Uncle Sam Moves to Block China


Today’s Profit Watch shares a little more of our American adventure. That’s before we escort you to Papua New Guinea and its sudden strategic importance to both China and the United States.

In Baltimore, you can go from the ghetto to the fine restaurants down by the harbour in just a few blocks.

A friend took us to dinner in his car last night.

On the way, it doesn’t take much time staring out the window to see a lot of homeless trudging the streets.

Some of them lie on top of the vents in the road above the train line to feel the heat. Others hold up cardboard signs and beg.

Ten minutes later, and you’re sitting in a beautiful restaurant looking at a menu.

Your wine glass doesn’t stay empty for more than a moment before a waiter is filling it up again.

That’s America. There’s nowhere quite like it…

We can now say something like that about Long Island City in Queens, New York. This is one of the two spots Amazon chose to locate its workforce away from Seattle.

The rent seekers are moving in. ‘Condos’ (apartments) are now in a gold rush. Buyers are happy to step in, sometimes sight unseen, according to the Wall Street Journal. These guys are just front-running the coming gentrification.

A local ad agency said searches for listings were up 295%. This data is BEFORE the announcement was official.

Wait for the figure next week!

Apparently, the whole area needs a bit of a refresh. Some of the new buyers might like to pop into Home Depot [NYSE: HD] to get going.

It’s a big home improvement chain over here.

I bring it up because the company just put out its latest results. It’s enough to make you sleep a little easier.

It made good money and raised its full-year guidance. Now, I’m not suggesting this is one to consider buying.

But it’s another example that shows the US consumer appears to be in a relatively happy place right now.

The doomsters can be held at bay a little longer.

There’s another reason we can have a bigger spring in our step. The US might be about to shower some money over our neck of the woods.

Here’s the story…

The great powers compete – to spend money

In October, President Trump signed the ‘Build Act’ into law.

This is a new development agency the US can use to finance infrastructure projects around the world. It’s going to have US$60 billion to splash around.

Apparently, the US wants to push back against China’s One Belt, One Road program. It wants to win friends and influence people in those places. Cheap money usually works.

Certainly, it looks like Papua New Guinea might become something of a favoured state of Australia and the USA as part of this.

Both plan to spend up big to help roll out electricity, internet and more in PNG, according to The Australian. There’s a new naval base there, too.

Rumour has it there could be a big announcement on this to come at the APEC leaders summit this weekend.

Certainly, there could be project tenders to be won here for Australian companies, or perhaps even further mining leases.

It’s a very positive development for regional economic growth anyway, should the spending come about.

China’s Xi Jinping is also going to the APEC meeting. China is due to make its own announcement about investing in the same region.

Papua New Guinea has a lot of gas, and China has an interest in locking in as much supply of this as it can.

Here’s an interesting point right now: The price of natural gas flew up 14% today here in the US. It’s now up 48% for the month.

It’s unseasonably cold here on the American east coast, and natural gas inventories are at a decade low for this time of year.

It brings a touch of doubt over how much American LNG can be exported when the domestic market is undersupplied.

That could work in the favour of the Australian firms competing for market share to supply China and the rest of Asia.

In turn, this could help underwrite the case for expanding gas projects in Papua New Guinea.

The APEC meeting is a very interesting dynamic to watch this weekend. All signs point to a bullish round of spending to spring from it that benefits Australia. Stay tuned for more on this.


Callum Newman Signature

Callum Newman,
Editor, Profit Watch