On March 5, Exxon (XOM) reaffirmed its contrarian plans to boost its capital spending in the years ahead with hopes of doubling its earnings power between 2018 and 2025: "Capacity investments have overwhelmed the growth in demand, leading to the down cycle and waiting for demand to catch up. These are typical cycles. Unfortunately, they're hitting multiple businesses at once, creating a short-term issue. That, unfortunately, is impacting short-term industry earnings...We expect these down markets to discourage industry investment, setting a stage for a significant upswing. And we believe the best time to invest in these businesses is during a low, which will lead to greater value capture in the coming upswing. You can do that if you have the opportunities and [...]

LyondellBasell's (LYB) origins date back to the 1950s when breakthrough discoveries were made in synthesizing petrochemicals. Today, LyondellBasell is one of the world’s largest diversified chemical suppliers and refiners. The heart of LyondellBasell's business is converting fossil fuels into plastic resins and other petrochemicals that are sold to manufacturers and eventually turned into food packaging, home furnishings, clothing, tires, automotive components, fertilizers, paints, and much more. Petrochemicals are everywhere in modern society. In many parts of the world, crude oil is the feedstock of choice in the production of petrochemicals due to oil's accessibility and low cost. As a result, petrochemical prices are generally tied to the price of oil. However, LyondellBasell has a large presence in the U.S., where [...]

The price of oil plummeted as much as 30% last weekend as Saudi Arabia and Russia engaged in a price war that threatens to take market share from higher-cost U.S. shale producers. We analyzed this event in a note here, but the bottom line is that we believe oil prices could now remain at historically weak levels (i.e. $35 per barrel or lower) for at least a few quarters, if not for more than a year. Many oil producers are unprofitable at prices this low. Even the largest energy companies will likely further reduce their planned spending in this environment, painting a rather bleak outlook for the firms that do business with them. Some analysts expect upstream capital expenditure budgets to [...]

Boeing's (BA) timeline for returning its best-selling 737 MAX plans to commercial service likely took another hit this week, as the Federal Aviation Administration is expected to order certain electrical wires relocated inside the jets, accordingto the Wall Street Journal. Meanwhile, the coronavirus is weighing on travel demand and the financial health of Boeing's airline customers. Not only is this bad for new plane orders, but it could pressure the ability of some customers to make advanced payments to support production of their jets that are under construction. Given Boeing's increasingly fragile state and the rising uncertainty facing the company, we are downgrading the company's Dividend Safety Score from Borderline Safe to Unsafe. We also plan to exit our Boeing position today in our Top [...]