Energy infrastructure companies are known for their free cash flow generation and generous, growing dividends. But what are the long-term growth drivers for these businesses and how do structural trends in energy benefit midstream/MLPs?
The U.S. economy may be heading into choppy waters, and investors might be wise to buckle up.
The yield on the 10-year note ended September 6, 2024 at 3.72%, the 2-year note ended at 3.66%, and the 30-year at 4.03%.
There is a general belief that there are four big indicators that the NBER Business Cycle Dating Committee weighs heavily in their cycle identification process. This commentary focuses on one of those indicators, nonfarm employment. August saw a 142,000 increase in total nonfarm payrolls and the unemployment fell to 4.2%.
OPEC+ is like a teabag – it only works in hot water. The late Robert Mabro, one of the savviest oil-market observers, liked to say the cartel only got the job done when it was under prolonged financial pain. To judge by its latest actions, OPEC+ has yet to realize it’s inside a warming kettle.
Labor Day weekend, marking the end of the US summer driving season, is typically the year’s last hurrah for gasoline producers. This year, the high-fives were reserved for drivers (and White House occupants): The average pre-long weekend pump price was down 13% from last year after gasoline refining margins collapsed in August. Pump prices have eased further this week.
Despite pullbacks and elevated volatility in the earlier days of the month, major equity indices were up in August.
After a decade of consistent outperformance, Japanese small caps began underperforming their large cap peers in 2018, a trend that has accelerated since 2023.
We’ve always admired the great artistry of David Byrne from the Band Talking Heads. My favorite song of theirs is “Once in a Lifetime.” We think this song can tell our readers a great deal about how to look at our portfolio as we navigate an expensive and maniacal S&P 500 Index environment.
In this edition, Harold Evensky explores the challenges facing sustainable and active funds, the implications of the new DOL Fiduciary Rule, and the value of long-term performance projections. With candid observations and critical analysis--read on to gain perspective on navigating the complex world of investing, the importance of risk management, and the role of fiduciary advisors in securing your financial future.
There are two radically different visions of our AI future, and they depend on the cost of energy.
The case for infrastructure investment is rising, but so are its costs.
A soft landing for the U.S. economy still appears to be the most likely outcome.
The August S&P Global US Manufacturing PMI™ fell to 47.9 in August from 49.6 in July, indicating a modest deterioration in business conditions for a second straight month. The latest reading was just below the forecasted reading of 48.0 and is the index's lowest level of the year.
I asked my great friend and business partner David Bahnsen, who is about as politically wired as anyone and one of the truly great economic and investment minds, to reflect on the intersection of politics and markets. It is a quick, balanced, and reasonable read...
As I write this, gold continues to trade above $2,500 an ounce after surging past the psychologically important level for the first time ever in mid-August. For seasoned gold mining investors, this should be a moment of validation. After all, the yellow metal has long been seen as the ultimate hedge against economic uncertainty.
As of August 31, 2024, the 10-year note was 339 basis points above its historic closing low of 0.52% reached on August 4, 2020.
Has the tide turned decisively against King Dollar? A fall of around 5% in the greenback versus major currencies in the past two months, pushing the dollar index to a 13-month low, suggests its post-pandemic surge has meaningfully faltered.
Copper has been trending lower since the middle of May, but supply disruptions in Latin America could help reverse that trend.
Personal income (excluding transfer receipts) rose 0.32% in July and is up 4.1% year-over-year. However, when adjusted for inflation using the BEA's PCE Price Index, real personal income (excluding transfer receipts) was up 0.16% month-over-month and up 1.6% year-over-year.
The path for lower rates in the U.S. has finally arrived.
Portfolio managers should always have good explanations for their underweight positions. These days, it matters more than ever.
Gas prices fell to their lowest level in 6 months this past week. As of August 26th, the price of regular and premium gas decreased 7 cents and 5 cents from the previous week, respectively. The WTIC end-of-day spot price for crude oil closed at $77.42, up 5.1% from last week.
Midstream’s second quarter earnings calls reinforced the positive outlook for US natural gas demand driven in part by expected power demand from data centers. This note discusses the advantages of natural gas for data centers, additional factors contributing to demand growth, and how midstream is uniquely positioned to benefit from these trends.
