Climate Summit Thoughts

Macro Perspectives: Mon 23 Apr 2021

The Biden Climate Summit last week looked a lot like the World Economic Forum of the past several years - the cast of characters is the same, including Bill Gates, who was a featured speaker on Friday.

As we discussed in my previous note, world leaders and influencers have been working to sell the climate action initiative over the past days, the stocks in the industry they are trying to kill (fossil fuels) can be catalysed by the growing attention to this theme.

Why? Because people realise that the strong-arm of government can curtail supply easier than they can curtail demand, and until the clean energy initiative can produce viable energy alternatives at scale, we will still be using a lot of oil - even as it gets more and more expensive.

With that, since this movement was well telegraphed with the Biden election, it has been oil and gas stocks that have been the big movers.

The biggest energy ETF (XLE) is up 61% since election day. The biggest clean energy ETF (ICLN) is up only 22% over the same period.

Exxon is up 68% since election day. Chevron is up 40%. ConocoPhillips is up 63%. Phillips 66 is up 62%. EOG resources is up 103%. Still, as discussed, many of these oil and gas stocks have dipped in recent months - that dip is a buying opportunity.