WickedDesk Weekly #013: Costlier energy, higher rates

Last week we looked at Bitcoin and stocks that had moved higher after earnings. Several have since pulled back. SNOW has fallen below its earnings day low, and COIN is below its 200 day SMA. DELL still holds above the price area we were watching.

Energy stands out this week. Oil is back above $100, and many energy stocks are holding up better than the broader market. Bond yields are rising at the same time. That matters beyond the energy sector, including for companies buying fuel or refinancing debt.

Price comparisons in this issue run through Thursday’s close.

From the September 4 close through September 10, energy ETF XLE gains +1.36%. SPY loses 1.60%, QQQ 1.43% and IWM 2.81%. The chart compares the prices of these ETFs.

SPY and QQQ close just below their 50 day averages. IWM is further below. All three remain above the SMA 200, their average closing price over 200 sessions. Smaller stocks have taken a larger hit in this pullback, while energy has held up against the broader losses.

Thursday brought US producer prices and the ECB rate decision, alongside a sharp rise in oil. Oracle and Adobe reported their latest quarterly results that evening.

Both companies released their numbers after regular US trading ended. Thursday’s closing prices were recorded before the results were announced.

October WTI settles at $102.48 a barrel on Thursday and November Brent at $107.63. WTI gains 6.70% on the day, Brent roughly 6.3%. DTN describes renewed disruption to supply routes as the trigger.

A producer can benefit from a higher selling price. Airlines, hauliers and chemical companies may face higher energy bills. The effect on profit also depends on hedging and how much of the extra cost they can pass on to customers. Before studying an energy stock, I want to understand how the company makes its money.

The October European TTF contract trades at €78.77 per megawatt hour at 8:29 a.m. CEST on Thursday. This is a morning quote, not a closing price. At that point it is 0.66% below the previous reference price.

TTF is a benchmark for European gas. Supply routes into Europe, available liquefied natural gas cargoes and regional storage all affect this market. Henry Hub is the more relevant reference for US gas. When comparing the two, keep the different units in mind: euros per megawatt hour here for TTF, dollars per MMBtu for Henry Hub.

The Henry Hub spot price falls from $2.92 on September 4 to $2.81 per MMBtu on September 9. This is the price for near term physical delivery.

US storage holds 3,254 billion cubic feet for the week ending September 4. That is 4.8% above the five year average but 2.4% below the previous year. The weekly injection is 40 billion cubic feet.

Storage is therefore above its longer term average. For a US gas producer, these supply conditions and US prices are more useful starting points than the European price alone.

The US ten year Treasury yield rises from 4.78% on September 4 to 4.95% on September 10. Two and thirty year yields rise as well. The chart shows yields before and after the move, with the change in basis points on the right. One hundred basis points equal one percentage point.

If you already hold fixed rate bonds, rising yields can initially mean falling prices. Newly issued bonds offer higher rates, making existing lower yielding bonds less attractive. This matters particularly if you want to sell before maturity. Longer maturities often react more strongly to rate changes.

On September 10, the ECB decides to raise all three key rates by 0.25 percentage points. The deposit rate moves from 2.25% to 2.50%, effective September 16. The ECB projects inflation of 3.0% and economic growth of 0.9% for 2026.

New loans and refinancing can become more expensive. A company then needs a higher return on an investment to cover its financing costs. A home purchase can become harder to finance too. Existing fixed rate loans do not become more expensive simply because the ECB raises rates. Savings accounts and term deposits may pay more, although each bank decides how much it passes on.

When households borrow less to spend and companies delay investment, demand weakens. That can ease price pressure while also weighing on orders and growth. The effect takes time. Higher rates do not create extra oil or gas supplies either. The ECB is trying to contain inflation while expensive energy is already putting pressure on the economy.

For the money supply, banks are an important part of the process. When a bank makes a loan and credits the borrower’s account, it creates deposit money. Repaying the principal removes that money. More expensive loans can therefore slow monetary growth. Whether the money supply actually shrinks also depends on new lending, repayments and other flows. A higher policy rate alone does not tell us the outcome.

Euro area broad money M3 grew 3.4% from a year earlier in July. M3 includes currency, bank deposits and certain short term financial instruments. Adjusted lending to nonfinancial companies grew 4.4%. These figures describe conditions before the September decision, not its effects.

For my stock research, this means looking at upcoming refinancing for heavily indebted companies and watching demand in construction and consumer businesses. A company with solid cash generation and little need for financing can be affected differently. I would not infer that every stock must fall because of this rate increase.

US producer prices rise 0.4% in August from the previous month and 5.4% from a year earlier. Excluding food, energy and trade services, the monthly increase is 0.3%.

The report measures prices on the producer side. How much of that increase reaches consumers depends partly on companies’ ability to pass on costs. Consumer prices are measured separately.

Energy takes first place in the WickedDesk sector ranking, ahead of health care and pharma. The median one month gain among energy stocks is 8.56%. Some 80.7% of the 88 covered names are positive over that period, so the strength extends across much of the group.