California wants some insurance against pump prices. But in proposing that oil companies there hold a minimum stockpile of fuels, the state is also, and less obviously, seeking insurance against the complications of its own energy policies. In seeking to kill off gasoline demand but ensure suppliers stay engaged for years to come, the state is confronting one of the central challenges of the energy transition.
“What happened in 1971?” It is one of the most important and debated questions in US economic history, and new research suggests that the answer may be lurking a few decades earlier — in 1948, to be precise.
Artificial intelligence has the potential to reshape our economies, labor markets, societies, and politics. But despite the rosy forecasts of an AI-driven boom, history shows that technological advances rarely lead to immediate improvements in living standards and often lead to profound disruption.
This week we take a not-so-random walk through the data, trying to simplify what is actually a fairly complex subject. I think it is quite fun, but also important. Let's dive in.
This week, before she accepted the Democratic Party’s nomination for president, Vice President Kamala Harris threw her support behind President Joe Biden’s tax proposals for 2025, which include a steep 44.6% capital gains rate and an unprecedented 25% tax on unrealized gains.
For years, a Chinese company has dominated one of the most lucrative corners of the cryptocurrency universe. Rising political tensions, and the prospect of Donald Trump retaking the White House, pose an unprecedented threat to that reign.
Amid expectations of rate cuts from major central banks, managers are increasing their exposure to more cyclical and value-oriented names, including autos, transportation, and short-cycle industrials.
Oil, copper, soybeans and a handful of others monopolized the attention — but of all commodities, the humble lump of iron ore benefited the most from the Chinese economic boom of the last 25 years.
Silver is an important component of solar photovoltaic (PV) panels, meaning that for China to reach its ambitious climate targets, it must import massive amounts of the white metal. In June alone, China spent over $228 million on silver, a new monthly record based on Bloomberg data going back to 2009.
Ethical Capital's Sloane Ortel marshals the data to counter the arguments against aggressively fighting climate change laid out in Larry Siegel's recent article.
Just as bond traders grow more assured that inflation is finally under control, a camp of investors is quietly building up protection against the risk of a future spike in prices.
Earlier this year, around the time Nvidia Corp.’s market cap eclipsed that of the entire S&P 500 energy sector, I wrote about whether oil and gas stocks might offer a decent hedge when AI-fever breaks. The past several weeks have offered a test.
Portfolio Manager Jeremy Sutch, CFA, and Chief Investment Officer Sean Taylor assess the issues besetting the region’s key markets—from domestic challenges to geopolitical headwinds—as well as their structural strengths, and whether prospects may brighten with the onset of a U.S. rate-cutting cycle.
Value has been in a protracted slump versus growth for years, but it’s been undergoing something of a makeover during that time.
As much as my two-pronged dividend strategy works in all markets, we still need to acknowledge that politics influences the market. Sometimes it’s a tangible impact like big swings in the price of oil. Other times it’s just investor sentiment moving the market.
Nominal retail sales in July were up 0.97% month-over-month (MoM) and up 2.66% year-over-year (YoY). However, after adjusting for inflation, real retail sales were up 0.81% MoM and down 0.25% YoY.
The headlines suggest catastrophe for the global food supply: Biblical heatwaves, floods, storms and wildfires. And yet, in the world’s breadbaskets, the weather has been fair this growing season — so good that we’re facing an oversupply of key agricultural commodities and thus much lower prices than in 2022 and 2023.
Let's do some analysis of the Consumer Price Index, the best-known measure of inflation. The Bureau of Labor Statistics (BLS) divides all expenditures into eight categories and assigns a relative size to each. The pie chart illustrates the components of the Consumer Price Index for Urban Consumers, the CPI-U.
Inflation cooled for a fourth straight month in July, dropping to its lowest level since March 2021. According to the Bureau of Labor Statistics, the headline figure for the Consumer Price Index fell to 2.9% year-over-year, lower than the expected 3.0% growth. Additionally, core CPI cooled to 3.2% as expected.
Oil prices have been resilient in 2024, and US natural gas prices have staged an impressive rebound. Oil demand remains in focus for energy markets, even as natural gas sees new long-term structural demand drivers.
Haidt’s The Anxious Generation documents the post-iPhone 4 explosion of anxiety and depression disorders among adolescents. Haidt calls the substitution of screen time for play “The Great Rewiring” of young brains that is directly responsible for the dramatic increase in adolescent mental health disorders.
