Central planners have their plans cut out
Abraham George Macro View
The clean energy agenda is firing on all cylinders. The fossil fuel industry is being taken to task in the developed countries. A Dutch court ruled that the oil giant Shell has to cut emissions on a much more aggressive timeline than they had projected. This is very important. A Dutch judge is enforcing a company to comply with the Paris climate agreement.
At its annual meeting, Chevron shareholders voted in favour “aligning its strategy with emissions levels compatible with the goal of the Paris climate Agreement”. All of this shouldn’t be so surprising as the big oil giants have already been given the marching orders to transform to renewables dating back to 2017.
Exxon has been the big bad boy. They weren’t playing ball. Yesterday in a proxy vote, shareholders (influenced by a full-on movement by the climate activist powers) voted to shake up the board, placing two members on the board that will push the Paris Climate compliance agenda.
What does this all tell you? The global energy transformation is going according to the central planners’ plan. But as we have discussed many times before, the global investment in new exploration continues to evaporate under the this agenda, There will be a lot of pain. End result, we will continue to consume a lot of oil for the foreseeable future. The only difference is we will be doing this at much higher and higher prices.
Equities
The rise from 4057 in S&P 500 from May 12 is corrective and strong. Further upside should be supported at 4156 to fill the gap as from the close of May 21. A break of that level could start a significant move to the downside.
Bonds
The rally from 155^14 from May 13 must have not fully played out. Think prices can still rise and top out slightly under 159^12. The daily sentiment index is close to extreme levels at 80% . The previous highs were at 83% (Aug 4, 2020) and 84% (Sep 29, 2020) levels.
Euro
The euro may show more weakness in the short term. The near term supports are 1.2160 and 1.2130. There are many overlapping waves and interpretations are confusing. Still looking for a move up to 1.2350 and above.
Gold
Gold has closed higher 9 out of last 10 sessions. With the Silver’s countertrend rally on May 18 a non-confirmation exists between gold. The area surrounding the current levels looks like a good place for gold to start a short term decline.
Abraham George is a seasoned investment manager with more than 40 years of experience in trading & investment and portfolio management spanning diverse environments like banks (HSBC, ADCB), sovereign wealth fund (ADIA), a royal family office and a hedge fund.
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