Comment of the Day
11th April 2023
Eoin Treacy
Apr 12
Video commentary for April 11th 2023
A link to today's video commentary is posted in the Subscriber's Area.
Some of the topics discussed include: bitcoin breaks out with limited supply driving enthusiasm. gold steady, oil firms, bonds steady ahead of CPI but megacap tech eases, non-US assets benefit from a weaker dollar.
Pioneer Natural Resources (NYSE:PXD) stock jumps after WSJ report of merger talks with Exxon Mobil
This article from MarketWatch may be of interest. Here it is in full:
Shares of Pioneer Natural Resources Co. powered up 6.4% toward an eight-week high, to pace the S&P 500's premarket gainers, after the Wall Street Journal reported that the fracking company has held preliminary talks with Exxon Mobil Corp. over a possible acquisition. Exxon's stock fell 0.9% while futures for the S&P 500 shed 0.5%. ahead of Monday's open. Citing people familiar with the matter, the WSJ report published Friday said the discussions have been informal, but with Exxon flush with cash after recording record profits in 2022, the oil giant has been exploring options. Pioneer Natural's stock has lost 8.9% year to date through Thursday, while Exxon shares have tacked on 4.3% and the S&P 500 has gained 6.9%.
Eoin Treacy's view
The pace of M&A activity is heating up in the resources sector. Exxon Mobil’s proposed merger with Pioneer suggests the shale oil and gas sector is maturing. The days of the wildcat land grab are over. The resources are well understood and the unique attributes of unconventional supply allow production to be dialled up and down as needed. That is an attractive add on for a global major.
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Bitcoin, Not Ether, Builds Crypto Market Dominance Ahead of Ethereum's Shanghai Upgrade
This article from Coindesk may be of interest. Here is a section:
Ether's dominance rate remains stagnant between 19% and 20%. That compares with a rise to 21% from 14% in the weeks before a software upgrade last September known as the Merge. That technological overhaul replaced Ethereum's at-the-time energy-intensive proof-of-work mechanism of verifying transactions with a proof-of-stake system and set the stage for Shanghai. Staking involves depositing coins in the blockchain to boost the network's security and verify transactions in return for rewards.
Investor caution in pricing ether ahead of Shanghai stems from several factors, including concerns tokens unlocked after the upgrade will flood the market and regulatory issues.
"The Shanghai upgrade will unlock over 18 million ether staked since late 2020. The market is worried that the unlocking may bring about a sell-off, causing uncertainty in the market," Griffin Ardern, a volatility trader at crypto asset-management firm Blofin, told CoinDesk.
Eoin Treacy's view
Ethereum has been lagging bitcoin for the last couple of months as traders price in the risk of additional supply coming back onto the market. However, that does not explain why bitcoin is breaking out to new recovery highs.
This section continues in the Subscriber's Area.
Blackstone Raises More Than $30 Billion for Property Fund
This article from Bloomberg may be of interest to subscribers. Here is a section:
Blackstone Inc. has closed on its largest global property drawdown fund, targeting opportunistic deals across sectors such as rental housing, hospitality and data centers.
The company secured $30.4 billion of total capital commitments for the fund, called Blackstone Real Estate Partners X, according to a statement Tuesday. Blackstone’s latest fund is the largest of that type, according to PitchBook data going back to 2002.
The real estate market has come under pressure over the past year due to a pullback across commercial-property lending, as borrowing costs skyrocketed. At the same time, the stocks of public real estate investment trusts have also suffered amid the uncertainty in the market and increasing concerns about certain property types such as offices.
“Pullback with all forms of capital will create opportunities,” said Kathleen McCarthy, global co-head of Blackstone Real Estate. “We can use our capital and expertise to capitalize on the moment for our investors.”
Blackstone’s latest fundraising helps cement the private equity firm’s status as a powerhouse in the real estate market. Blackstone’s real estate business, which started in 1991, now has $326 billion of investor capital under management.
Eoin Treacy's view
The vintage of property funds is likely to be a major conversation piece over the next few years. Those that closed on purchases between 2019 and 2022 in commercial real estate paid top prices and will be sitting on implied and real losses for years. They are in much the same position as investors that bought bonds with negative yields.
This section continues in the Subscriber's Area.
Eoin's personal portfolio: commodity longs initiated April 5th 2023
One of the questions subscribers ask most often is how to find details of my open trades. To make it easier I will simply repost the latest summary on a daily basis until there is a change.
This section continues in the Subscriber's Area.
© 2023 Eoin Treacy
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