On Monday, global equities and digital assets underwent a dramatic selloff as the unwinding of the Japanese yen carry trade rattled markets. The S&P Global Broad Market Index (BMI), which measures the performance of more than 14,000 stocks around the world, retreated 3.3%, its worst trading day in over two years.
During volatile markets, investors may flock to safe haven sectors like utilities that can weather a recession.
Copper prices have pulled back since peaking in May at $5.12, but the long-term bull case for copper remains strong.
Family Feud, a popular game show when I was growing up, would ask contestants to guess how a group of people had answered a specific question. It served as a regular and early reminder for me of the importance of supplementing one’s thinking with external perspectives.
One of the very popular technology companies in recent years has been CrowdStrike, Inc. It provides cybersecurity to numerous major technology companies including the top Artificial Intelligence (AI) players.
Take the market narrative with a grain of salt and look at the fundamentals in determining your outlook for the economy and financial markets. We ultimately believe this soft patch of data will prove to a be a ‘growth scare,’ not a ‘recession reality.’
Never before in my history studying the Federal Reserve (Fed) has the Fed’s policy come into question immediately following the Fed decision.
As Milton Friedman taught us many decades ago, monetary policy works with long and variable lags. Recent economic reports suggest that the long and variable lags on the tightening of monetary policy in 2022-23 are starting to come to an end.
Is this the beginning of the inevitable bear, where these then-most-valuable stocks could get clobbered? Here’s what history teaches us about the current concentrated market and the current correction.
De Leus and Gijsels, both originating in the world of institutional brokerage identify the five principal trends affecting investments in the near future. The two take turns writing chapters so that the book is a straight man/funnyman show, with the straight man providing mostly sound, conventional analysis and the funnyman interviewing dead economists and Fed chairmen not yet born.
The July U.S. services purchasing managers' index (PMI) conducted by S&P Global came in at 55.0, just below the forecast of 56.0. The latest reading keeps the index in expansion territory for the 18th straight month.
Treasury yields plunged below 4% this week for the first time since January on recession fears as global manufacturing activity contracted and hiring in the U.S. slowed dramatically in July.
While election news dominated July's headlines, small-cap stocks had their best monthly performance relative to large-cap stocks since December 2000.
Like you, we have read countless comparisons between today’s enthusiasm for all things AI and the top of the TMT bubble in 2000, with the implication being that stocks are on thin ice.
A fifth of Americans are on the hook for an 833% jump in the cost to ensure the lights stay on. The folks being paid that premium, mostly electricity generators in this instance, face that most welcome of problems: What to do with a windfall.
Official recession calls are the responsibility of the NBER Business Cycle Dating Committee, which is understandably vague about the specific indicators on which they base their decisions. This committee statement is about as close as they get to identifying their method.
Our outlook on the 11 S&P 500 equity sectors.
President Joe Biden’s withdrawal and endorsement of Vice President Kamala Harris has sent shockwaves through the political establishment, and while former President Donald Trump remains the frontrunner, the wind has certainly shifted in Harris’s favor.
Progress toward a goal usually isn’t linear. The first 50% isn’t too bad, the next 40% is harder, and the last 10% consumes most of the effort and resources. Business strategists call this the “last mile” problem… and it applies to inflation, too.
Like it or not, the world is going to fall far short of meeting its current goals for reducing carbon emissions.
The big story making the rounds this summer is the spike in the small-cap Russell 2000 since the release of the latest Consumer Price Index (CPI) report, which shocked the market by printing 0.0% month-over-month in June.
US stock markets have remained bullish in the face of deepening domestic and international risks, owing to three key factors. But with two of these coming under pressure, the durability of the current cycle will depend on the third: the US Federal Reserve.
Ether, the second-largest token, paced a drop in digital assets following a slump in equities that spread unease in global markets.
Investors soured on the promise of artificial intelligence Wednesday, sparking a $1 trillion rout in the Nasdaq 100 Index as questions swirled over just how long it will take for the substantial investments in the technology to pay off.
Following the historic decision by President Biden to drop out of the 2024 race, Raymond James CIO Larry Adam provides insight into his team's economic and market outlook.
The bitcoin halving event in April 2024 reduced the block reward for miners, which is expected to increase bitcoin’s price.
The appetite for nuclear energy is growing fast. Here in the US, most adults now favor expanding our nuclear power capabilities because it’s a great alternative to fossil fuels. Unlike wind or solar, nuclear provides energy around the clock. So, why haven’t we built more nuclear power plants?
