Finimize - 🐚 Shell-shocked

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Today's big stories

Oil giant Shell warned its record profit run is coming to an end
Quality investors like predictability, so maybe you should too – Read Now
The eurozone’s retail sales fell by more than expected in August

Shell Takes A Shelling

What’s Going On Here?

Oil giant Shell warned investors on Thursday that its run of record quarterly profit is about to come to an end.

What Does This Mean?

What benefits oil companies and what benefits the wider world isn’t always the same – that much was clear after war erupted in Europe back in February. The ensuing jump in oil prices led to a boom for the industry and handed Shell two back-to-back quarters of record profit. But the global economy’s tanked in the meantime, and all of a sudden the outlook for oil has dimmed – with prices taking a tumble from their over $120-a-barrel price back in June. Add weaker gas trading and falling demand for plastics to the mix, and it’s no surprise that Shell said its profit will probably underwhelm when the numbers emerge at the end of the month.

Why Should I Care?

For markets: A slim ray of HOPEC.
OPEC+, a group of oil producing nations, is less than thrilled with falling oil prices, and has announced plans to reduce supply by two million barrels a day – twice the rumored amount. Now, while that move will probably spur a recovery in oil prices, the effect might not actually be as drastic as it seems: weaker members of OPEC+ have struggled to keep up with existing production targets anyway, so the actual dent to supply could be less than the official figure suggests.

The bigger picture: The grass is always greener – the future, not so much.
Many companies – including Shell – have ambitious plans to pivot to green energy, but it looks like they aren’t investing enough. According to experts, the world needs to be spending $4 on renewables for every $1 we spend on high-polluting energy by 2030. Do that, and we have a chance of reaching net-zero by 2050 – but given that we haven’t even reached a spending ratio of 1:1 yet, it’s a long shot.

You might also like: Investing in the oil and gas industry in good times and bad.

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Analyst Take

Is It Time To Buy Quality Stocks?

By Paul Allison, Analyst

You’ll sometimes want to go against the crowd when you’re investing.

And right now, that might mean leaning into quality stocks.

These stocks, which are neither the market’s cheapest nor its most expensive, have fallen out of favor this year.

But they actually make a lot of sense in this environment: after all, these well-established companies are known for their high predictability, fairly certain growth, and minimal risks.

That’s today’s Insight: why it might be time to consider quality investing.

Read or listen to the Insight here

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