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Today's big stories

ExxonMobil and Chevron reported better-than-expected earnings thanks to a resurgent oil price
One ETF provider is touting a strategy that’ll protect your gains if markets come crashing down – Read Now
Procter & Gamble’s better-than-expected quarterly results suggest there’s more good news to come

Slim Pickings

What’s Going On Here?

Chevron and ExxonMobil’s second-quarter results beat expectations on Friday, after a year of trimming the fat helped turn them into lean, mean oil-making machines.

What Does This Mean?

The second quarter of 2020 was a calamity for oil companies, with almost all of them turning in a loss after oil prices tanked last year. That forced them to take a long, hard look at themselves and, ultimately, cut unnecessary costs wherever they could.

Now, though, the slippery elixir’s price has come roaring back: it’s up over 150% in the last year. That’s allowed Exxon and Chevron to sell the oil they’ve been extracting at a higher price, which brought last quarter’s revenue in ahead of expectations. And since they were feeling remarkably cost-light after a year of cuts, their profits beat expectations too. Chevron even made investors’ days by saying it’d start buying back shares again.

Why Should I Care?

For markets: Oil up, oil stocks up.
Exxon and Chevron’s stocks both initially rose on Friday, which is saying something: analysts had long been expecting energy industry stocks to deliver the highest sales and earnings growth of any sector. That was already reflected in their share prices, with US energy stocks rising 35% this year – more than any other industry – versus the key US stock index’s 19%. And given that their stocks rose on Friday, it suggests investors – who might otherwise have cashed out and sent them down – see even more good news on the horizon.

The bigger picture: Nature is healing.
Data out on Friday showed the eurozone economy grew by a better-than-expected 14% in the second quarter compared to the same time last year, which bodes well for energy demand and the industry’s stocks. But rising oil prices also helped push eurozone inflation over the European Central Bank’s (ECB) target in July – and that could eventually become a problem for the industry if the ECB is forced to slow things down.

You might also like: How to pick energy’s big winners.

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2. Analyst Take

How To Black Swan-Proof Your Portfolio

What’s Going On Here?

Black swans are those rare events with the potential to wipe out all your gains in one fell swoop. Think the 2008 financial crisis, or last year.

And you might be worried that another one’s on the way: stock valuations, after all, keep hitting record highs, even though an uninterrupted economic recovery is no guarantee.

But one ETF provider rolled out a strategy in 2018 that could be just the answer.

That’s not a long track record, but it did pass its first black swan test: the strategy only lost 5% in the coronavirus crash versus the 20% drop of the key US stock market index.

It did well out of the subsequent recovery too. That’s unusual: even strategies that weathered the crash tended to falter when things started picking back up.

So that’s today’s Insight: a strategy for how to play the bull market in a smarter way, and four ways to roll it out yourself.

Read or listen to the Insight here

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