Underweight The S&P oil & gas refining & marketing index has typically performed in line with their profitability (second panel); the absolute price of inputs and outputs are far less important than the spread…
Key Portfolio Highlights The S&P 500 has started 2019 with a bang as dovish cooing from the Fed has proven a tonic for equities. While we have not entirely retraced the path to the early-autumn highs, our strategy of staying…
Highlights Hyman Minsky famously said that “stability begets instability.” The converse is also true: Instability begets stability. None of the preconditions for a U.S. recession are in place yet. The Fed’s decision…
In our commodity team’s simulation of how a state collapse could affect oil prices, we make the following assumptions based on recent history. First, Venezuela collapses next month. Second, OPEC 2.0 responds with a…
Our commodity strategists remain convinced OPEC 2.0 member states will once again have to embark on a strategy to backwardate the Brent forward curve, as they did in 1H18. Reducing production in the short term will force refiners…
OPEC 2.0 is building physical optionality, to deal with different possible moves the U.S. can make on Iranian oil export sanctions and waivers. This comes despite an apparent break in the sense of urgency Saudi Arabia and Russia feel re…
The above chart introduces our commodity team’s new model developed to understand the effect of EM GDP growth on oil prices. EM demand tends to mean revert toward a linear trend. Additionally, it anchors other…
The Fed’s near-term capitulation on its rates-normalization policy highlighted by our fixed-income desks will provide a tailwind for EM oil demand this year by weakening the USD. This will reduce refined-products’ costs in…