Morning Update

I know there is a LOT of speculation about what happens in Europe with no gas flows from Russia, but the European and British governments are stepping in, between electric and gas companies and citizens to use the power of the public treasury to give everyone time to allow futures prices to go back to normalized rates before passing costs on to nationals.  Russia may have abandoned its Joker by not turning off Nord Stream much much earlier in 2022, and by letting flows continue it allowed most of the European countries to fill their coffers and find supply in other partners (namely the US), and now that Russia has finally“’shut things down,” the EU and the UK have found a number of routes to divert the most gross shocks to the system.

Energy may be in a super cycle, and so there will continue to be a bullish move overall, but we also have to accept that a LOT of bad news has already been priced into the energy markets and without a NEW exogenous event like a harsher winter than already expected, worse droughts or floods than expected, or a real move between China and Taiwan.  

For almost a year I’ve been suggesting high dividend energy stocks as great buy and holds, but now I think what’s very important (Larry pointed this out) is that we need to be looking to see how energy companies are diverting the cash they’ve made with these high energy stocks over the last year, and if the companies you’re investing in are diverting new cash into projects categorized as renewable or clean energy projects, and those companies will withstand the on-going pressure of ESG regulations.  

Russia also looks like they’re abandoning some of their aggressions in Ukraine and that could be positive news, which would be bearish for energy costs.  So be cautious of what you’re investing in in Energy, even a bullish super cycle can break down companies that are not ready to move into the new regulatory framework.

Morning Update – September 11th, 2022

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