In short: Named in Terranova's refiner trio (34:26) — "it's Phillips 66, it's Marathon, it's Valero" — the same diesel supply-shock thesis.
In short: Brown best-stocks energy name (refiner). "The refiners, Marathon, Phillips 66, they look incredible." Part of his case that energy is the one hedge against an oil spike that also has earnings momentum: "very easy for an active manager to outperform by overweighting this group relative to tech."
In short: Third on TPH's list of Venezuelan-crude refiners, behind Valero and Chevron — same mechanism, smaller share. "Refiners' stocks were up on Monday."
In short: Named alongside Valero as the refining exposure Terranova has been recommending into an all-time-high crack spread — "you need to own the refiners, especially going into the fall" — carrying the same crowding warning: on momentum, sentiment and positioning the refiners are starting to look like the late-June memory trade, "extremely bullish at this point."
Phillips 66 is the other refiner Terranova has been recommending, and it carries the same two-part message as Valero: own the refiners into the autumn because refining margins are at record levels, but understand that everybody now knows the story.
His framework is that a trade stops paying not when the fundamentals turn but when the last buyer has already bought. On that basis the refiners are "extremely bullish" in sentiment and positioning — the same reading he had on the memory-chip trade shortly before it reversed. Own it, but do not add to it blindly.
In short: The third named U.S. refiner among "the biggest beneficiaries," likewise at an all-time high in the past few weeks. Same driver: a fuel market disrupted harder than the crude market — Hormuz shut (~20% of world oil), 2.8m barrels of Russian refining capacity droned offline (BofA), Russian export restrictions into next year, Chinese export cuts — leaving the U.S. as the exporter of last resort at record weekly diesel exports.
Phillips 66 is the third refiner the article names as a big beneficiary, and the third whose stock has reached a record high in recent weeks. The economics are the same: buy crude, process it into fuels, keep the difference — a difference that has just set an all-time record.
The reason the record is in fuel and not in oil is worth spelling out. Iran shutting the Strait of Hormuz took about a fifth of the world's oil off the market, which is a crude problem. But the fuel market got hit harder and from more directions at once: Ukraine's drones took 2.8 million barrels of Russian refining capacity offline, Russia then restricted its own diesel and gasoline exports, and China cut fuel exports to protect domestic supply. With three big suppliers withdrawn, the U.S. has become the world's exporter of last resort — American refiners are shipping record weekly volumes of diesel and still can't fill the hole.
In practical terms, owning a refiner here is a way to own the shortage of refining capacity rather than a view on where oil goes. Storage tanks worldwide are unusually empty, so there is no cushion to absorb the next disruption.
In short: Named alongside Valero and Marathon in Lebenthal's "buy a refiner into hurricane season" call — "you could have Phillips 66… any of them." A capacity/disruption trade on the refining bottleneck rather than a bet on the crude price.
Phillips 66 is one of the three refiners Lebenthal named in his "buy a refiner" call — "you could have Phillips 66… any of them." The bet isn't on the oil price; it's on the profit margin between crude and finished fuel, which widens when refining capacity is tight and widens further if hurricane season takes Gulf Coast plants offline.
In short: Reference — the midstream/refinery spin-out that left Conoco a pure upstream supermajor. Board member Doug Terreson (author of Can't Deny It) built the "why upstream, why supermajors" framework Conoco ran.
35:41If your listeners haven't read his book, Can't Deny It, wonderful framework book for thing about Doug really built the framework of why upstream, why super majors, and Conoco has ran that playbook. They don't have any downstream assets. So, as we talk to folks here, what are we really interested? Ultimately, not having downstream assets.
In short: Named with Valero as the refiners whose charts "look like AI stocks" — the direct beneficiaries of record crack spreads while diesel goes short (Russian/Gulf refining knocked offline, diesel fungible and scarce). The refining bull market inside a manipulated crude tape.
Phillips 66 is another major refiner, named right alongside Valero. It benefits from the same thing: with diesel scarce (Russian and Gulf refining capacity offline, and diesel being interchangeable worldwide), refining margins have exploded and the stocks have soared. It's Polomny's live example that a "manipulated," falling crude price can hide a real fuel shortage — and that the refiners, not the crude, are where the money is being made.
29:59Here's the proof. Here's your crack spreads. $65 a barrel. That's telling you — this is I think some of the highest crack spreads ever. It's basically telling you, give us more crude. We need to refine more crude. But there's only a set amount of refineries. And if you start knocking them offline in the Gulf or in Russia, then again, the amount of refined products goes down in a global economy because diesel is fungible. And so customers that were getting it from those refineries have to get it somewhere else and there isn't enough. Get it? Now, this is good if you've owned refiners because look at the charts of Valero and Phillips 66. These things look like AI stocks. So again, that's why I say there's a bull market. There's always a bull market somewhere.
In short: Reference — Doug Terreson (author of Can't Deny It) sits on the board, with Elliott involved. The example behind "upstream/midstream/downstream don't belong together."
37:49I'm literally stealing what he said. Um because plagiarism is legal in our business. Um so he points that out. He's on the board of Philip 66. So, and he's got currently obviously Elliot involved in the stock. And so um you know I think he does a really good job in his book in discussing the wise of that and he uses you know to give a good example of this Konico Phillips we own Kico Phillips on our US portfolio they are a major but they're ENP only they're purely an upstream business and what you've seen is they just produce better returns
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