VDE

Energy Sector In Shambles, Looks to Recover But Headwinds Persist

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Image Source: ConocoPhillips – November 2019 Analyst and Investor Meeting IR Presentation Executive Summary: Though raw energy resource pricing is on the rebound, the outlook for the oil and gas industry remains stressed. Global demand for oil and related refined petroleum products remains subdued due to headwinds generated by the ongoing coronavirus (‘COVID-19’) pandemic. The OPEC+ oil cartel has responded by pledging to keep a significant amount of oil output off the market for an extended time. However, raw energy resource prices need to go much higher and be sustained at elevated levels before the space could become attractive from a longer-term perspective. In our view, the US upstream industry (specifically those in the shale patch) need WTI to move … Read more

Historic Oil Deal Reached

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Image Source: Chevron Corporation (CVX) – March 2020 Security Analyst Meeting Presentation By Callum Turcan Over the Easter holiday weekend, members from the Organization of Petroleum Exporting Countries (‘OPEC’), non-OPEC members that are part of the OPEC+ group (countries that in the recent past have joined forces with OPEC to curtail global oil supplies in a formal manner), and non-OPEC members outside of the OPEC+ group such as Brazil (EWZ), Canada (EWC), and the United States (SPY) came to an agreement to cut their collective oil output by north of 10 million barrels per day. Global oil and other raw energy resource prices (USO, BNO) have been simply demolished year-to-date due to a combination of demand destruction from the ongoing … Read more

ICYMI — Video: Will Hasty Policy Facilitate the Next Leg Down, or Do We Have It Coming Anyway?

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President of Investment Research and award-winning author of Value Trap: Theory of Universal Valuation Brian Nelson explains how US policymakers are stuck between a rock and a hard place, and how the market may be factoring in too high of a probability of a return to normalcy before 2021. This and more in the latest video report. Summary Make sure you review Value Trap on Amazon. Do so here. We think those that bought equities near the bottom of this swoon may be looking to take profits at present levels. The market is currently reflecting an 80%-85% probability of a return to normalcy before 2021, which we believe is too high at this time. Our main concern is that government … Read more

Seeking Balance: What’s Happening in the Crude Oil and Iron Ore Markets

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Image Source: Sollven Melindo Commodity prices are notoriously volatile as the global markets often struggle to maintain a sustainable balance of supply-demand. Let’s take a look at some recent developments and coming events that are impacting the prices of crude oil and iron ore. By Kris Rosemann We’re not rushing to add any commodity-based exposure at the moment. We have some of course – but we’re not looking to add more to the newsletter portfolios. For starters, the iron ore pricing market appears to be setting itself up for another period of pain, and we’re preaching serious levels of caution for those considering the space as iron-ore prices have already begun to descend from the peak of the puzzling early-2017 … Read more

Valuentum’s ETF Reports

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Image Source: GotCredit Welcome to Valuentum’s ETF coverage. If you’re new to the site, please be sure to access the stock reports and dividend reports as part of your membership. If you are looking for the archives to the Best Ideas Newsletter, they can be found here. The Dividend Growth Newsletter archives can be found here. The Exclusive and High Yield Dividend Newsletter have their own website with archives, the latter coming soon. To learn more about Valuentum’s ETF reports, please see  here . To request a report of an ETF we do not currently cover, please contact us. To access the relevant Valuentum reports for each major ETF category, please click on the respective link, “Click Here to Access Valuentum Report.” The links … Read more

Big Energy Earnings Roundup

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Image Source: Exxon Mobil Corporation – Third Quarter 2019 Earnings Presentation By Callum Turcan In alphabetical order by ticker: COP, CVX, RDS, TOT, XOM ConocoPhillips On October 29, upstream super-independent ConocoPhillips (COP) reported third quarter earnings for 2019. Its adjusted underlying oil and gas output rose by 7% year-over-year to over 1.3 million BOE/d in the quarter. Conoco sold off most of its UK operations (through a deal announced in April 2019), which were primarily represented by mature offshore oil and gas fields and a stake in the Clair oilfield, raising approximately $2.2 billion in net cash proceeds when the deal was completed in the third quarter. That transaction will see Conoco’s upstream output move lower sequentially in the fourth … Read more

2,350-2,750 on the S&P? Could the Coronavirus Catalyze a Financial Crisis?

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Image: We think a rather modest sell-off in the market to the target range of 2,350-2,750 on the S&P 500 is rather reasonable in the wake of one of the biggest economic shocks since the Global Financial Crisis. The chart above shows how far markets have advanced since 2011, and an adjustment lower to the target range of 2,350-2,750 is rather modest in such a context and would only bring markets to late 2018 levels (note red box as the target range). The range reflects ~16x S&P 500 12-month forward earnings estimates, as of February 14, adjusted down 10% due to COVID-19. When companies like Visa talk about a couple percentage points taken off of growth rates, one knows that … Read more

Analyzing Chevron and Important Updates in the Global Energy Industry

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Image Source: Chevron Corporation – November 2019 IR Presentation Summary In this note, let’s cover the current state of raw energy resource prices in North America and around the world. We’ll analyze Chevron’s 2020 capital investment and exploration budget, in particular, and the global energy industry at-large. Shares of CVX appear generously valued as of this writing given the numerous headwinds facing the energy industry going forward. By Callum Turcan The world of oil and gas equities has been battling with persistently low raw energy resource prices for some time now. Back in the middle of 2014, a barrel of light sweet crude delivered to Cushing, Oklahoma (home of the West Texas Intermediate, or WTI, benchmark), would fetch over $100. Now … Read more

Worst in Energy Not Over, Stay Away from Leveraged Enterprises, Seeds of Financial Crisis Sown?

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Image Shown: The energy and banking markets continue to be experiencing pain. Since we removed the Energy Select Sector SPDR (XLE) and Financial Select Sector SPDR (XLF) from the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio, the XLE has fallen more than 50% and the XLF has fallen 13%, while the SPY has held up roughly 2%. We continue to believe staying away from energy and financials/banks will be a source of significant alpha. These are challenging times. The oil price swoon has complicated an already-dire situation with COVID-19. We’re seeing cracks in the credit markets, and the European banking system is far from healthy. The US banks may face knock-on impacts from energy loan defaults and hold … Read more

US Congress Is Getting Ready to Pass a Massive ~$2.2 Trillion Fiscal Stimulus Bill

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Image Shown: US equities have started to recover some of their lost ground as the likelihood that the US Congress will pass a massive ~$2.2 trillion fiscal stimulus and emergency spending package, dubbed the CARES Act, has increased significantly over the past week as seen through the bounce in the SPDR S&P 500 ETF Trust (SPY). President Trump has clearly indicated that he intends to sign such a bill into law as soon as possible, with the US House of Representatives expected to take up the legislation this upcoming Friday morning on March 27. By Callum Turcan On March 25, the US Senate worked late into the night to secure a bipartisan compromise on a massive ~$2.2 trillion fiscal stimulus … Read more