COM - Energy Stocks Take A Brutal Hit Where To Next?

• Energy stocks are getting beaten up! What gives?
• In our view, the market shifted following the Fed rate hike announcement. The market now believes the Fed will be successful in fending off inflation.
• But as we all know, the Fed doesn't print commodities, so the structural oil supply deficit will continue.
• Over the next few months, oil prices should remain elevated thanks to a bullish physical oil market environment. Energy companies will make an insane amount of free cash flow, but energy stocks may languish on this market perception.
• Towards the end of the year and following many Fed rate hikes, if inflation stays persistent (we think it will), investors will be back in energy stocks in a meaningful way.

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