The momentum we've seen in U.S. equity markets over the past year continued in the second quarter of 2024. With large technology stocks leading the wave, the S&P 500 index has risen 23% in the 12 months ended June 30.
VettaFi discusses the impact of hurricanes on energy companies — upstream, midstream, and downstream.
Canola oil — invented in Canada 50 years ago as a healthier, shelf-stable cooking fat — may soon venture beyond the world’s kitchen cupboards to a spot in the airways.
A seismic shift is taking place in corporate America as even more companies announce plans to relocate from blue states to more business-friendly jurisdictions like Texas.
Wheat and corn are the most actively traded grains in financial markets. But they can’t damage the global economy like rice. The staple for half the world is largely ignored by Wall Street, but it’s the one commodity that really matters for global food security.
Kinder Morgan Inc. (KMI) provided insight into natural gas demand and growth opportunities during the firm’s second-quarter earnings call.
Artificial intelligence is set to become a game changer for the electric power industry, notes Pavel Molchanov, Managing Director, Energy Analyst, Equity Research.
Over three decades on Wall Street, Jim Covello has learned how painful it can be to bet against an inflating tech stock bubble. The market has a way of minting riches, month after month, even after it’s clear the latest breakthroughs aren’t playing out quite as expected.
A transition to alternative energy is helping to fuel a 4th industrial revolution. In turn, this will increase critical minerals demand.
Artificial intelligence and generative AI remain the proverbial hype trains of thematic investing this year.
At Institutional Investor, keeper of Wall Street’s version of the Oscars for financial analysts, the winner in one category this year is — nobody.
Private market growth in recent years has been remarkable. We think there's more to come.
Softening inflation supports the potential for a Federal Reserve interest rate cut in coming months, but there are complexities below the surface.
Notwithstanding whether there was a formal agreement, the petrodollar is not going anywhere. Even if Saudi Arabia accepts rubles, yuan, pesos, or gold for its oil, it will need to convert those currencies into dollars in almost all instances.
We are in the time of year when Americans pack transatlantic airliners for their European vacations. I had actually hoped to be one of them. That didn’t work out but we can still talk about events in Europe. And we probably should, because potentially major changes are happening.
As many of you are no doubt aware by now, France’s left-wing New Popular Front alliance thwarted Marine Le Pen’s National Rally party in a stunning upset, leaving the country without a clear majority in parliament.
President Joe Biden, as you’ve no doubt heard, has had a rough few weeks. Yet on Tuesday, he signed a bill into law that could well prove transformative for America’s energy future. Here’s hoping — whatever happens in November’s election — that more progress lies ahead.
Over the last four years, we have maintained that the U.S. middle-class consumer is on firmer ground than many believe. The first wave of inflation that seems to be receding is just that—the first wave of a set—and oil and gas companies are fundamentally well-positioned for the next decade.
Energy
Midstream/MLPs: What’s Fueling Long-Term Growth?
Energy infrastructure companies are known for their free cash flow generation and generous, growing dividends. But what are the long-term growth drivers for these businesses and how do structural trends in energy benefit midstream/MLPs?
The Yield Curve Inversion Just Ended, but Economic Risks Remain
The U.S. economy may be heading into choppy waters, and investors might be wise to buckle up.
Treasury Yields Snapshot: September 6, 2024
The yield on the 10-year note ended September 6, 2024 at 3.72%, the 2-year note ended at 3.66%, and the 30-year at 4.03%.
The Big Four Recession Indicators: August Employment
There is a general belief that there are four big indicators that the NBER Business Cycle Dating Committee weighs heavily in their cycle identification process. This commentary focuses on one of those indicators, nonfarm employment. August saw a 142,000 increase in total nonfarm payrolls and the unemployment fell to 4.2%.
OPEC+ Kicks the Can Down a Very Uphill Road
OPEC+ is like a teabag – it only works in hot water. The late Robert Mabro, one of the savviest oil-market observers, liked to say the cartel only got the job done when it was under prolonged financial pain. To judge by its latest actions, OPEC+ has yet to realize it’s inside a warming kettle.
