This post originally appeared on April 3, 2023
Market Giving Up Friday’s Gains:
Yesterday, we published a piece concluding that the market may have misinterpreted Friday’s PCE report. The NASDAQ, which is more sensitive to interest rate changes than other major indexes, has given up half of Friday’s gains as of the time of this writing. Please see yesterday’s post (linked above) for DKI analysis.
LVS Coming Back:
Las Vegas Sands ($LVS) is approaching $60 again, a level it hit last month. Before that, the last time the stock was at that price was almost two years ago. There are two pieces of news in the name. Inside Asian Gaming is reporting that March gross gaming revenue in Macau hit a 38-month high in a continued recovery spurred by the government relaxing and eliminating Covid-related travel restrictions. This recovery is one of the key reasons we like the stock.
In addition, the company has indicated that the massive $1 billion expansion of the Marina Bay Sands is on track to be completed by the end of this year. Las Vegas Sands owns one of the two casinos operating in Singapore, a market which is starting to report results approaching pre-pandemic levels.
OPEC Expresses Displeasure with the White House and Cuts Production:
We’ve covered the inconsistent White House energy policy at length in recent months. The Administration wants more oil production, but is trying to limit the incentives and availability for domestic producers to engage in E&P (exploration and production). Instead, they’ve reached out to countries like Iran and Venezuela to try to get them to produce more. This will achieve the opposite of the Administration’s environmental goals as US producers are more careful on such matters.
Last year, the White House asked the Saudis to increase production. Saudi Arabia denied that request. The Saudis have further complicated matters by agreeing to price oil in yuan which marks the beginning of the end for the petrodollar.
In a successful midterm election ploy, the White House sold down the Strategic Petroleum Reserve (SPR) to levels we haven’t seen since the mid-1980s. They said they’d replenish the SPR when oil reached the high $60s/low $70s, but didn’t follow through on that promise. Energy Secretary, Jennifer Granholm, has said that replenishing the SPR would be “difficult” and could take several years. No reason for the “difficulty” was given.
The Saudis and OPEC were displeased at the US breaking its promise to buy more oil, and responded by cutting production by over 1MM barrels a day. Brent crude is up by 6.4% as of this writing eliminating the opportunity for the US Administration to fulfil its promise to address the SPR shortfall around $70 a barrel.
While this is bad news for consumers, it is fantastic news for the huge DKI energy portfolio which is showing big profits today. That portfolio is available to DKI subscribers here.
If you have questions about this subject or report, I’m reachable at IR@DeepKnowledgeInvesting.com.
Information contained in this report is believed by Deep Knowledge Investing (“DKI”) to be accurate and/or derived from sources which it believes to be reliable; however, such information is presented without warranty of any kind, whether express or implied and DKI makes no representation as to the completeness, timeliness or accuracy of the information contained therein or with regard to the results to be obtained from its use. The provision of the information contained in the Services shall not be deemed to obligate DKI to provide updated or similar information in the future except to the extent it may be required to do so.
The information we provide is publicly available; our reports are neither an offer nor a solicitation to buy or sell securities. All expressions of opinion are precisely that and are subject to change. DKI, affiliates of DKI or its principal or others associated with DKI may have, take or sell positions in securities of companies about which we write.
Our opinions are not advice that investment in a company’s securities is suitable for any particular investor. Each investor should consult with and rely on his or its own investigation, due diligence and the recommendations of investment professionals whom the investor has engaged for that purpose.
In no event shall DKI be liable for any costs, liabilities, losses, expenses (including, but not limited to, attorneys’ fees), damages of any kind, including direct, indirect, punitive, incidental, special or consequential damages, or for any trading losses arising from or attributable to the use of this report.
