Good morning. Phil Rosen here — it's good to be with you on a Monday morning, especially as the Elon Musk-Twitter drama continues to unspool.
More on that below, but first let's talk energy.
Oil remains top of mind for both investors and everyday Americans, whether you're watching costs per barrel or prices at the pump.
Much of Wall Street expects crude to go up, but one analyst is expecting the opposite to happen, in dramatic fashion.
Here we go.
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1. From Goldman Sachs to UBS, top firms have made bullish predictions for oil, with JPMorgan even eyeing a worst-case scenario of $380 a barrel.
But Citi has taken the opposite view, and the investment bank's strategists predict oil will take nosedive by the end of the year.
Francesco Martoccia, Citi's head of European commodities strategy, said oil prices could slump as low as $65 a barrel if a recession takes hold.
Oil demand plays a key role, Martoccia explained, and Europe is a likely candidate to cut back on energy consumption.
"When you look at the gas demand, for instance, from the industrial complex in Italy, or even the orders of one of the biggest industrial facilities, it's going down," he said.
The US has tried to do its part to alleviate the global energy crunch by tapping into the Strategic Petroleum Reserves. But there's been an unintended consequence — America's been sending more crude to other countries.
But, to oil analyst Matt Smith, exporting barrels overseas can bring crude prices down as effectively as keeping them in the US.
"Part of the goal was in response to Russia, so those SPR barrels are meant to backfill Russian crude," Smith said.
In other news:
2. US stock futures fell early Monday, while oil prices dropped after Russia cut off natural gas supply to parts of Europe via the Nord Stream 1 pipeline to conduct maintenance. But the big news today is Elon Musk backing out of the Twitter deal — shares of the social media company dropped 6.9% in premarket trading this morning. Here is your market wrap.
3. On the docket: National Grid plc, COSMOS Pharmaceutical Corp, and more, all reporting.
4. Barclay's acclaimed internet stock analyst Mario Lu said trouble could be ahead for unprofitable firms in the sector. Recession risks are rising, and that's bad news for internet names, he explained. But these two companies look attractive with substantial upside — and one in particular could surge 106%.
5. Europe's scramble for gas is depriving poorer nations from getting enough amid the global energy crunch. The continent has ramped up liquefied natural gas imports by 49% this year, as countries like India, Bangladesh, and Brazil have had to slash purchases. As one analyst told the Wall Street Journal: "The European gas crisis is sucking the world dry of LNG."
6. Goldman Sachs forecasts that oil will hit $140 a barrel. Investors are overplaying recession risks, and the bank's analysts said commodities traders are worrying too much about a downturn. Goldman doesn't think a collapse in crude demand is in the cards.
7. Bonds aren't doing what they normally would in a bear market. That's according to top strategist Melissa Brown, who told Insider that aggressive rate hikes are changing the dynamic in the debt market. She explained why bonds are looking more attractive than stocks in the current landscape.
8. This batch of stocks have some of the most stable earnings on the market. And together they are set to be a magnet for investors' cash amid a broad economic slowdown, according to Morgan Stanley. See the list of 37 companies here.
9. A top-4% fund manager is keeping nearly half his portfolio in cash because he thinks there's more weakness ahead for stocks and the economy. He sees several key risks still ahead — but he shared what it will take for him to change his mind and turn bullish once again.
10. The US is right around the corner from recovering the jobs lost during the pandemic. After Friday's jobs data, the country is just 524,000 payrolls away from returning to pre-COVID levels. The rebound has been drastically different from that of the Great Recession.
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Curated by Phil Rosen in New York. (Feedback or tips? Email [email protected] or tweet @philrosenn).
Edited by Max Adams (@maxradams) in New York and Hallam Bullock (@hallam_bullock) in London.