American Drivers Signal a Top in Gasoline Demand
Labor Day weekend, marking the end of the US summer driving season, is typically the year’s last hurrah for gasoline producers. This year, the high-fives were reserved for drivers (and White House occupants): The average pre-long weekend pump price was down 13% from last year after gasoline refining margins collapsed in August. Pump prices have eased further this week.
Fed Rate Cuts Give Higher Probability of the Great Rotation Occurring
Despite pullbacks and elevated volatility in the earlier days of the month, major equity indices were up in August.
Small Wonders: Overlooked Japan Small Caps Poised for Resurgence
After a decade of consistent outperformance, Japanese small caps began underperforming their large cap peers in 2018, a trend that has accelerated since 2023.
Same as it Ever Was
We’ve always admired the great artistry of David Byrne from the Band Talking Heads. My favorite song of theirs is “Once in a Lifetime.” We think this song can tell our readers a great deal about how to look at our portfolio as we navigate an expensive and maniacal S&P 500 Index environment.
Navigating the Investment Landscape: Insights and Warnings
In this edition, Harold Evensky explores the challenges facing sustainable and active funds, the implications of the new DOL Fiduciary Rule, and the value of long-term performance projections. With candid observations and critical analysis--read on to gain perspective on navigating the complex world of investing, the importance of risk management, and the role of fiduciary advisors in securing your financial future.
AI Culture Will Be Weirder Than You Can Imagine
There are two radically different visions of our AI future, and they depend on the cost of energy.
Reinforcing Economic Foundations
The case for infrastructure investment is rising, but so are its costs.
August Sees Markets Close Strong After Tough Start
A soft landing for the U.S. economy still appears to be the most likely outcome.
S&P Global US Manufacturing PMI™: Lowest Level of 2024
The August S&P Global US Manufacturing PMI™ fell to 47.9 in August from 49.6 in July, indicating a modest deterioration in business conditions for a second straight month. The latest reading was just below the forecasted reading of 48.0 and is the index's lowest level of the year.
Your Portfolio and the Election
I asked my great friend and business partner David Bahnsen, who is about as politically wired as anyone and one of the truly great economic and investment minds, to reflect on the intersection of politics and markets. It is a quick, balanced, and reasonable read...
Why Gold Stocks Could Be a Contrarian Investor’s Dream Right Now
As I write this, gold continues to trade above $2,500 an ounce after surging past the psychologically important level for the first time ever in mid-August. For seasoned gold mining investors, this should be a moment of validation. After all, the yellow metal has long been seen as the ultimate hedge against economic uncertainty.
Treasury Yields: A Long-Term Perspective
As of August 31, 2024, the 10-year note was 339 basis points above its historic closing low of 0.52% reached on August 4, 2020.
King Dollar's Softening Is Good News for Nearly Everyone
Has the tide turned decisively against King Dollar? A fall of around 5% in the greenback versus major currencies in the past two months, pushing the dollar index to a 13-month low, suggests its post-pandemic surge has meaningfully faltered.
Supply Disruptions Could Push Copper Prices Higher
Copper has been trending lower since the middle of May, but supply disruptions in Latin America could help reverse that trend.
The Big Four Recession Indicators: Real Personal Income Up 0.2% in July
Personal income (excluding transfer receipts) rose 0.32% in July and is up 4.1% year-over-year. However, when adjusted for inflation using the BEA's PCE Price Index, real personal income (excluding transfer receipts) was up 0.16% month-over-month and up 1.6% year-over-year.
The Shot Heard Round The World
The path for lower rates in the U.S. has finally arrived.
So Why Don’t You Own It?
Portfolio managers should always have good explanations for their underweight positions. These days, it matters more than ever.
Gasoline Prices Fall to 6-Month Low
Gas prices fell to their lowest level in 6 months this past week. As of August 26th, the price of regular and premium gas decreased 7 cents and 5 cents from the previous week, respectively. The WTIC end-of-day spot price for crude oil closed at $77.42, up 5.1% from last week.
AI, Natural Gas & Midstream’s Emerging Opportunities
Midstream’s second quarter earnings calls reinforced the positive outlook for US natural gas demand driven in part by expected power demand from data centers. This note discusses the advantages of natural gas for data centers, additional factors contributing to demand growth, and how midstream is uniquely positioned to benefit from these trends.
California’s EV Dreams Face an Awkward Reality
California wants some insurance against pump prices. But in proposing that oil companies there hold a minimum stockpile of fuels, the state is also, and less obviously, seeking insurance against the complications of its own energy policies. In seeking to kill off gasoline demand but ensure suppliers stay engaged for years to come, the state is confronting one of the central challenges of the energy transition.
