If you needed a better invitation to get long oil stocks for the next two years, the floating of Exxon Mobil (XOM) ex-CEO Rex Tillerson as secretary of state couldn't be more obvious. There are some clear themes floating through the nascent Trump administration, set to take office in January, and one thing is becoming stunningly clear:
Oil and gas are the connective tissue here.
I'm not going to go into long detail -- only to quickly outline what I am seeing, and the pieces to this puzzle are coming together very quickly.
It starts with a steady connection of Russia to the incoming president and his yet-to-be-confirmed Cabinet.
It continues with Trump's refusal to accept the recent findings of the CIA or other national security intelligence concerning Russia's influence on the national election.
The Russian influence is important here -- they are another non-OPEC nation dependent upon oil revenue for survival and international influence -- the other arguably being the United States.
Now, look at the names that dominate the incoming Cabinet. There are two themes here of the next president in the men he is choosing: There are generals and other military thinkers, and there are men with strong ties to oil. There's Wilbur Ross, nominee as commerce secretary, the hedge-funder with a majority share in EXCO Resources (XCO) and other oil interests. There's Harold Hamm, the Continental (CLR) CEO who until recently was the Trump pick for energy secretary, before being quashed as being too cozy with oil, but he remains a loyalist and confidant. There's Scott Pruitt, the attorney general of an oil- and gas-intensive Oklahoma, ready to assume command of the EPA.
There were words on the campaign trail of slashing drilling regulation, an "unleashing of U.S. energy potential," a restart of the Keystone pipeline and several quotes from the president-elect bemoaning that the U.S. didn't "take the oil" while still in Iraq.
And just this weekend, we got a first-time commitment from the Russians to participate in the newly crafted OPEC production agreement, throwing in a small but significant 300,000 barrels a day, pushing oil prices back above $52 a barrel.
Is it coincidence that the ex-CEO of Exxon, who won the Russian Medal of Friendship, is Trump's latest idea for secretary of state?
I hardly think so.
Whether or not he is ultimately picked or confirmed, the signs are just too telling to ignore.
Oil stocks are going to do very, very well in a Trump administration. And you need to be buying them. Now.
