KSA

Best Idea Alphabet Growing Global Cloud Presence

by

Image Shown: Alphabet Inc Class C shares, a top-weighted idea in our Best Ideas Newsletter portfolio, are up ~65% over the past year. By Callum Turcan Alphabet Inc (GOOG) (GOOGL) has historically focused primarily on growing its digital advertising revenues since the company was founded under the Google name back in 1998. More recently, the technology giant has begun seriously seeking to broaden its revenue base, and we like what we see on this front. We include Alphabet Class C shares (ticker: GOOG) as an idea in the Best Ideas Newsletter portfolio given its immense capital appreciation upside potential as a net cash-rich, free cash flow generating powerhouse (topics that we have covered often in the past). Our fair value … Read more

Exxon Mobil Puts on a Brave Face

by

Image Source: Exxon Mobil Corporation – November 2019 Guyana IR Presentation By Callum Turcan Near-term oil prices and most importantly, the oil price futures curve, have improved materially since just a couple of months ago when it looked like the sky was falling. For the first time ever, WTI turned negative in April 2020 for physical deliveries due May 2020 of light sweet oil to Cushing, Oklahoma, as storage options were limited (and arguably, many speculators had jumped into the market not fully aware of the risks they were taking on). Exxon Mobil Corporation (XOM) has seen its share price recover considerably since the drop, though we caution that management’s commitment to the dividend will prove a hard task if … Read more

Stress in the Oil & Gas Industry Grows as Major Energy Exporters Hunker Down

by

Image Shown: WTI is down almost 61% over the past year as raw energy resources prices were decimated by the news that OPEC and non-OPEC members couldn’t reach another production curtailment deal in early-March 2020. By Callum Turcan Raw energy resources pricing has crashed through the floor, so to speak, with WTI (USO) (US oil pricing benchmark), Brent (BNO) (international oil pricing benchmark), Henry Hub (UNG) (US natural gas pricing benchmark), and the LNG Japan/Korea Marker (pricing benchmark for liquefied natural gas [‘LNG’] deliveries to East Asian markets) are all trading at or near multi-decade lows as of this writing. The pricing for natural gas liquids (‘NGLs’), like ethane, propane, and butane, have also come crashing down (seen through Mont … Read more

Fed Cuts 100 Basis Points, Launches More QE

by

“Now, stocks and other assets are being sold, some indiscriminately. It is truly becoming a stock pickers market as opposed to a quant-led and index-led market. It takes a different kind of bravery to buy on massive down days and one must have conviction in their research that the company will not go away if massive downside scenarios do in fact emerge.” – Matthew Warren. In this piece, we cover our assessment of what the global markets might be facing in a bull-case, base-case, and bear-case scenario. Our base case is a substantial recession in the US and a financial crisis of some unknown magnitude. By Matthew Warren The tremendous (mostly downside) volatility in all asset markets globally during the … Read more

Oil Markets Get Decimated

by

Image Shown: Oil prices have been decimated year-to-date. By Callum Turcan We are following up on our ‘Oil Prices Collapse, Reiterating 2,350-2,750 S&P 500 Target Range; Credit Crunch Looming?’ note (link here) published Sunday, March 8, to provide additional commentary on what’s going on in the shale patch right now. As of this writing, oil prices (BNO, USO) continue to get hammered. Here’s what we had to say in that recent note: The independent upstream producer space (XOP) is careening off a cliff, and that was before the OPEC+ cartel was unable to reach an agreement during their joint meeting (OPEC and non-OPEC members) on March 6. Due to the inability for the oil cartel to reach a deal, largely because Russia … Read more

Covering Oil Markets Ahead of the Upcoming OPEC/OPEC+ Meetings

by

Image Source: Exxon Mobil Corporation – 2019 IR Presentation  By Callum Turcan On March 5, the Organization of Petroleum Exporting Countries (‘OPEC’) is holding an “extraordinary” meeting in Vienna, Austria (EWO), which will be followed up by a ministerial meeting between OPEC and non-OPEC members the next day. The group had already agreed to cut oil (USO, BNO) supplies by an additional 0.5 million barrels of per day (‘bpd’) back in December 2019 through an agreement that would last through March 2020 (that was on top of an existing deal to keep 1.2 million bpd off of the market which runs through the end of March 2020 as well). As part of that deal, Saudi Arabia (KSA) offered to “voluntarily” … Read more

FedEx Bemoans Trade Wars and Issues Weak Guidance, Shares Get Crushed

by

Image Source: FedEx Corporation – IR Presentation By Callum Turcan Global logistics and shipping giant FedEx Corp (FDX) reported first quarter earnings for its fiscal 2020 (ended August 31) on September 17 that underwhelmed, sending shares sharply lower (down almost 13%) on September 18. FedEx reduced its fiscal 2020 guidance and management made sure to call out what the company sees as its main problem, trade wars and the dynamic effect that is having on global shipping volumes. Here’s what management had to say (emphasis added): “FedEx is lowering its fiscal 2020 earnings forecast as the company’s revenue outlook has been reduced due to increased trade tensions and additional weakening of global economic conditions since the company’s initial fiscal 2020 … Read more

Saudi Arabia Attacked, Oil Prices Shoot Higher

by

Image Shown: Saudi Arabia’s oil infrastructure was attacked over the weekend, causing WTI and Brent to rally at the start of the trading session. By Callum Turcan Disaster struck this weekend when several drones took out the Abqaiq oil processing facility and the massive onshore Khurais oil field in Saudi Arabia (KSA) on Saturday, with WTI and Brent both surging on the news once trading resumed at the start of the week. The Khurais oil field produces around 1.5 million barrels of crude per day and the Abqaiq oil processing facility is the largest in the world. Saudi Arabia’s oil production capacity was reduced by 5.7 million barrels of crude per day due to these attacks and the country is … Read more

In the News: Conflicting Crude Oil Reports, All Eyes on G20 Summit, HP Battling Through Tariffs, Altria Eyes Crown Juul of E-Cigs

by

Let’s take a look at some top stories across the markets, including conflicting reports on the likelihood of a crude oil production cut agreement from OPEC and Russia, implications of the G20 Summit this weekend, HP’s solid fiscal fourth quarter report, and Altria’s potential acquisition of a stake in noted private e-cig maker Juul. By Kris Rosemann Volatility in the crude oil market (USO) is nothing new, but investors have been whipsawed quite notably of late by a number of conflicting reports that have potentially meaningful implications on the direction of crude oil prices in the near term. Reports that Russia (RSX) was in agreement with Saudi Arabia (KSA) over the need for production cuts provided a boost to the … Read more

In The News: Oil Price Slump Continues, GE Cutting Baker Hughes Stake, and Home Depot’s Outlook

by

Let’s take a look at some of the top stories from around the markets, including a number of energy-related headlines and what Home Depot sees in its near-term outlook. By Kris Rosemann Crude oil prices (USO) continue their recent slide as oversupply fears creep back into the fore. OPEC recently cut its forecast for 2019 global oil demand growth for the fourth consecutive month, and the cartel expects supply growth from non-OPEC countries to exceed demand growth in the year. OPEC noted that its expectations for oil demand growth to slow relative to prior forecasts goes hand in hand with recent downward revision in the IMF’s recent reduction in global economic growth estimates. President Trump continues to target Saudi Arabia … Read more