Good Morning BullBuzzers!
"The commodity tells you the story. It does not tell you the ticker."
⚡TODAY IN 10 SECONDS
The S&P fell 0.60% for a fourth straight session as Brent settled near $107.63, wholesale inflation ran 5.4%, and the 10-year yield leapt 12 basis points to 4.95%, its highest in nearly three years.
The trade is International Seaways ($INSW), a tanker owner paying more the longer Hormuz stays dangerous.
FOCUS OF THE DAY
Secret #5: Trade The Theme, Not The Ticker
Brent rose about 6% Thursday to settle near $107.63, its highest since May, as Hormuz strikes intensified. The obvious trade lost money. $XLE opened at a 52-week high of $66.17 and reversed all day to close at $64.93, down 0.58%. The ships were green: Frontline rose 2.52%, International Seaways 2.58%, TORM 4.66%.
A producer sells the barrel for more, but also carries war risk and a market that doubts $107 survives the demand destruction it causes. A tanker owner does not own the barrel. It rents the steel that moves it. When a chokepoint gets dangerous, cargoes take longer routes and ships sit waiting, removing vessels from the usable fleet and lifting day rates regardless.
The theme was supply disruption. The ticker expressing it had no "oil" in its name.
Find all 10 Secrets to Success at the bottom of today's issue.
📰 HEADLINES
Wholesale inflation ran 5.4%, and diesel did most of it. August PPI rose 0.4% on the month and 5.4% over the year, with over a third of the goods increase traced to diesel, up 24.1%. Core PPI rose only 0.2%, under the 0.3% forecast, framing this as energy passing through rather than inflation broadening.
The 10-year yield jumped 12 basis points to 4.95%, the highest in almost three years. The 30-year reached 5.37%, near the top of its two-decade range, and the 2-year moved 13 basis points to 4.56%. Odds of a September 16 hike rose from roughly 52% to 61% in one session.
Oracle beat on AI cloud. Adobe beat and got sold anyway. Oracle's cloud infrastructure revenue rose 121% to $7.4 billion against a $7.19 billion consensus, and it is indicated near $163 after closing down 5.38% at $152.94. Adobe beat both lines but guided full-year revenue to about $26.6 billion versus roughly $27.0 billion, and is indicated near $239.
🎯 IDEA OF THE DAY
Seaways owns 70 crude and product tankers. It closed Thursday at $102.14, up 2.58%, on a day energy fell. It trades at 6.5 times earnings and paid $12.61 per share over twelve months, including a record $5.05 dividend that went ex Thursday. That is why it opened at $99.94 from a $104.62 close, then climbed most of it back.
Second-quarter free cash flow was $261 million against a $5.06 billion market value. Hormuz disruption lengthens voyages, the same as removing ships from the fleet. Beta is negative 0.10, so it barely tracks the S&P.
The honest risk is that the Street's average target is $102.17, essentially today's price, and forward earnings are expected to normalize lower. A ceasefire ends this trade overnight.
🔔 HEADING INTO THE OPEN
Bird's Eye: Four down days, and the cause changed on day four. Monday through Wednesday, the market sold long-duration assets on a rising 10-year. Thursday it sold because an oil shock became an inflation shock, the harder problem: rate cuts fix slow growth, not $107 crude.
Ground Level: Look at what held. Communications rose 0.60% and staples 0.05% while technology fell 1.41%. Both winners share one trait: revenue collected this quarter from customers who cannot easily stop paying. Run your book through that filter until yields stall.
Under the Hood: Energy fell on a 6% crude day and reversed off a 52-week high. That is the market saying out loud it does not believe $107 lasts. If you are long energy on the war, own the piece paid by the disruption, not the barrel price.
😂 MEME OF THE DAY
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