Energy Select Sector SPDR Fund (XLE)

Energy was upgraded today based on healthy earnings growth, reasonable valuations, geopolitical insulation and low correlation to AI infrastructure. There's risk to the price of oil.

You don't buy this for the future price of oil, but for what happened before the US-Iran war: how these companies reward the shareholder and grow production.

He predicts the price of oil to rise from now to the end of the year, to $70-80. We're underestimating how much inventories need to be refilled around the world. Also, it takes a while to transfer oil out of the gulf. Thirdly, countries will de-link from the Persian Gulf.

You can't be bullish energy, because more supply is coming from OPEC and the US. Supply is surging, while demand is far below. So, inventories are building.

Oil prices have shown a little life recently. This is a contrarian trade, but likes it full year. It's part of the cyclical trade and will rise in a relief rally when rotation happens again.

Trump wants to reduce energy price. Near-term, any resolution in the Russia-Ukraine war will put pressure and a ceiling on oil prices.

He sold his small position. Crude is down 7.5% the past month. For energy, you need to be in the fully integrated names. But it's too early to play energy--see how much China will stimulate demand.

Finally, the tide has turned in China (news of government stimulus this past week), so it's time to be exposed to China, which ahs been a terrible place to invest. It's a trade of at least 6 months.

The sector has been going nowhere. It needs a catalyst like an event in the Middle East to move shares up. Likes Diamondback and Exxon.

He owns a lot of energy stocks. This sector is performing a lot better year to date than the street gives it credit. Many energy companies like Exxon and Marathon are doing well. The second half of 2024 looks positive.

Her energy outlook: bullish. If there's a rotation based on valuation, then energy is now attractive. If the Fed cuts rates in the second half of 2024, the 2-year-yield will drop which will benefit dividend stocks like energy. Also, we're in summer driving season and an oil price shock can always happen.

There's been a lot of M&A in energy, so she expects nice returns for the rest of the year. YOY energy earnings for companies are starting to climb.