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Data: FactSet; Chart: Michelle McGhee/Axios

Over the past two years, electric vehicle and emerging renewable technology stocks have soared as investors priced in the transition away from fossil fuels, but so far in 2021 that narrative has reversed.

By the numbers: XOP, an ETF that tracks the largest U.S. oil and gas companies, has gained nearly 40% so far this year as oil producers like Diamondback Energy and Occidental Petroleum have seen their shares jump by more than 50%.

  • The S&P 500 energy sector has been far and away the best performing of the index's 11 sectors (delivering 15 percentage points better return for investors this year than the second best sector, financials).
  • Diesel, crude oil and gasoline have been the world's top performing major assets in 2021, each gaining more than 25%.

On the other side: Clean energy has suffered, led by the swoon of 2020's world-beating stock, Tesla, which has dropped into "bear market" territory having fallen by 20.6% from its last record high on Jan. 8.

  • The decline in renewable energy names has been broad with companies as diverse as Chinese EV manufacturer Nio, California battery maker Romeo Power, hydrogen power company Plug Power and electric tractor trailer producer Hyliion Holdings all seeing big drops.

What they're saying: UBS Global Wealth Management CIO Mark Haefele is recommending "investors with a high risk appetite ... seek direct exposure to oil," even as crude prices reach one-year highs.

  • "As border closures and quarantine measures are eased, this should release pent-up demand for holiday travel and other types of recreational activity, boosting demand for oil," he said in a client note.
  • He expects global oil demand to reach 100 million barrels a day in the second half of the year, nearly equaling the global record of 102 million bpd.

Alternatively: "Given their aggressive discounting to present of long-term cash flows, they're suffering from the same effects as investment grade corporate bonds and anything else that pushes cash flow far into the future," Bespoke Investment Group said in a Monday post.

The big picture: Tech companies have broadly seen a turndown so far in February, but renewable energy companies have fared much worse. ICLN has declined 7.1% this year, while the Nasdaq Composite is up 4.5 % and the Nasdaq 100 is up 2.4%

The last word: The 2021 malaise is happening despite good news for the industry coming into the year: President Biden is expected to increase renewable energy investment in the U.S., oil prices are rising, and early estimates of global 2020 EV sales jumped to more than 3 million, reaching a market share of 4.4% — almost double 2019's 2.5% share.

Go deeper

Felix Salmon, author of Capital
Feb 22, 2021 - Economy & Business

Brazil investors eye the worst-case scenario

Expand chart
Data: EIA; Chart: Axios Visuals

Brazil's markets tumbled on Monday, with state oil company Petrobras losing 19% of its value, after president Jair Bolsonaro announced he was firing the company's Chicago-educated CEO and replacing him with a former general.

Why it matters: Bolsonaro pledged to "put a finger on electricity" — to keep prices at artificially low levels, worrying investors who had previously been counting on him to have more of a laissez-faire approach to industry.

Dion Rabouin, author of Markets
Feb 23, 2021 - Economy & Business

Commodities hit 8-year high as market divergence continues

Expand chart
Data: FactSet; Chart: Axios Visuals

Tech stocks suffered some big losses on Monday, as the specter of higher U.S. borrowing costs continued to weigh on their share prices, while bullish vaccine expectations helped make the Dow the only major U.S. index to end in the green.

What happened: The benchmark 10-year Treasury yield rose to 1.37%, a fresh one-year high, showing investors remain bullish on the economy and a recovery in inflation.

Ben Geman, author of Generate
Feb 23, 2021 - Energy & Environment

Interior nominee Deb Haaland looks to thread the needle on oil

Illustration: Aïda Amer/Axios

President Biden's pick for Interior secretary faces a balancing act as she defends limits on oil-and-gas development while responding to concerns that the initiatives — and her own policy views — threaten producing states.

Driving the news: Rep. Deb Haaland (D-N.M.) appears this morning before the Senate energy committee vetting her nomination and faces critical questioning from GOP members.