The monthly figure is the median of the included stocks. It is neither XLE’s return nor the return of an investable portfolio. Technology has improved its rank but its monthly median is still negative.

Technology moves from sixth place in the previous week’s ranking to third. Energy climbs from second to first. Health care gives up the top spot but remains among the leading sectors.

Technology’s monthly median is still minus 0.20%. Its higher position means it has improved relative to other groups, while the median stock is still down over the month.

CLMT gains 6.23% in the weekly comparison and PBF gains 3.69%. Both trade near their yearly highs, which brings them into the search for strong energy stocks.

Refining margins help explain the business behind the charts. Refiners buy crude and sell the products made from it. The gap between those prices, known as the crack spread, indicates the margin before other costs. A higher crude price alone therefore tells us little about their profit.

US refinery utilisation is 97.8% for the week ending September 4. Commercial crude inventories decline by 0.4 million barrels to 424.1 million.

Oracle reports quarterly revenue of $19.3 billion, up 30% from a year earlier. Cloud infrastructure grows 121% to $7.4 billion. Free cash flow is negative at roughly $5.4 billion. Alongside the rapid growth, the amount of capital required remains worth following.

Adobe increases quarterly revenue by 13% to $6.76 billion. It also reports annual recurring revenue, or ARR, of $27.50 billion. That annual measure is reported separately from revenue earned during the quarter.

Bitcoin closes Thursday at $76,568.13. That is -3.90% from the previous Friday’s close. Ether falls 0.77% over the same comparison. Both use completed UTC daily candles through September 10.

Bitcoin remains above its 50 and 200 day averages. Coinbase has been weaker: COIN is back below its 200 day SMA. If you follow crypto stocks alongside Bitcoin, these are two different chart situations. We return to COIN below.

CLMT, PBF and DELL meet our selection rules. The first requirement is a price above the 200 day SMA. We also look for RS of at least 90, a gain of at least 20% over 63 sessions, ADR of at least 3% and average daily dollar volume of at least $15 million. All remain within 15% of their highest price over the last 252 sessions.

RS measures relative strength within the scanner universe. ADR is the average daily trading range over 20 sessions. We calculate dollar volume as the closing price multiplied by shares traded, averaged over 50 sessions. It helps compare the amount of trading in each stock.

CLMT and PBF have already risen a long way. DELL fell sharply on Thursday. I want to see where each begins to consolidate.

The daily chart shows an advance with brief pullbacks and higher lows. The $56.44 close is less than 1% below the highest price of the last 252 sessions. At the same time, it is roughly 75% above the 200 day SMA.

A consolidation over several days with smaller daily ranges would interest me here. That could give us a price area around which to plan an entry and stop. After the recent rise, proximity to the high alone would not be enough for me.

In the previous issue we wanted to see whether SNOW could hold its earnings gap. The September 3 low was $355.47. The latest close of $329.72 is below it.

SNOW has lost that price area and stays off the new watchlist for now. I would wait to see whether a fresh base forms after this decline, then assess it on its own.

With COIN, we were watching for a hold around its 200 day SMA. The stock now stands at $172.28 against a 200 day average of $191.60. The latest rally has fallen back below it.

COIN no longer meets our first selection rule. The red line in the chart is the 200 day SMA, which is also still declining. The price would first need to regain it before COIN could return to this watchlist.

Issue 012, “Bitcoin moves higher”, covered five stocks using September 3 prices. Here is how those observations have developed since then.

SNOW and COIN have fallen below the levels we identified. With DELL, HOOD and TEAM, we are still waiting for the consolidation we wanted to see. That is why their status remains “Open”.

Oracle and Adobe close Thursday below their respective 200 day averages, so neither meets that watchlist rule. Those closing prices were recorded before their new quarterly results were released.

COIN is also below its 200 day SMA. With SNOW, the loss of the earnings day low is the reason to wait.

CLMT and PBF are both in energy. If you hold several stocks from the same sector, look at the combined position. News about oil prices or refining margins can affect several holdings at once.

Maturity matters for bonds. With stocks, debt and upcoming refinancing are worth checking, especially as rates rise. For a short term trade, I also need a planned exit if the price moves against me.

Position size can then be based on the intended loss between entry and stop. Fast moves or gaps can lead to a different execution price. That is also why upcoming earnings and major rate decisions belong in the preparation.

On Wednesday, September 16, the Fed announces its decision at 2 p.m. New York time, followed by the press conference at 2:30 p.m. US industrial production is due on Friday at 9:15 a.m.

Lennar reports after the US close on Wednesday. Its call follows on Thursday at 11 a.m. New York time. I want to pay particular attention to demand and sales incentives at the homebuilder to see how financing costs are affecting the business.

CLMT, PBF and DELL stay on the watchlist. For the two energy stocks I am waiting for narrower ranges after the advance. DELL’s earnings day low at $478.31 remains the important reference. For now, I am watching SNOW and COIN only to see whether they regain the price areas they lost.