Fed chair Jay Powell appeared slightly less confident at Wednesday’s press conference. He acknowledged that their forecast of temporarily higher inflation might be wrong, and it was hard to say when it would moderate. He repeated his warning that, “forecasters have much to be humble about.” This humility must apply to the Fed. One of […]
On Sunday, Swiss voters narrowly rejected increased taxes on users of fossil fuels. The measure was promoted by the government as necessary to ensure Switzerland can meet its commitment under the Paris climate accord. Following the government’s defeat, plans to meet Switzerland’s 2030 emissions goals have been derailed. 8.5 million Swiss people emit around 0.1% […]
This past winter included some tumultuous weather events with implications for global energy markets. Winter storm Uri exposed vulnerabilities in the Texas power grid, and left millions without heat during an unusually cold snap (see Why Texas Lost Power). All power sources provided less than needed – some blamed the state’s excessive reliance on windmills, […]
This is an assertion made by economist Roger Bootle. Two decades ago he argued the opposite, in The Death of Inflation: Surviving and Thriving in the Zero Era. But now the founder of Capital Economics regards, “the environmental emphasis and in particular the drive towards net-zero” as the single biggest factor pushing inflation higher. The […]
Last week the Alerian MLP and Infrastructure Total Return Index (AMZIX) finally recouped its Covid losses. MLPs have returned to where they were at the end of 2019, when few knew what a coronavirus or N95 mask was. MLP investors have had a miserable decade. The Shale revolution turned out to be an investment bust through overinvestment; the energy […]
Do scientists spin the truth in order to explain complex answers simply? That is the suggestion scientist Steven Koonin makes in his new book Unsettled: What Climate Science Tells Us, What It Doesn’t, and Why It Matters. Koonin speaks with some authority – his career includes being BP’s chief scientist 2004-09 followed by serving in the Obama administration as Under Secretary for Science 2009-11. He has […]
I spent the last couple of days visiting clients in central Florida, which is why this blog post is a day later than normal. The gradual return of in-person meetings is a welcome reminder that we’re moving on from Covid. Floridians are happy with how their state handled the virus, often noting that business has […]
An enduring dichotomy in the valuation of midstream energy infrastructure companies has been the sharply different outlooks implied by debt versus equity pricing. Dividend yields of 6-7% suggest equity investors don’t regard their payouts as being sustainable indefinitely. Contrast that with investors in long term bonds, who accept yields of under 4% that can only […]
The S&P500 is up 11% so far this year. 2021 EPS estimates from Factset are up by close to the same amount. The rise in ten-year treasury yields means the Equity Risk Premium (ERP) doesn’t show the market to be quite as cheap as it was, but not by much. Covid has been less traumatic […]
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 […]
