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Energy Prices Surge As Southern U.S. Sees Coldest Weather In 30 Years

Energy Prices Surge As Southern U.S. Sees Coldest Weather In 30 Years

Plus, bitcoin surged above $50,000 for the first time, CVS delivered an earnings beat, and Palantir reported an earnings miss.

Stocks were higher to start Tuesday with the Dow adding 13 points, or  less than 0.1%. The S&P 500 rose 0.1%%, while the Nasdaq gained 0.4%.

Energy prices are surging this morning as the deep freeze gripping the Southern U.S. boosts demand for fuel and hampers production. In Texas, more than 4 million people are without power as the local electric grid struggles to keep up with heightened demand. “Weather is severe enough to curtail supply when demand is near all-time high levels,” RBC analysts said in a note. “Certain regional natural gas spot prices have shot up 10- to 100-fold in a matter of days.” The cold snap pushed West Texas Intermedia crude futures above $60 per barrel for the first time in more than a year, while U.S. natural gas futures jumped as much as 10%. U.S. oil production has plunged by more than 2 million barrels a day as the coldest weather in 30 years wreaks havoc on key producing states. The losses are reportedly highest in the Permian Basin, the most prolific U.S. oil producing region which spans from West Texas to southeast New Mexico.

Bitcoin rose above $50,000 for the first time as the blistering rally in the cryptocurrency continues. The digital coin jumped as higher as $50,548 before falling back to $49,001 at the time of writing, bringing the gains to nearly 70% so far this year. “Whether it’s Musk, Mastercard, or Morgan Stanley, the mood, music and momentum is impossible to ignore,” said Antoni Trenchev, managing parter and co-founder of Nexo. “To the annoyance of many, the bitcoin express has left the station.” MicroStrategy shares are down nearly 5% after the software company announced it is offering $600 million of senior convertible notes and use the proceeds to buy more bitcoin. “I think bitcoin is a much more stable asset class today than it was three years ago,” said Michael Saylor, CEO of MicroStrategy. “It used to be dominated by leveraged retail traders… on international markets with a lot of leverage.”

The seven-day average of new COVID-19 cases has fallen 23% from a week ago in the U.S. to around 85,200 as measures to interrupt transmission appear to be working. “The history of surges is they do come down,” said Robert Wachter, chair of the department of medicine at the University of California-San Francisco. “They generally come down from some combination of changes in behavior, changes in government policy and the impact of immunity.” While declining cases is a positive, Rochelle Walensky, head of the U.S. CDC, said that “now is the time to double down” on mitigation efforts. “We are nowhere out of the woods.”

CVS Health’s fourth-quarter earnings came in above Wall Street’s expectations as pharmacy sales got a lift and the drugstore chain expands COVID-19 testing and vaccine distribution. The company posted earnings of $1.30 per share on revenue of $69.55 billion, compared to expectations for earnings per share of $1.24 on revenue of $68.75 billion. CVS CEO Karen Lynch said around 8 million consumers came into the company’s stores for the first time for COVID testing, and expects they will reach millions more customers as vaccinations speed up. “We will use this opportunity to shape a health experience that demonstrates the value we bring,” Lynch said. “It will create the opportunity to expand our customer base while deepening relationships with current customers.” 

In other earnings news, Palantir shares are down more than 8% after the company reported a fourth-quarter loss. The company reported an adjusted operating loss of $156.6 million, while analysts on average expected an operating profit of $48.1 million. CEO Alex Karp said in a prerecorded video that he condemns “near-term myopism” in regards to the company’s results. “At Palantir, we’ve rejected this in every way. Palantir’s numbers are a lagging indicator of several macro trends that we got right,” Karp said. “Software is the language of our time, and mastery of software will determine what works and what doesn’t.”

Stocks We’re Watching

Ceva Inc (NASDAQ: CEVA): Ceva shares are up more than 10.5% today after the company reported fiscal fourth quarter and year-end results. Ceva posted 15% year-over-year gain in annual revenue to $100.3 million, and a 19% jump in royalty revenue to $16.1 million. “We are very pleased to end the year with another excellent quarter, in both licensing and royalties,” said CEO Gideon Wertheizer in a statement. “We concluded 21 licensing agreements, including a strategic and comprehensive agreement with a top tier smartphone OEM who will develop a range of CEVA-based connectivity chips to serve its smartphone and wireless accessories product lines. Our record high royalty revenue reflects a particularly strong quarter in smartphone shipments and continued traction in our base station and IoT product category, which grew 50% year over year.”

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