Three Things (8/1)

Monday, Aug 1st 2022

Commentary

Banner quarter for oil giants, worker pay rises, ex-NBA player eyes 1 billion investment fund

“Never argue with a fool, onlookers may not be able to tell the difference.”—Mark Twain


1) Oil giants post record profits:  Exxon, Chevron, and Shell posted record quarterly profits as high commodity prices linger and the oil giants cautiously increase output. Chevron reported earnings of 11.6 billion in the second quarter, Exxon printed $17.9 billion, and Shell raked in $16.7 billion in profit on a net current cost basis. The three oil behemoths posted $46 billion in combined quarterly profit.  

Titan's Takeaway: Despite recent struggles for energy stocks, the sector is still the top-performing group this year. With persistently high commodity prices, energy companies are just printing cash. We expect a continued emphasis on shareholder returns and free cash flow.  

2) Worker pay rises: Worker pay and benefits increased 1.3% last quarter, suggesting that wages are attempting to keep pace with inflation. Business and government employers spent 5.1% more on workers in Q2 compared with last year, the fasted increase since 2001. 

Titan's Takeaway: Compensation and labor remain surprisingly resilient despite consecutive GDP contractions. The historical tight labor market coupled with shrinking growth puts the economy in the crosshairs of a monetary paradox. 

3) Ex-NBA player eyes 1 billion investment fund: Former NBA player Metta World Peace is set to create a new investment fund with the co-founder of Houlihan Lokey as an advisor. The new fund will target $1 billion and focus on sports, real estate, health, and startups in Asia and the U.S. 

Titan's Takeaway: Athletes have grown increasingly motivated to participate in venture capital. Sometimes name recognition, and a social media presence is just as alluring to founders as the injection of cash. But money always helps.

As of this writing, XOM was a portfolio holding of Titan. This security may cease to be a portfolio holding at some point in the future.
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