Welcome to 2023! I hope you had a wonderful New Year and enjoyed the long holiday.
Today also marks the first trading day of the year, and it ended up being a disappointing one for stocks. The stock market did try to stage an “early January effect.” This yearly phenomenon, which tends to significantly boost small-cap stocks, occurs as folks pour money into their retirement accounts, employers contribute to their employees’ retirement savings, and financial gifts are made.
Unfortunately, investors grew more concerned about the economic activity around the world following the spread of COVID in China, which is weighing on China’s economy. Russia also remains a thorn in the side of the global economy, as it continues to try to circumvent the oil sanctions against the country.
But now that the New Year is officially underway, I want to use today’s Market 360 to share my three top predictions for 2023. Let’s dive in.
Prediction No. 1: The G7 Price Cap on Russia Fails
My first prediction ties in directly with the continued oil struggles with Russia. Specifically, I believe the G7 price cap at $60 per barrel on Russian crude oil will fail. Russia’s fleet of over 100 “shadow” tankers will allow it to circumvent the G7 price cap. According to The Wall Street Journal, this “shadow fleet” will change flags, turn off transmitters that employ decoy signals, and swap crude oil at sea. In the end, Russia will likely sell more crude oil to China, India, Saudi Arabia and UAE, where it can be refined. So those countries, especially India, can then sell excess refined products like diesel and fuel oil. Officially, Russia is refusing to sell crude oil to companies that are complying with the G7 price cap.
Prediction No. 2: ESG Is Dead
The ESG blowback will spread as many university endowments and pension funds have to explain to their trustees why they avoided investing in fossil fuel companies for ESG reasons. The SEC is still trying to force companies to disclose their ESG activities, but this is a complicated and subjective process. I should also add that when the S&P 500 Global kicked Tesla out of its ESG index and replaced it with Exxon Mobil Corporation (XOM), the ESG confusion spread – especially since S&P Global cited the batteries that Tesla, Inc. (TSLA) uses as the primary reason it got booted!
Prediction No. 3: Crude Oil Hits $120 Per Barrel
Brent sweet crude oil should hit $120 per barrel in 2023 because the Biden administration is expected to stop draining a million barrels a day from the Strategic Petroleum Reserve (SPR). The SPR is down to the lowest level since 1980 and the new Republican House is expected to be very critical of the SPR releases. Furthermore, China is reopening, and crude oil demand is expected to steadily rise. Finally, crude oil prices traditionally rally in the spring due to increasing seasonal demand.
If my predictions are correct, this year should be a phenomenal year for the energy sector. So, I’m going “all in” on energy this year. The fact of the matter is there are several catalysts that could drive energy stocks higher over the next 12 months.
I don’t want you to miss out on the potential profit opportunities here. This is why I’ve decided to hold a special Big Energy Bet event on Thursday, January 5, at 12 p.m. Eastern time (click here to reserve your spot now). During this event, I will explain why I’m so certain the energy sector should be the dominant force over the long term for the U.S. economy, the entire world even… I’ll reveal my Big Energy Bet and detail the best opportunities in this one particular sector. I will also unveil a free stock pick – ticker symbol and all.
The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
Exxon Mobil Corporation (XOM)