THE AI REVOLUTION NEEDS ENERGY
US natural gas demand is growing to supply data centers and LNG exports. We believe midstream energy infrastructure offers predictable cash flows to investors.
Midstream Earnings Reinforce Outlook
1Q earnings have been coming in to heightened expectations following strong equity performance so far this year. Energy Transfer (ET), Targa Resources (TRGP) and Cheniere (CEI) all beat median Street EBITDA forecasts and raised full year guidance. AI-driven demand for natural gas to power data centers remains an important theme. ET has described the volume […]
Oil May Be Higher For Longer
We’ve felt for several weeks that financial markets were too optimistic in expecting a rapid re-opening of the Strait of Hormuz (see Calmer But Not Resolved and A Healthy Correction). Commercial shipping can only resume once the threat of Iranian attacks is resolved, an achievement we felt was beyond the ability of military action short […]
More Pain Over There Than Here
We spent last week traveling in Austria with friends. The impact of the Iran War felt closer – and not just because an Iranian missile could theoretically hit Vienna. This part of the world is highly energy dependent. They rely on imports for just over half of their primary energy, and about the same share […]
Calmer But Not Resolved
In Wealth, War and Wisdom (2008), Barton Biggs showed how financial markets often react with greater insight into the shifting fortunes of war than the general population. During World War II for example, German stocks peaked in 1941, well before the military disaster at Stalingrad. The US market rallied following the Battle of Midway in […]
A Healthy Correction
Normally I regard a “healthy correction” after a long rally as the description of those uninvolved. There’s nothing healthy about a market drop for the longs, regardless of if it was preceded by an extended rally, as is the case for energy this year. A sell-off under any circumstances is only good for shorts and […]