Inflation is probably the biggest known risk facing equity markets today. Last week’s CPI report was expected to be high and still exceeded expectations. The 4.2% year-on-year increase in the All Urban Consumers index (CPI-U) was boosted by comparisons with a year ago. The Fed, and many economists, have warned of the transitory base effects […]
The hacking into Colonial Pipeline’s network demonstrated the high-tech vulnerability of some infrastructure as well as society’s reliance on it. Colonial is the largest privately owned pipeline in the U.S., carrying up to 45% of the east coast’s gasoline supply from refineries in Texas to New Jersey. On Monday gasoline futures initially rose 4% on […]
The media is not short of simple solutions for climate change. Solar panels and windmills have been cheaper than natural gas for so long in the popular narrative that you’d think utilities are willfully pursuing lower profits by not blanketing the country with them. The industry that provides over 80% of our energy is often […]
This Friday’s non-farm payroll report is more important than normal. With the Fed in single-minded pursuit of half their twin mandate (maximum employment), the stable prices objective is receding. The recent stalling in the bond market sell-off doesn’t correspond to equanimity over inflation. Declining real rates have accompanied the drop in nominal ones. In April, […]
One of the most important questions for investors is whether interest rates will remain low. Persistent paltry yields still aren’t fully explained. Inflexible investment mandates affecting trillions of dollars are a partial explanation. For example, the equity risk premium favors stocks sufficiently that it’s possible to replace a ten-year government bond with as little as […]
Last week Kinder Morgan (KMI) reported earnings, which included around $1BN in one-time gains from the Texas power outages in February. Natural gas prices increased briefly by more than 100X. KMI had natural gas available, so profited from selling it to power companies who had commitments to meet. Energy Transfer (ET) is expected to report […]
The ascent in lumber prices is the most spectacular of many commodities that reflect the pandemic recovery. Recently a general contractor I know lamented that the wood for his typical newbuild construction had doubled over a few months. High lumber prices are not only caused by booming suburban real estate markets — new household formations […]
“Coiled, ready to go.” is how JPMorgan CEO Jamie Dimon described consumers last week. “Consumers have $2 trillion in more cash in their checking accounts than they had before Covid.” he added. Borrowers are in such good shape that JPMorgan reported a 4% drop in loans when they released their quarterly earnings. Stimulus cash is […]
What if CO2 emissions could be captured before they entered the atmosphere? Sulfur dioxide is already removed from the emissions of coal-burning power plants. Why not CO2 from burning natural gas for power, steel or cement production? The endless hype over solar panels and windmills, overstating their competitiveness, downplaying their intermittency – none of this […]
Public policy is becoming more important to energy investors. Democrats now own the climate change issue. The desire of progressives to advance a world of solar panels and windmills is confronting pragmatists who’d like to keep the lights on. Rising oil and gas prices are helpful to the energy transition, by improving renewables’ competitiveness. But […]
