There’s been a pretty good run in the stock market, at least when the exchanges are functional. Nomura’s Charlie McElligott explains that investors have had to “grab” assets due to repricing “right-tail” higher outcomes, as US inflation is cooling, China’s reopening and Europe is avoiding a deep recession. How long that process plays out is a question, but the call of the day looks specifically at the oil sector. The European-listed integrated oil companies trade at a more than 40% discount to their US peers, according to analysts at Citi. Most of that discount is explained by the higher premium US stocks more generally possess to European equities, though Exxon Mobil’s and Chevron’s shale exposure, and the pressures on European investors not to own the sector for political reasons, also are a consideration. The markets, say Citi analysts led by Alastair Syme, aren’t going to close that gap by themselves. But the industry could, if Exxon XOM or Chevron CVX bought out BP BP, Shell SHEL or TotalEnergies TTE. “The prize for the US IOCs would look considerable, with value uplift coming through the ability to fund at a lower level [cost of equity] as well as cost-synergies that we estimate in [net present value] terms in the region of 15-30% of target market-cap,” they say. Would Europe allow the Americans to swoop in? European politicians would undoubtedly rattle their sabers, but given they have already set out an anti-oil narrative it seems unlikely they would intervene directly. Competition authorities are unlikely to put up blockers, at least not enough to remove the value-accretion potential,” they reply. It’s not like the oil industry hasn’t gone through consolidation before, the last wave occurring in the 1990s. And in American hands, the European companies wouldn’t spend as much on low-carbon investment, “a part of the business that is set to be a cash-sink for the European IOCs over the coming years.” The research note comes ahead of Chevron results, due Friday, and Exxon results, which are scheduled for Tuesday. The market US stock futures ES00 fell in early trade, with the Nasdaq 100 contract NQ00 weighed down by Microsoft’s cautious outlook. Oil futures CL were trading around $80 per barrel, and the yield on the 10-year Treasury BX:TMUBMUSD10Y was 3.43%. For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily. The buzz Microsoft MSFT late Tuesday warned sales in the current quarter would miss Wall Street estimates by $1 billion, with less consumption growth at its Azure cloud division as well as lower-than-expected new business growth. Dutch microchip equipment maker ASML Holding ASML beat earnings expectations for the fourth quarter, and guide for first-quarter sales above consensus. Other earnings reports are due from companies including AT&T T, and after the close, IBM IBM and Tesla TSLA. Rupert Murdoch’s News Corp. NWS is in talks to sell Realtor.com operator Move to CoStar Group CSGP, as a proposal to reunite News Corp. with Fox FOX was called off. News Corp. is the parent company of MarketWatch, the publisher of this report. Best of the web Former International Monetary Fund chief economist Olivier Blanchard argues that low interest rates will return due to secular stagnation. The short-seller who famously alleged that Nikola demonstrated a truck by rolling it downhill is taking on the world’s number-three billionaire. Here’s an English language opinion piece arguing China is not responsible for an African debt trap, after Treasury Secretary Janet Yellen’s visit to Zambia in which she urged action from the number-two economy. China’s embassy in the US was more blunt, telling Yellen to fix the US debt ceiling first. Best of the web Here were the most active stock-market tickers as of 6 am Eastern. The chart BrandWatch Microsoft this week confirmed it was investing billions more in OpenAI, the company behind internet sensation ChatGPT. However, what was wondering at first is quickly descending into more negative emotions about the new technology. BrandWatch Consumer Research gathered data on Twitter, Reddit, Instagram and other sites between the week of Jan. 12 and Jan. 18. Random reads Tech company layoffs have led to the new phenomenon of remote job cuts. There are red cards and yellow cards, but for the first time, a soccer game featured a white card. Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern. Listen to the Best New Ideas in Money podcast with MarketWatch reporter Charles Passy and economist Stephanie Kelton.