Entries by Simon Lack

The Emergence Of Omicron Covid

For the past few months the eurodollar futures market has steadily priced in the FOMC’s abandonment of “transitory” in its assessment of inflation. More often than not the Fed follows the market. The typical absence of public comments that precedes FOMC meetings was extended while Biden contemplated renewing Powell’s term. In short order, Powell’s reappointment […]

US States Choose Reliable Power

On Monday the Energy Information Administration (EIA) announced that 27.3 Gigawatts (GW) of natural gas power plants will be added to the US fleet over the next three years, representing a 6% increase from current capacity. The US is blessed with abundant supplies of natural gas, sufficient to power the country for many decades. Many […]

Will The Fed Catch Up With The Curve?

It’s easy to criticize the Fed. They’ve maintained their uber-accommodative monetary policy for probably a year longer than needed. Once the vaccine breakthrough was announced last November, prudence dictated that they anticipate an economic rebound and begin normalizing rates. Instead their bond buying has had the effect of partially monetizing Federal debt issued to fund […]

Do Pipelines Move With Crude?

We often get questions on the correlation between pipeline stocks and crude oil. Most investors intuitively believe they are linked – and inconveniently they seem especially so when prices are falling. March of last year is a recent example. Pipelines are a volume business — the “toll model” has often been used to describe the […]

The Best Odds Aren’t In Las Vegas

Following last week’s 6.2% inflation print, eurodollar futures fully priced in 0.75% of tightening by the end of next year. The approximate rate path envisages tapering by the summer, and rate hikes commencing around the same time. Beyond December ‘23 the curve is so flat that in effect the market expects the tightening cycle to […]

Energy Demand Drives Earnings Higher

The global energy crisis is turning out to be the catalyst driving the sector higher. Years of under-investment in new oil and gas output are finally colliding with relentless demand growth. Energy investors are enjoying growing free cash flow because of reduced capex. The credit for this shareholder-friendly behavior should be shared with climate extremists […]

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