Memories of the 2013 “Taper Tantrum” loom over today’s FOMC as they engineer an exit that will hopefully be more elegant than our current one from Afghanistan. Both were well overdue, although there is no doubt the military withdrawal was handled disastrously. Can the Fed do better? Unlike the Afghan army, the bond market has […]
Paul Kennedy’s The Rise and Fall of the Great Powers coined the term “imperial overstretch”. Throughout history, the decline of every great power has coincided with military commitments beyond its means. Such cycles last many decades, and Kennedy’s 1987 book speculated that Japan was the new rising power about to overtake America. That call was […]
The most recent CPI report was a little better than expected – all-items less food and energy was up 4.3% year-on-year. Used car prices had boosted prior inflation figures but were up just 0.2% in July. Owners’ Equivalent Rent (OER), the statistician’s’ quixotic means of measuring what it costs to attain shelter through home ownership, […]
The UN’s Intergovernmental Panel on Climate Change (IPCC) released their latest report on Monday, in preparation for COP26, the November meeting of heads of government in Glasgow to discuss how we should respond. The report says humans have warmed the planet by 1° C since pre-industrial times, the agreed-upon benchmark. A further 0.5°C is likely […]
The fall in treasury yields can be misinterpreted as implying that inflation expectations are moderating. Although ten-year treasury yields have dropped 0.40% over the past three months, almost all of that has been through lower TIPs yields. Inflation expectations (nominal yields minus TIPs) have hardly budged. Given the Fed’s outsized role in the bond market, […]
Williams Companies (WMB) announced 2Q21 earnings on Monday. Results were largely in-line with expectations; Adjusted EBITDA came in at $1,317MM, $11MM ahead of forecasts reflecting the stability of their business. Their dividend is +2.5% YoY and is now expected to be 1.9X covered by Available Funds From Operations (analogous to the Distributable Cash Flow metric […]
The link with crude oil is a familiar topic for investors in pipelines, who have often been told that the two are uncorrelated only to experience both inconveniently plunging together. Since the Covid bottom in March, crude oil and midstream energy infrastructure have conveniently tracked each other higher – until the last several weeks during […]
Last week’s meeting of G20 environment ministers to discuss global warming exposed fault lines in the rich world/poor world debate about climate change. Most notably, they couldn’t agree to phase out coal, even though this is the most effective step nations could take to reduce emissions of Global Greenhouse Gases (GHGs). Coal burning power plants […]
This week the FOMC meets on Tuesday and Wednesday. Most recently released minutes suggest that the gradual cessation of the $120BN in monthly bond buying ($80BN in US treasuries and $40BN in mortgages) is getting closer. Given the history of prior efforts to wean the bond market off Fed support, popularly referred to as “taper tantrums,” careful consideration is being given to […]
Crude oil fell sharply on Monday, hit by the long-awaited confirmation of increased production from OPEC and growing concerns about the Delta Covid variant. Pipeline stocks dropped along with the energy sector. Financial markets’ concern coincided with the dropping of all remaining Covid restrictions in the UK (although visitors still face mandatory testing and/or self-quarantine, […]
