Market News and Stock Updates 11.1

Market News and Stock Updates:

5.25 to 5.5

The Fed has raised interest rates this year to a 22-year high to combat inflation by slowing economic activity. Officials are committed to achieving a rate setting that is “sufficiently restrictive” to bring inflation down to its 2% goal over time. “We are not confident that we have achieved such a stance,” Powell said in remarks prepared for delivery at a conference in Washington on Thursday.

Price pressures have eased this year. Core inflation, which excludes volatile food and energy prices and which peaked at 5.6% last year, hit a 2.8% annualized rate over the April-to-September period, according to the Commerce Department.

inflation has improved enough recently for Federal Reserve officials to hold interest rates steady at their meeting next week.

Officials extended a pause in rate increases at their meeting last week, marking the first time since they began raising rates in March 2022 that they held them steady at consecutive policy meetings. Their next meeting is Dec. 12-13, and Powell left the door wide open to leaving rates on hold again

The Labor Department last week reported that the unemployment rate ticked up to 3.9% in October from 3.8% in September and from a recent low of 3.4% in April, a sign that demand for workers, while still strong, has eased in recent months.

(The job market could lose further momentum in 2024. The number of new hires and the number of people who voluntarily quit their jobs have declined since early last year. The number of layoffs has held steady, according to the Labor Department.)

Stock Updates: Eni S.P.A

Company Overview:

• An Energy company headquartered in Rome.
  • Production and Sale of Oil and Gas, as well as electricity and chemicals.
  • Big Supplier
  • Produces electricity from cogneration and renewable energy sources
  • Basic Financials
    • 4B Euro Ebit
    • 3B net profit
    • 13% leverage, net debt 7Billion
  • Industry trend
    • OPEC+’s decision to cut production. Saudi Arabia, followed by Iraq, the UAE, and Kuwait, has decided to cut production by 1.1 million barrels per day, which corresponds to 1.1% of global supply. When combined with Russia’s 500,000 barrel cut, the result is an extremely tight market and skyrocketing prices.
    • Crude oil price is expecting to increase.
    • Hamas and Isreal did not affect Eni, 油田在海上，没关系。
  • Investment thesis:
    • Mattei Plan
      • Background:
        • Followed by recent conflicts in Ukraine (Hamas vs Iran), an increase in oil and gas prices. This has meant that many countries no longer look to the East for energy supplies, but to strategic partners to the south, in Africa. However, this poses many limitations: in addition to a very unstable geopolitical scenario, there is also the problem of a lack of infrastructure and stability in the area to guarantee a long-lasting partnership.
        • Algeria to become the first Italian energy supplier, taking advantage of Eni’s logistics and production capacity.
        • With the arrival of the current Italian Prime Minister, Giorgia Meloni, this process continued thanks to talks and agreements with Tunisia, Libya, and Morocco. This need to find new energy suppliers, along with the policy of stabilizing the Saharan and Sub-Saharan regions to slow down migratory flows, led to the creation of a non-aggressive strategic plan called the “Mattei Plan”.(由于需要寻找新的能源供应国，加上稳定撒哈拉和撒哈拉以南地区以减缓移民潮的政策，意大利制定了一项名为”马泰计划 “的非侵略性战略计划)
          • structural investments and guarantee growth to African states by creating economic ties in order to then benefit from the energy resources of these countries. (意大利计划的目标是通过建立经济联系，为非洲国家提供结构性投资并保证增长，从而从这些国家的能源资源中获益。)
        • In summary, Eni is the second-largest energy multinational in Africa, where it produces over 60% of its global production, and it is also the only company capable of providing the logistics capacity to Italy to guarantee stable flows of crude oil and gas towards southern Europe. Furthermore, Eni is also bonded to the Italian Ministry of Economy and, without Eni, a Mattei Plan would not be possible. That’s why Eni could become the biggest beneficiary in terms of profits. (埃尼公司是非洲第二大能源跨国公司，其在非洲的产量占其全球产量的60%以上，它也是唯一一家有能力向意大利提供物流能力，以保证原油和天然气稳定地流向南欧的公司。此外，埃尼公司还与意大利经济部建立了联系，如果没有埃尼公司，马泰计划将无法实施。因此，埃尼公司可能成为利润方面的最大受益者。)
      • Minister to Mozambique and Congo appears to solidify the plan even further.
        • 意大利总理乔治亚-梅洛尼10 月 13 日对莫桑比克和刚果的访问发出了另一个非常积极的信号。在与莫桑比克总统菲利佩-努西的会谈中，意大利政府宣布打算从气候基金中拨出约 30 亿欧元（占 42 亿欧元基金的 70%），用于马泰计划在非洲的结构性投资。这对投资范围做出了更精确的估计。此外，首相还鼓励其他欧盟国家走类似的道路。
        • This meeting was significant not only for establishing the groundwork for long-term political cooperation between Italy and Mozambique and Nigeria, but also for stating strategic interests in the energy sector. Indeed, in 2022, Nigeria produced 1.5 million barrels per day, while Mozambique boasts an estimated annual gas production capacity of 43 million tonnes.(这次会议意义重大，不仅为意大利与莫桑比克和尼日利亚之间的长期政治合作奠定了基础，而且表明了在能源领域的战略利益。事实上，在 2022 年，尼日利亚的日产量为 150 万桶，而莫桑比克的天然气年产量估计为 4 300 万吨。)
        • Therefore, while the Italian government will oversee the infrastructural investment and the political aspects, and presumably, in a short time, other European countries will also become involved, Eni’s role will involve utilizing its existing logistical capabilities and investments in the pursuit of new oil fields (an area in which Eni excels). This will ensure the company gains significant benefits, with minimal investment and without the “risks” associated with operating in unstable countries(因此，虽然意大利政府将监督基础设施投资和政治方面的问题，而且在短时间内，其他欧洲国家也可能会参与进来，但埃尼公司的角色将包括利用其现有的物流能力和投资来开发新油田（这是埃尼公司擅长的领域）。这将确保公司以最小的投资获得最大的收益，并且不会承担在不稳定国家运营所带来的”风险”。)
      • Great management team
        • Change its strategy, Green policies
      • This is noteworthy, as Eni can continue to carry on its core activities while benefiting from the enormous inflows of capital that ESG funds have had in recent years.
      • Another smart move by Eni’s management is their confirmation of the IPO of Plenitude. By detaching the green branch of operations and its debt, Eni will bring value to investors in the long run.
      • Moreover, I was also impressed by Eni’s management abilityto deal with the problems caused by the war in Ukraine. The company quickly shifted the production of more than 50% of the natural gas from Russia thanks to its relations with Qatar, Algeria, and Egypt.