🤓 BlackRock changed its investments

What’s going on here?

ExxonMobil Corporation agreed to buy Pioneer Natural Resources Company in the world’s biggest takeover this year.

What does this mean?

Exxon is one of the energy sector's top performers, with a stock price that’s more than tripled over the last three years. And now, the giant is buying smaller firm Pioneer for just shy of $60 billion in an all-stock agreement – the energy titan’s biggest deal since it merged with Mobil in 1999. When all is said and done, Exxon should be able to crank up its daily oil production to around 50% more than its nearest rival’s, and tap into tons of onshore oil wells that can be fired up within months. That quick turnaround may come in handy: demand for oil fluctuates fast, so the ability to rapidly tweak production could help Exxon use market conditions to its advantage.

Why should I care?

For markets: It’s feeding time.

Major-scale oil companies once shrugged off The Permian Basin, doubtful that its wells could deliver enough crude oil to turn into worthwhile profit. That left smaller independent producers like Pioneer free to roam what’s become the US’s most prolific oil and gas basin. But now that the big dogs have cottoned on, major companies will likely snap up smaller ones to move toward Exxon’s scale and presence in the region. Remember, though, that this mega deal, and any that follow, will be scrutinized by the Federal Trade Commission – especially now that the US president's accused Exxon of pocketing “more money than God”.

The bigger picture: Oil’s not slipping.

If Exxon’s still digging deep into oil assets, it’s because the company believes fossil fuels will power the global economy for years to come – despite warnings that oil demand must fall to save the Earth. So while some believe peak oil prices are on the horizon, Exxon’s not holding its breath.

What’s going on here?

French luxury conglomerate LVMH reported results that were far less glamorous than expected.

What does this mean?

LVMH was hanging celebratory banners around the office back in April, when the owner of brands like Louis Vuitton and Christian Dior became the first European company to boast a market value of over $500 billion. Thing is, the conglomerate was projected to cash in when China – a motor for the luxury industry’s record sales since 2020 – abandoned its strict pandemic restrictions. No luck: the country’s economic stumbles have tripped up consumer confidence. LVMH’s organic revenue – excluding the effects of currency swings and acquisitions – in Asia (not including Japan) ticked up just 11% last quarter, well short of analyst expectations and the 34% recorded the quarter before. And because that’s LVMH’s prime market for sales, the firm’s overall organic revenue only managed to inch up by 9% – roughly half the pace notched over the first half of the year.

Why should I care?

The bigger picture: Fatigue’s contagious.

After three years of properly luxurious sales figures in the high-end industry, LVMH warned that growth is now headed toward historical averages instead. And because the firm’s by far the world’s biggest luxury group, it’s considered a bellwether for the sector as a whole. So that warning may well ring out again when rivals Hermès and Gucci-owner Kering report later this month.

For markets: London’s luxury life.

LVMH’s stock fell 6% on Wednesday. And because together, LVMH, L’Oréal, Hermès, and Kering make up almost a fifth of the French CAC 40 stock market index, any more bad news for the squad could really weigh on the French stock market. In comparison, 14% of the UK’s FTSE 100 consists of energy companies, a sector that’s been riding high thanks to towering oil prices since the summer. So unless trends change, London could well overtake Paris as Europe’s biggest stock market, less than a year after relinquishing that title.