Kill A Word – Recession Or Not; Demand Indicators Suggest Mounting Headwinds Relative To Supply

Daily Chemical Reaction

Kill A Word – Recession Or Not; Demand Indicators Suggest Mounting Headwinds Relative To Supply

Key Points:

• The 2Q US GDP drop (the 2nd consecutive quarterly drop) may be spurring a debate over the definition of recession, but our 2H22 sector profit concerns are irrefutable.  
• We flag oil and gas sector 2Q reports and expand on our views that those with the most aggressive energy transition plans are being penalized by the stock market.
• US commodity petrochemical producers face lower prices and lingering high costs in 3Q22. However, most still maintain a sizable global cost advantage.
• We highlight Shell and Valero updates on their clean-energy initiatives with their 2Q reports and happenings that favor the passage of a US climate bill.
• We discuss US GDP taking a step lower in 2Q22, indicating a recession led by inflation, primarily triggered by energy, holding many similarities to the 1970s.

See PDF below for all charts, tables and diagrams