Deutsche Bank anser att marknaden inte har tagit hänsyn till de negativa konsekvenserna av lägre energie priser
One of the most interesting disconnects that we are currently witnessing on the valuation landscape is that broad market indexes – in equities and in credit – have largely ignored a bear market that has hit energy assets. S&P500 energy stocks are down 19% since their late June highs, while overall index is 5.8% higher and at its all time highs. In credit, energy bonds have widened by 50bp in IG and 310bp in HY, whereas non-energy bonds are wider by 20bp and 60bp respectively. Taking into account the fact that energy is the single-largest sector in all of HY, second-largest in IG, and third-largest in S&P500 (on a level 2 industry basis), this strikes us as an unusual outcome.
In fact, when we went back in history to confirm our suspicions, we found that it is indeed a rare occurrence. In HY, looking at top-three weight sectors trading 200bp above the rest of HY, the only instances that fit these criteria going back to 2000 are Financials in 2009, Media and Autos in 2008, Autos in 2005 (F/GM downgrades), Telecoms in 2001/2002, and Materials in 2001. This makes Autos in 2005 the mildest instance, where a large sector went into distress and the broad market widened by "only" 130bp. Autos were 10% of the market and peaked out at 630bp, whereas Energy today is 15% and trades at 710.
A similar exercise in equities – top three sectors down 20% or more – yields hits in Financials in 2010 and 2007 and Technology in 2000 – all instances where a distress in one sector pulled the rest of the market lower. The smallest impact was left by Technology in early 2013, where the sector dropped 25% and S&P 500 responded with just a 7% pullback.
These observations form the base underneath our view that something has to give here. Either the market is too negative on Energy, or it is not diligent enough in thinking about broader implications. The only argument that stands against this view is that the rest of the economy is supposed to benefit from lower oil, which as we have shown earlier, has its own limitations.