When Did the Great Stagnation Actually Begin?
“What happened in 1971?” It is one of the most important and debated questions in US economic history, and new research suggests that the answer may be lurking a few decades earlier — in 1948, to be precise.
Will the AI Revolution Lead to Greater Prosperity?
Artificial intelligence has the potential to reshape our economies, labor markets, societies, and politics. But despite the rosy forecasts of an AI-driven boom, history shows that technological advances rarely lead to immediate improvements in living standards and often lead to profound disruption.
Unemployment, Inflation and The Fed’s Choice
This week we take a not-so-random walk through the data, trying to simplify what is actually a fairly complex subject. I think it is quite fun, but also important. Let's dive in.
How Price Controls Could Harm the U.S. Economy Under a President Harris
This week, before she accepted the Democratic Party’s nomination for president, Vice President Kamala Harris threw her support behind President Joe Biden’s tax proposals for 2025, which include a steep 44.6% capital gains rate and an unprecedented 25% tax on unrealized gains.
Trump’s ‘Made in USA’ Bitcoin Threatens China Juggernaut Bitmain’s Reign
For years, a Chinese company has dominated one of the most lucrative corners of the cryptocurrency universe. Rising political tensions, and the prospect of Donald Trump retaking the White House, pose an unprecedented threat to that reign.
August 2024 Active Management Insights: Positive Outlook for Cyclical and Value-Oriented Stocks
Amid expectations of rate cuts from major central banks, managers are increasing their exposure to more cyclical and value-oriented names, including autos, transportation, and short-cycle industrials.
Welcome to the End of the Biggest Commodity Boom
Oil, copper, soybeans and a handful of others monopolized the attention — but of all commodities, the humble lump of iron ore benefited the most from the Chinese economic boom of the last 25 years.
The Fine Line Between Content Moderation and Censorship in the Digital Age
Silver is an important component of solar photovoltaic (PV) panels, meaning that for China to reach its ambitious climate targets, it must import massive amounts of the white metal. In June alone, China spent over $228 million on silver, a new monthly record based on Bloomberg data going back to 2009.
A Rebuttal to an Energy Transition “Realist”
Ethical Capital's Sloane Ortel marshals the data to counter the arguments against aggressively fighting climate change laid out in Larry Siegel's recent article.
Global Bond Traders Are Seeking Protection From Inflation Threat
Just as bond traders grow more assured that inflation is finally under control, a camp of investors is quietly building up protection against the risk of a future spike in prices.
Oil’s AI Hedge Works, Just Don’t Mention a Recession
Earlier this year, around the time Nvidia Corp.’s market cap eclipsed that of the entire S&P 500 energy sector, I wrote about whether oil and gas stocks might offer a decent hedge when AI-fever breaks. The past several weeks have offered a test.
Latin America's Long-Term Potential
Portfolio Manager Jeremy Sutch, CFA, and Chief Investment Officer Sean Taylor assess the issues besetting the region’s key markets—from domestic challenges to geopolitical headwinds—as well as their structural strengths, and whether prospects may brighten with the onset of a U.S. rate-cutting cycle.
The Forgotten Style: What Ever Happened to Value?
Value has been in a protracted slump versus growth for years, but it’s been undergoing something of a makeover during that time.
Should We Change Strategy Heading Into the Election?
As much as my two-pronged dividend strategy works in all markets, we still need to acknowledge that politics influences the market. Sometimes it’s a tangible impact like big swings in the price of oil. Other times it’s just investor sentiment moving the market.
The Big Four Recession Indicators: Real Retail Sales Up 0.8% in July
Nominal retail sales in July were up 0.97% month-over-month (MoM) and up 2.66% year-over-year (YoY). However, after adjusting for inflation, real retail sales were up 0.81% MoM and down 0.25% YoY.
A Break in the Weather: Good News From the World’s Farms
The headlines suggest catastrophe for the global food supply: Biblical heatwaves, floods, storms and wildfires. And yet, in the world’s breadbaskets, the weather has been fair this growing season — so good that we’re facing an oversupply of key agricultural commodities and thus much lower prices than in 2022 and 2023.
