water use has risen at double the rate of population growth.
  • Competition for water will increase and lead to conflict, full-on wars over water. ISIS uses water as a weapon.
  • The problems over border rivers affecting two countries are growing, e.g. electricity generation versus irrigation – Egypt vs. Ethiopia, Tajikistan vs. Uzbekistan.
  • The challenge for clean water is bigger for developing countries than in the rural areas.
  • We have to seriously look at the price of water, which we have taken for granted.
  • 1,000 children under age 5 die every day because of lack of water and lack of sanitation.

Nathan Myhrvold at Intellectual Ventures said:

  • In 1908, an asteroid luckily hit in Siberia and devastated hundreds of square miles, and was bigger than the largest ever atomic explosion on earth. If it had hit in Europe, the US, or even in the middle of the ocean, the whole 20th century would have been shaped by the event.
  • In 2013, an asteroid hit in Chelyabinsk, Russia but luckily came in at only 18 degrees above the horizon and so exploded in the upper atmosphere, breaking a million windows and causing 1,500 injuries. At a steeper angle, it would have killed a million people.
  • We put very little resources into finding asteroids. If an asteroid is only a week away, then we can only party – if  small, we might be able to evacuate the area. If the asteroid is further out, we have, or could develop, the technology to meet and nudge it.

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Exports to Recover in U.S. as Global Growth Firms: Economy – Bloomberg 01-23-13

Salient to Investors:

Exports from the US are set to pick up in 2013 as global growth strengthens. Gary Hufbauer at Peterson Institute for Intl Economics said competitive US industries include agriculture, medical supplies and aviation, and exports are a very high-paying sector of the US economy – jobs are more steady in export-oriented companies, which pay better and do more R&D.

The World Bank says developing nations will grow 5.5 percent in 2013 while Europe stabilizes, and Latin America will grow 3.5 percent versus 3 percent in 2012 and led by Brazil.

Maury Harris at UBS Securities said the rest of the world is still growing, and expects exports to rise 6.7% in Q4 versus Q4 2012. UBS expects foreign demand to grow at a 6% pace in Q1 and 7% pace for the rest of 2013.

The IMF expects developing economies to grow 5.5% in 2013 versus 5.1% in 2012, and the world to grow 3.5% as Europe shrinks for a second year.

The Institute for Supply Management’s export index exceeded the break-even 50 level in December for the first time since May. UBS says this index’s 3-month average leads similar changes in actual exports by a few months.

Joseph Carson at AllianceBernstein said the US will gain market share in a growing market, in the direction of emerging markets, now 57% of US exports and up 20% over the past decade.

Neil Dutta at Renaissance Macro Research expects US exports to grow 2.3% in 2013 and global demand to firm in half2, but cautioned that Canada, the US’s biggest customer, is cooling. Dutta said Canada’s housing market is cooling, while fiscal tightening in Europe and an Asian rebound that has had little impact outside the region are working against an acceleration in demand for US goods.

Diane Swonk expects overseas demand to pick up in half2, US exports to grow 5.1% in 2013 as China recovers and Europe stabilizes, and sales overseas to grow 8.7% in 2014. Swonk said the first wave for developing nations is importing goods such as automobiles that require time to produce domestically, and from American companies.

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Boeing 747-400 Prices Tumble as Fuel Costs End 23-Year Reign – Bloomberg 06-13-12

Carriers are rushing to buy newer and more fuel-efficient aircraft.

Newer aircraft use less fuel because more efficient engines and use of lightweight materials.

Teal Group’s Richard Aboulafia says the market for large aircraft in general is disappearing fast.

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