David Fuller and Eoin Treacy's Comment of the Day
Category - Energy

    Vanishing Spreads Are Ringing Alarms in Risky Debt Markets

    This article from Bloomberg may be of interest to subscribers. Here is a section:

    “What do you do with your cash?” said Luke Hickmore, investment director at Aberdeen Standard Investments in Edinburgh, where he helps run a number of bond funds. “Leaving it standing there makes no sense and the experience over the last 10 years is that there is no pain in buying bonds. Learnt behavior is that it is safe. Inflation is nowhere and central banks start buying every time yields go higher.”

    Heavy demand for tax-exempt income drove yields on even the riskiest municipal bonds to 3.58% on Friday, the lowest since Bloomberg’s records began in 2003. The influx has compressed spreads across the country and caused some debt in high-tax states like California and New York to yield less than top-rated benchmark securities. Municipal mutual funds have reported inflows for the 58th straight week on Feb. 13.

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    BP Sets Bold Agenda for Big Oil With Plan to Eliminate CO2

    This article by Laura Hurst for Bloomberg may be of interest to subscribers. Here is a section:

    For BP to survive the energy transition in a world that’s gradually falling out of love with oil, it will need to make big investments in new sources of clean energy, ensure cash keeps flowing from its fossil fuel assets, while also funneling generous returns to investors. It’s a tricky balancing act that its closest peer Shell is already struggling to master.

    BP’s commitment to do all this while still boosting free cash flow and shareholder returns is “really the key challenge,” said RBC Capital Markets analyst Biraj Borkhataria.

    The company announced structural changes alongside its emissions target. Looney will dismantle its upstream and downstream businesses and reorganize them into an entity made up of 11 new teams that will be more integrated and focused.

    “For us the statement represents a step change in terms of vision for the company and one that moves the group toward the biggest reorganization and modernization in at least two decades, if not a century,” analysts at Barclays said in a note. “The magnitude and radical nature of this shift should not be underestimated.”

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    Saxo Q1 Outlook: The Great Climate Shift

    This press release may be of interest to subscribers. Here is a section:

    Email of the day on rare earth metal miners

    Maybe 18 months ago you were looking at Rare Earths outside China. One you mentioned in Australia - Alkane Resources - has recently perked up considerably on gold exploration but also on the likely demerger of its Rare Earths project at Dubbo. I'm a shareholder so noticed(!) You might like to re-visit some time as it is a happy graph for holders

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    DoubleLine Round Table Prime 1-6-20 - Segment 3: Best Ideas

    This third part of the round table may be of interest to subscribers.

    Fiat Chrysler and Foxconn plan Chinese electric vehicle joint venture

    This article from Reuters may be of interest to subscribers. Here is a section: 

    Fiat Chrysler and Foxconn plan Chinese electric vehicle joint venture - This article from Reuters may be of interest to subscribers. Here is a section:

    FCA last month reached a binding agreement for a $50 billion tie-up with France’s PSA (PEUP.PA) that will create the world’s No. 4 carmaker. FCA said that the proposed cooperation was initially focused on the Chinese market.

    It “would enable the parties to bring together the capabilities of two established global leaders across the spectrum of automobile design, engineering and manufacturing and mobile software technology to focus on the growing battery electric vehicle market,” it said.

    FCA said it was in the process of signing a preliminary agreement with Hon Hai, aiming to reach final binding agreements in the next few months.

    However, it added there was no assurance that final binding agreements would be reached or would be completed in that timeframe.

    Foxconn has been investing heavily in a variety of future transport ventures for several years, including Didi Chuxing, the Chinese ride services giant, and Chinese electric vehicle start-ups Byton and Xpeng.

    Foxconn also has invested in Chinese battery giant CATL and a variety of other mostly Chinese transportation tech start-ups.

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    Fiat Will Effectively Fund Tesla's German Factory, Baird Says

    This article by Gabrielle Coppola for Bloomberg may be of interest to subscribers. Here is a section:

    Chief Executive Officer Elon Musk announced in November that Tesla planned to build a plant outside Berlin. The facility is expected to produce Model 3 sedans and Model Y crossovers starting in 2021.

    Fiat Chrysler is going to launch a new version of its Fiat 500 battery-powered vehicle in Europe this year, along with plug-in hybrid versions of its Jeep Compass, Renegade and Wrangler models. That, combined with the Tesla credits, should make the company compliant with Europe’s emissions rules, CEO Mike Manley told analysts in July.

    While Fiat Chrysler would otherwise struggle to meet new carbon-dioxide emissions standards in Europe, the so-called open-pool option available in the European Union allows automakers to group their fleets together to meet targets.

    Compliance has gotten harder for automakers as consumers have shifted toward gasoline cars, which emit comparatively more CO2, following Volkswagen AG’s diesel-emissions scandal that first erupted in 2015.

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    Sony Shocks CES 2020 With Unveiling of Electric Car

    This article by Michael Cogley for the Telegraph may be of interest to subscribers. Here is a section: 

    Tech giant Sony shocked attendees at this year’s CES by unveiling a new electric car.

    The Japanese company, which is best known for its PlayStation games consoles and high-end televisions, revealed the Vision S concept saloon.

    The prototype boasts 33 sensors to monitor inside and outside of the car, as well as an ultra-wide monitor which will be used for entertainment and information purposes.

    Sony chief executive Kenichiro Yoshida said that cars will be redefined as a “new entertainment space”.

    “To deepen our understanding of cars in terms of their design and technologies we gave a shape to our vision,” Mr Yoshida told the tech conference in Las Vegas.

    “This prototype embodies our commitment to the future of mobility and contains an array of Sony technologies.”

    The new concept car also features “360 reality audio”, which Mr Yoshida says will give users an “immersive experience”.

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    U.S. Strike Ordered by Trump Kills Key Iranian Military Leader in Baghdad

    This article from the Wall Street Journal may be of interest to subscribers. Here is a section:

    Iraqi Prime Minister Adel Abdul-Mahdi condemned the targeted killing as a violation of the terms underpinning the U.S. troop presence in the country.

    Mr. Abdul-Mahdi said he had submitted a formal request for parliament to convene in order to adopt necessary measures “to protect Iraq’s dignity and sovereignty.” He didn’t say what those measures would be.

    The killing of the two men is likely to mark the beginning of a dangerous new chapter in the rivalry between the U.S. and Iran, which escalated after supporters of an Iran-backed Shiite militia attempted to storm the U.S. Embassy in Baghdad earlier this week. Mr. Mohandes was deputy leader of the Popular Mobilization Forces, an umbrella group that led the embassy attack.

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    Oilfield Services Ends 2019 With a Bang, Whimper

    This article by Liam Denning for Bloomberg may be of interest to subscribers. Here is a section:

    “When does it end?” is a perfectly reasonable question for New Year’s Eve. And in the case of anyone still holding onto oilfield services stocks, it is more than rhetorical.

    Core Laboratories NV, which offers services to enhance output from oilfields, dropped the ball early on Monday evening, or New Year’s Eve Eve if you will. It cut guidance for the quarter just about to end, issued underwhelming guidance for the quarter about to begin and, to cap it off, slashed its dividend by more than half. The latter was declared “sacrosanct” by management only two months ago — which, in hindsight, is one of those overwrought words that should set alarm bells ringing.

    Throw in Tuesday’s pre-drinking trading volumes, and the stock looks set to see out 2019 with a bang (not the good kind). The ostensible reason for the sudden about-face is sluggish activity in international markets, which were hoped to offset the drag from the slowdown in U.S. fracking. The underlying reason is one that blends the oil business with New Year’s Eve seamlessly: the triumph of hope over experience.

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