Casually following news of the energy transition can create the impression that the world is a few years away from running on solar power and windmills. The reality is that climate extremists have propagated two impractical beliefs that are impeding policies based on pragmatism. One is that solar and wind are the complete solution. The […]
The “energy” in midstream energy infrastructure is often the primary consideration of potential investors. It probably began with the increased investment during the shale revolution, and the energy transition generated questions about energy mix and stranded assets. But nowadays capital discipline beats growth capex while without energy security there is no transition. It’s time to […]
For anyone in finance, the US budget deficit has always been a looming disaster but rarely a current problem. It hasn’t been a political issue since Clinton ran for office and Jim Carville quipped that the bond market intimidated everybody. For a few brief years we had a budget surplus (1998-2001), but fiscal prudence long […]
A couple of weeks ago stocks and bonds looked vulnerable to strong data (see Confronting Asymmetric Risks). Since then the narrative of impending recession has been punctured by employment, retail sales and inflation figures that all surprised to the upside. Valuations based on the Equity Risk Premium (ERP) were only moderate. Since then, stocks are […]
Earnings continue to meet or modestly beat expectations. 4Q22 EBITDA at Enbridge of $3,911MM beat expectations by $16MM, or around 0.4%. The small margins between actual and expected at many companies highlight the visibility of their earnings. Along with TC Energy, both companies have a long history of dividend growth — 28 years at Enbridge […]
The BP Statistical Review of World Energy used to be a fact-based compilation of useful data. Skimming through the 2016 version, it recounts what happened and comments on likely trends. In recent years it has unfortunately degenerated into a political document. The historic data remains useful, but its implausible forecasts are there to defend itself […]
Enterprise Products Partners’ (EPD) earnings release last week revealed that leverage (Debt:EBITDA) fell to 2.9X at the end of last year. They are now targeting 3.0X, down from 3.5X previously. This is among the lowest in the industry, and reflects a continuing trend to strengthen balance sheets, de-risking the businesses. Years ago, Kinder Morgan argued […]
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 […]
