Fact 1: Earnings surprises - a big driver behind stock price appreciation - for FANG+ stocks are on the decline as expectations start to align with reality.
Fact 2: Tech sector market cap is double the next largest sector. Is this gap warranted, is tech overvalued or will other sectors start to catch up?
Fact 3: US oil production plummeted at the beginning of the Covid-19 pandemic and has barely recovered. Before the collapse, US shale production was growing quickly helping put a lid on global oil prices. Today, WTI is approaching $85 per barrel, doubling over the past year.
Fact 4: It takes energy to get energy. For civilization to function, energy gained via oil wells, shale mining, etc. must be far greater than energy used to obtain that new energy. This relationship is often described as EROI (energy return on investment). Think about it this way, if your commute to work cost $100 and your daily earnings was $100 it would no longer make sense for you to go to work.
EROI is rapidly declining. As it declines, greater civilizational resources must be committed to obtain the energy required to run and grow the global economy. This means diverting resources away from other needs. Hard choices will be required.
Source: Byline Times