Entries by Simon Lack

Is Being Bullish Socially Acceptable?

There’s rarely a shortage of bearish articles. The recent batch incorporates a tone of pleading, or at least reasoning, with investors to acknowledge our circumstances when choosing investments. One of my favorites is a New Yorker essay from mid-May, which asked Have The Record Number Of Investors In The Stock Market Lost Their Minds? The […]

Why Are MLP Payouts So Confusing?

It’s surprisingly difficult to figure out what dividends are doing for midstream energy infrastructure. Just about every company has a free pass on cutting its payout nowadays. Prudent cash management isn’t going to draw much criticism with the size of the economic shock we’re enduring. Given the beating energy stocks suffered during 1Q20, a few […]

Energy Investors See Us Moving Again

The energy sector has been leading the market’s rebound from the lows of March. Demand for crude oil plummeted, and the Saudi decision to simultaneously increase supply caused prices to briefly go negative. No investment sector in energy was safe, including midstream infrastructure. U.S. oil production has already dropped by 1.6 Million Barrels per Day […]

Falling Emissions Are Good For Energy

The International Energy Agency (IEA) expects CO2 emissions to fall 8% this year. This is six times the reduction that followed the 2008 financial crisis, reflecting the far greater drop in economic activity. Transportation has plummeted — peak congestion on roads in March was estimated down 50-60% in major cities around the world including Los […]

Stocks Look Past The Recession and Growing Debt

At Berkshire’s virtual annual meeting recently, Warren Buffett mused that their cash hoard of $135BN didn’t seem that much. Stanley Druckenmiller said, “The risk-reward for equity is maybe as bad as I’ve seen it in my career.” The New Yorker thinks stock investors have lost their minds. To not be bearish is to be insensitive […]

How Risky is Dining Out?

For a graphic picture of how the restaurant business has shut down, it’s hard to beat the OpenTable chart below. For several weeks, U.S. dinner reservations on their system have run at 100% below normal (i.e. there were none). What portion of this sector survives depends on the pace at which we re-open, combined with […]

The Market Recovers With Energy

Energy has rebound strongly from the market’s low on March 23rd. The S&P Energy ETF (XLE) is up 64%, matching the broad-based American Energy Independence Index (AEITR) and handily beating the S&P500 which is up 31%%. Although the YTD figures still show the energy sector down over 35%, quarterly earnings reports continue to provide plenty […]

The U.S. Borrowing Pandemic

Ever since the 2008 financial crisis ushered in permanently low interest rates, perhaps the biggest question in finance has been why long term rates remain so low (see Real Returns On Bonds Are Gone). On Monday, the U.S. Treasury announced plans to issue $2.99 trillion in marketable debt this quarter, and $4.5 trillion this fiscal […]

More Solid Pipeline Results

Earnings season for big pipeline companies has continued to be encouraging. Enterprise Products (EPD) reported results largely as expected and lowered 2020 growth spending by $1BN. The reductions in capex have been welcomed by investors who have long complained about the level of reinvestment by energy companies. Any reductions in EBITDA have been matched by […]