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July 12th news, on the 11th, the EU High Representative for Foreign Affairs and Security Policy Kallas said in Kuala Lumpur, Malaysia that in the face of a new round of protectionism, the EU will strengthen trade cooperation and defend the trade system with the WTO at its core, based on rules, non-discrimination, openness, fairness, inclusiveness, equality and transparency.On July 12, US President Trump said that he would impose a 25% tariff on imports from Japan from August 1. Hidetoshi Tashiro, chief economist of Japan Unlimited Contract Co., Ltd., said: Once the 25% tariff is widely applied to other categories of goods, it will be a fatal blow to manufacturers in almost all industrial fields in Japan. In fact, this impact has begun to appear. At present, many small and medium-sized enterprises that produce parts for large companies have cut off orders. The problem is no longer "may happen" but "is happening." This will deal a devastating blow to Japans overall economy. Recently, the Economic Trends Index for May released by the Cabinet Office of Japan showed that the overall assessment of the economic situation has turned to "worsened" for the first time since July 2020, indicating that there is a high possibility that the Japanese economy is in a recession.On July 12, He Xiaopeng, chairman of Xpeng Motors, posted on social media: "After nearly a month of internal discussions, Xpeng has formulated relevant steps for account period adjustment and execution, and has recently begun to move forward. We hope to move forward and change steadily step by step, and together with many partners, use our meager strength to promote the common progress and healthy development of the industry."On July 12, the Tianzhou-9 cargo spacecraft and the Long March 7 Yao-10 carrier rocket combination were vertically transferred to the launch area and are scheduled to be launched at an appropriate time in the near future.July 12, there was a report about "Lei Jun talks about car manufacturing: the most difficult part is making wheels". Xiaomi PR General Manager Wang Hua said: "I have seen several articles or similar videos in the past two days, which extracted the video of Lei Juns interview with Li Xiang in April 2024, cut off the beginning and the end, and took out the middle part that took wheel design as an example to spread it separately, and after taking it out of context, it became Lei Jun talking about the most difficult part of car manufacturing is making wheels."

Diversified Energy Exposure: Top Trade Opportunities

Cory Russell

Apr 20, 2022 10:36

A major oil ETF, XOP (SPDR S&P Oil & Gas Exploration & Production ETF), has gained 25% since mid-February and 135 percent since 2021. (shown below). Similarly, the biggest energy ETF by market value, XLE (Energy Select Sector SPDR ETF), which has majority sector exposure from Oil, Gas & Consumable Fuels, has gained by 14% since mid-February and 107 percent since 2021.


This year's energy bull market has been extraordinary, with energy assets outperforming the entire market by a wide margin. The long-term performance of these instruments, on the other hand, has been rather flat. Since 2017, XLE and XOP, for example, have grown by 3% and -18%, respectively.


For investors, especially volatility traders, the current, turbulent situation of the energy industry gives an intriguing opportunity. Traditional energy instruments' negative long-term performance, combined with their significant concentration on two politicized commodities, calls for a more diversified strategy to energy exposure. 


With the expanding popularity of electric cars, rising global computing needs, and major countries renovating their energy infrastructure, there may be longer-term concern about the health of the energy market. Clean energy stocks and ETFs are one method to obtain exposure to energy while also diversifying against the oil-and-gas-specific issues that have a large influence on the wider energy market.


While many renewable energy assets are still too volatile for active retail traders, a few have seen significant development in recent years. Plug Power (PLUG), a hydrogen fuel cell firm, and ICLN (iShares Global Clean Energy ETF), which invests in global clean energy shares, are two instances of very liquid companies. 


Brookfield Renewable Partners (BEP), which owns and runs renewable generating assets, and TAN (Invesco Solar ETF), which invests in global solar energy firms, are two less liquid (but still tradable) examples. Since 2017, the clean energy ETFs, ICLN and TAN, have outperformed the oil and gas ETFs by 164 percent and 344 percent, respectively, compared to the oil and gas ETFs.


Clean energy ETF assets have been generally uncorrelated with the big energy ETFs in recent months, providing exposure to energy as well as diversification versus conventional energy assets.


As of March 25, indicated volatilities for XLE, 48 percent for XOP, 43 percent for ICLN, and 49 percent for TAN were 36 percent, 48 percent, 43 percent, and 49 percent, respectively, for several energy assets (compared to 22 percent for SPY). Throughout Q2 of 2022, keep an eye on energy assets, and combining conventional energy assets with clean energy assets is a good strategy to have a more diversified energy exposure.

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