Entries by Simon Lack

Energy Realism Is Spreading

SL Advisors Talks Markets
SL Advisors Talks Markets
Energy Realism Is Spreading







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There were three stories last week that can best be characterized as providing energy realism. The fire at Freeport’s LNG facility sent US natural gas prices skidding, with the loss of 2 Billion Cubic Feet per Day (BCF/D) of export capacity. Freeport warned it’ll be at least three weeks before operations can resume – meaning […]

Even After A 30% One Year Return, Pipelines Remain Cheap

SL Advisors Talks Markets
SL Advisors Talks Markets
Even After A 30% One Year Return, Pipelines Remain Cheap







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When the MLP structure dominated midstream energy infrastructure almost a decade ago, yield was a popular valuation metric. MLPs typically paid out 90% or more (sometimes over 100%) of their Distributable Cash Flow (DCF). Comparing MLP yields with the ten year treasury provided a measure of historic valuation. By this metric, midstream isn’t cheap. The […]

The Hard Math Of The Energy Transition

SL Advisors Talks Markets
SL Advisors Talks Markets
The Hard Math Of The Energy Transition







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Getting to zero emissions by 2050, the goal set by the UN in order to limit global warming to 1.5° C above pre-industrial times, is technically well within reach. Not with intermittent solar panels and windmills – extracting all the minerals necessary for their manufacture plus enormous battery back-up in implausible.  Kinder Morgan’s enhanced oil […]

Fossil Future

SL Advisors Talks Markets
SL Advisors Talks Markets
Fossil Future







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Alex Epstein’s 100K Twitter followers have anticipated for months the publication of Fossil Future – Why Global Human Flourishing Requires More Oil, Coal, and Natural Gas – Not Less. Few authors have promoted a book more relentlessly. I awaited its publication eagerly. It is the follow up to Epstein’s 2014 book, The Moral Case for […]

Inflation Fears Moderate

SL Advisors Talks Markets
SL Advisors Talks Markets
Inflation Fears Moderate







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Maybe last week’s FOMC minutes had something for everyone. Some analysts seized on the consideration the Fed gave to tighter monetary policy: “They also noted that a restrictive stance of policy may well become appropriate depending on the evolving economic outlook and the risks to the outlook.”  On the other hand, the minutes noted that, […]

ESG Has No Clothes

SL Advisors Talks Markets
SL Advisors Talks Markets
ESG Has No Clothes







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Offering investments tailored to ESG (Environmental, Social and Governance) criteria is a growing source of fee income for Wall Street. Morningstar calculates that 65 US funds have been repackaged into ESG funds since the beginning of 2019. Investors are attracted by the notion of holding virtuous stocks, but companies and fund managers must also find […]

Pipeline Sector Extends Outperformance

SL Advisors Talks Markets
SL Advisors Talks Markets
Pipeline Sector Extends Outperformance







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The continued rally in the energy sector is steadily lifting past performance ahead of the S&P500 over multiple timeframes. The American Energy Independence Index (AEITR) now has a higher annual return than the S&P500 over the past one, two and three years. Even over five years the performance gap is closing. The 12.3% pa return […]

Different Audience, Different Energy Policy

SL Advisors Talks Markets
SL Advisors Talks Markets
Different Audience, Different Energy Policy







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Last week’s Economist magazine included an illuminating op-ed by Nigeria’s vice-president on “the hypocrisy of rich countries’ climate policies.” Like most emerging countries, Nigeria is simultaneously pursuing two goals; improving the access of Nigerians to energy, while reducing the country’s Greenhouse Gas (GHG) emissions. Vice-president Yemi Osinbajo’s essay neatly captures the dilemma his and other […]

A Good Week For The Fed

SL Advisors Talks Markets
SL Advisors Talks Markets
A Good Week For The Fed







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Financial advisors probably feel that they’re more than earning their pay recently. Market volatility is high, which means clients want to know what’s going on. Advisors have in the past confided to me that one of their most important roles is to persuade clients from selling impetuously. Their original asset allocation was made after much […]

Pipelines Are Less Volatile Than You Think

SL Advisors Talks Markets
SL Advisors Talks Markets
Pipelines Are Less Volatile Than You Think







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If it feels like the market’s daily swings are giving you whiplash, you’re right. Following Monday’s rout, the number of daily moves in excess of 1% breached 50% over the past hundred days. In other words, a 1% or greater change in the S&P500 is now more likely than not. This is unusual. Markets were […]

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