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“Can’t lose anymore money if you’ve already spent it all…”  – Jeff

Hey there carnivores,

Markets were down on Monday as stimulus hopes lost some steam.

Today we’re talking ConocoPhillips keeping the dream alive.

Keep raging,
Jeff & Jason

 

Gassed up

If making poor financial decisions is wrong, ConocoPhillips doesn’t want to be right.

ConocoPhillips has decided to go all Joker in the ‘Dark Knight’ (read: lighting its money on fire), buying up rival Concho Resources for $9.7B. The transaction is the largest energy deal since the beginning of the pandemic.

The new organization will have an estimated $60B market cap. That is, of course, until it files for bankruptcy… isn’t that right, Chesapeke?

Conoco is currently the largest oil producer in the great state of Alaska (read: it DGAF about polar bears), and it’s acquisition of Concho gives it access to Texas and New Mexico’s Permian Basin, the most active oil field in the US.

The combined company will become the largest independent oil producer in the US, and second only to Occidental in Permian oil output. Clear eyes, full barrels, can’t lose.

All stock, all the rage

The only thing hotter than O&G M&A right now is a Zoom call with Jeffrey Toobin.

With oil prices getting absolutely bodied this year, players large and small have been doing their best to delay the inevitable by combining. Devon agreed last month to a $2.6B merger with WPX, while Chevron agreed in July to buy Noble for about $5B. Come on in, the water’s fine…

Cooler Commentary

Conoco’s move comes against the backdrop of one of the most brutal years on record for the energy industry (thanks ‘rona boi). Are you happy now, Greta Thunberg?

But there is one group of straight shooters that can help ease the pain by controlling the supply of fossil fuel: OPEC.

As recently as last week, Saudi Crown Prince Mohammed bin Salman, and Russian President Vladimir Putin were pushing OPEC+ producers to stick with agreed upon production cuts to counteract dwindling demand as coronavirus begins to rear its ugly head again.

The final decision will be made at OPEC+’s next meeting at the end of November. No pressure, guys.

 

 

☑️Lames catch feelings, I catch flights … and the ‘rona.

Airports have seen an uptick in TSA screenings, with more than 1M travelers flying over the weekend for the first time since March. Including yours truly. While the seven figure club is a step in the right direction, it’s still 60% lower than the 2.6M people that passed through TSA on the same weekend last year.

Airline stocks gained on the news, with United jumping 3.9%. Investors seemed much less enthusiastic about Delta, Southwest, and American, but they managed to rise 0.1%, 0.4%, and 0.8%, respectively.

☑️Get your popcorn ready. Speaking of an industry that’s struggled due to ‘rona…. 

Movie theatres received the green light from Governor Cuomo to reopen in the state of New York. While the New York market only makes up 6% of ticket sales, investors liked what they heard.

AMC shot up 16.45%, while Cinemark rose 11%. Which is great if you are willing to risk your life to see that new Liam Neeson movie that seems an awful lot like ‘Taken’.

Unfortunately for cinephiles and movie theatre chains, not many blockbusters are on the docket for the rest of the year.‘Wonder Woman 1984’, ‘The Croods: A New Age’, and ‘Free Guy’ are slated for release.

☑️Neumann… ^ extremely Jerry Seinfeld voice.

Adam Neumann just can’t get out of his own way. The former CEO and founder of WeWork will not receive his full $185M “consulting fee,” as it appears he’s violated a non-compete agreement. Which first raises the question: who would hire him?

In case you forgot, he received the offer as part of a $1B+ severance package after screwing the pooch on WeWork’s IPO plans.

Couldn’t have happened to a better guy…

☑️In that economy?! Looks like China has its mojo back. China’s economy grew 4.9% in Q3 of 2020 compared to last year. While the growth is lower than the forecasted 5.3%, it does show that the country is expanding once again after struggling this year due to lockdowns.

And this might just be the beginning, as China is seemingly virus free, while the US, Europe, and other areas of the world are facing a second wave. The country has recently made large investments in transportation and infrastructure, and is now seeing spending pick back up amongst consumers.

Well, that, or it could just be lying about everything…

Author:
Jeff Bishop

One of the best traders anywhere, over the past 20 years Jeff’s made multi-millions trading stocks, ETFs, and options. He is renowned as an incredible trader with a deep insight and a sensitive pulse on the markets and the economy. Jeff Bishop is CEO and Co-Founder of RagingBull.com.

Even greater than his prowess as a trader is his skill and passion in teaching others how to trade and rake in profits while managing risk.

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