Wednesday’s soothing words on inflation from Fed chair Jay Powell seemed a distant memory after Friday’s blockbuster employment report. The market liked hearing that , “…the disinflationary process has started.” More relevant now is his warning that, “The historical record cautions strongly against prematurely loosening policy.” Investors are Confronting Asymmetric Risks, as we noted on […]

The Fed’s mid-week policy meeting will punctuate a busy earnings week. Sell-side analysts continue to ratchet down earnings forecasts. Factset reports bottom-up 2023 earnings expectations of $226, down over 10% compared with last spring when Fed tightening started to have an impact. Energy continues to be a bright spot, providing positive surprises in 4Q earnings […]

Last week Energy Transfer (ET) raised their quarterly distribution to $0.305, restoring it to a level last paid in July 2020. This cheered a great many people. Among the financial advisors we talk to it is the most widely held individual name. It is perennially cheap. JPMorgan, Morgan Stanley and (according to Refinitiv) 94% of […]

Most of the commodity questions we get relate to crude oil, since its price reflects energy investor sentiment and can move midstream prices. When oil and pipelines are down, people want to know why the volume dependency of midstream cashflows isn’t visible in stock price performance. The correlation between the two is unstable (see Energy’s […]

Kinder Morgan (KMI) reported earnings last week and announced that President Kim Dang will be taking over from Steve Kean as CEO. This prompted us to look back over KMI’s history, which reflects some of the best and worst of the MLP sector for the past ten years. A decade ago the shale revolution drove […]

On the weekend the WSJ highlighted contrasting views of the 60/40 portfolio between Goldman Sachs and Blackrock. The classic asset allocation had its worst year in nominal terms since the 2008-9 Great Financial Crisis (GFC) and adjusted for inflation the worst since the Great Depression. It shouldn’t be a surprise. Bond yields have been too […]

The US Energy Information Administration (EIA) published their Short Term Energy Outlook last week. The EIA produces an enormous amount of data and is apolitical. For energy investors it’s really all good news. US crude production is expected to grow, but slowly. Natural gas production will increase at a faster pace with export growth more […]

Michael Wilson, Morgan Stanley’s chief equity strategist, thinks stocks could fall 22% this year. Wall Street is bearish, and the mood has spread to consumers. Earnings forecasts are falling and households report expectations close to the depths of the 2008 great financial crisis. A lot of smart people are negative. We don’t spend any effort […]

The Fed has a poor forecasting record, something Wall Street never tires of pointing out. The chart below from Barclays shows the FOMC’s constant self-correction on inflation through successive meetings. Fed chair Powell downplays the blue dots but often refers to them at his press conferences. Usually, the dots move towards the market as the […]

You might think last year’s 39.5% outperformance of the S&P500 by the pipeline sector was a record but in 2016 the margin was 42.0%. This followed a harrowing 41.0% underperformance the prior year. However, the past two years have been the best on record, with the American Energy Independence Index (AEITR) beating the S&P500 by […]