Senior Strategist Roger Scott and I just filmed the latest episode of The Big Picture With Jeff & Roger, and we both agree on something…
Energy stocks are about to explode higher again.
The stock market leads the real economy by about six months. And if you look at the past six months, we’ve done a complete 180 in the past month, from super bearish to super bullish.
The economy is just now catching up to that bearish move as the stock market is recovering. The odd part about it is it’s all happening in hyper real time, and the stock market moving back up has made people feel better on the whole.
I can’t tell you how many people I’ve talked to in the past few weeks are like…
“Phew, the coast is clear, we dodged a bullet, let’s go… Let’s take a trip, let’s go out to a big dinner.”
And the Federal Reserve knows this, and that’s why it can’t stop tightening — and it will tighten by $95 billion in September. That’s an unprecedented amount of tightening. So that brings us to the stocks I see exploding higher again: energy stocks.
The Big Picture With Jeff & Roger: Why the Energy Pullback Is Temporary
Here’s the thing…
We’re on the precipice of the biggest strain on the energy complex: winter. And it’s going to be freezing in places like Germany, and have you seen natural gas prices in Europe?
So it seems like the U.S. market is ignoring this 800-pound gorilla. Energy prices right now in the U.S. are under control, and gas is coming down because it behooves a lot of people in the government to keep that under control.
But it’s like they’re trying to hold back the flood that’s coming no matter what. And if you have an economy that’s strong alongside a massive market disruption, prices have to go higher.
And here’s my point to sum this all up nicely: The pullback in energy is transitory. This is a counter-trend thing that’s happening right now.
Just when everyone takes their eyes off oil prices, they’re going to sneak higher and higher, and then we’ll get one of these shock moves up again.
So I’m super bullish on Occidental Petroleum Corp. (NYSE: OXY), APA Corp. (Nasdaq: APA) and Pioneer Natural Resources Co. (NYSE: PXD). They look fantastic in terms of basing out and consolidating before they move higher, especially with crude oil taking a big dip — I see crude bouncing and those stocks exploding higher.
Here’s Warren Buffet’s favorite energy stock, OXY, for example…
That wasn’t the end of the discussion in this week’s edition of The Big Picture With Jeff & Roger, so check out the video above for more on the macro state of the economy, the Fed, interest rates and one of the most important headlines of the week: China cutting interest rates — and why that could be a fly in the ointment for the bull case in oil..
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