From budding trends to mature industries, Novem Group works hard to stay abreast of developing news.
Here’s what caught our eyes this week:
COVID in Three Acts
I. The Melt Down
- “sell your stocks, head for the hills, the end is coming”
II. The Melt Up
- “On March 23, the Fed initiated even more substantive measures, pledging to serve as a safety net in the private lending markets.”
III. The Recalibration
- “In most crises, young companies suffer at the expense of old companies, risk-on companies get hurt more than risk-off companies,” Damodaran said. “This crisis seems to have flipped the script.”
- “The only exception to that rule was debt: High-debt firms performed worse than their low-debt counterparts. But otherwise, high-growth beat low-growth, non-dividend beat high-dividend, and high P/E beat low P/E.”
Oil Inventories have declined rapidly yet oil prices do not seem to be fully recognizing this tightness.
ESG-related concerns in developed markets and limitations of the US shale basins will keep a lid on supply growth
As the global economy grows in 2021 and 2022 and continues to draw on inventories, where will incremental supply come from?
Those who claim that growth of EVs will sharply reduce oil demand should consider the case of Norway.
- In terms of EV penetration, no country is further along than Norway. More than 50% of new cars in Norway are now fully electric or hybrid electric.
- Yet Norway’s oil consumption very steady! Even with the COVID-19 pandemic in 2020, oil consumption has been pretty steady!
In the long run, EV penetration will put downward pressure on oil demand but we have a long way to go!
- In the US, EVs and hybrids are about 5% of new cars sold.
Of course they did… seems fitting.
“Sorry for the confusion officer. Just living my best life.”
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