Inside the Consumer Price Index: July 2024
Let's do some analysis of the Consumer Price Index, the best-known measure of inflation. The Bureau of Labor Statistics (BLS) divides all expenditures into eight categories and assigns a relative size to each. The pie chart illustrates the components of the Consumer Price Index for Urban Consumers, the CPI-U.
Consumer Price Index: Inflation Cools to 2.9% in July
Inflation cooled for a fourth straight month in July, dropping to its lowest level since March 2021. According to the Bureau of Labor Statistics, the headline figure for the Consumer Price Index fell to 2.9% year-over-year, lower than the expected 3.0% growth. Additionally, core CPI cooled to 3.2% as expected.
2024 State of Energy: Midstream/MLPs Stand Out
Oil prices have been resilient in 2024, and US natural gas prices have staged an impressive rebound. Oil demand remains in focus for energy markets, even as natural gas sees new long-term structural demand drivers.
The Great Rewiring
Haidt’s The Anxious Generation documents the post-iPhone 4 explosion of anxiety and depression disorders among adolescents. Haidt calls the substitution of screen time for play “The Great Rewiring” of young brains that is directly responsible for the dramatic increase in adolescent mental health disorders.
Understanding the Yen Carry Trade Impact on World Markets
On Monday, global equities and digital assets underwent a dramatic selloff as the unwinding of the Japanese yen carry trade rattled markets. The S&P Global Broad Market Index (BMI), which measures the performance of more than 14,000 stocks around the world, retreated 3.3%, its worst trading day in over two years.
Recession or Not, Utilities Can Thrive in Current Market
During volatile markets, investors may flock to safe haven sectors like utilities that can weather a recession.
Don’t Count Out Copper Yet
Copper prices have pulled back since peaking in May at $5.12, but the long-term bull case for copper remains strong.
The Fed Should Resist Placating Markets
Family Feud, a popular game show when I was growing up, would ask contestants to guess how a group of people had answered a specific question. It served as a regular and early reminder for me of the importance of supplementing one’s thinking with external perspectives.
Crowd Strike
One of the very popular technology companies in recent years has been CrowdStrike, Inc. It provides cybersecurity to numerous major technology companies including the top Artificial Intelligence (AI) players.
Putting the Recent Equity Weakness Into Perspective
Take the market narrative with a grain of salt and look at the fundamentals in determining your outlook for the economy and financial markets. We ultimately believe this soft patch of data will prove to a be a ‘growth scare,’ not a ‘recession reality.’
It's Time for the Fed to Cut Permalink
Never before in my history studying the Federal Reserve (Fed) has the Fed’s policy come into question immediately following the Fed decision.
The Lags are Over for Tighter Money
As Milton Friedman taught us many decades ago, monetary policy works with long and variable lags. Recent economic reports suggest that the long and variable lags on the tightening of monetary policy in 2022-23 are starting to come to an end.
Is the Stock Market Too Concentrated?
Is this the beginning of the inevitable bear, where these then-most-valuable stocks could get clobbered? Here’s what history teaches us about the current concentrated market and the current correction.
A Straight Man and a Funnyman Explain the World Economy
De Leus and Gijsels, both originating in the world of institutional brokerage identify the five principal trends affecting investments in the near future. The two take turns writing chapters so that the book is a straight man/funnyman show, with the straight man providing mostly sound, conventional analysis and the funnyman interviewing dead economists and Fed chairmen not yet born.
S&P Global Services PMI: Expands for 18th Straight Month
The July U.S. services purchasing managers' index (PMI) conducted by S&P Global came in at 55.0, just below the forecast of 56.0. The latest reading keeps the index in expansion territory for the 18th straight month.
A Closely Followed Recession Indicator Was Just Triggered. What Happens Now?
Treasury yields plunged below 4% this week for the first time since January on recession fears as global manufacturing activity contracted and hiring in the U.S. slowed dramatically in July.
Small-Cap Stocks Bolstered by Possibility of Interest Rate Cuts
While election news dominated July's headlines, small-cap stocks had their best monthly performance relative to large-cap stocks since December 2000.
Concentrate!
Like you, we have read countless comparisons between today’s enthusiasm for all things AI and the top of the TMT bubble in 2000, with the implication being that stocks are on thin ice.
Power Plants’ 833% Windfall May Unleash a Political Firestorm
A fifth of Americans are on the hook for an 833% jump in the cost to ensure the lights stay on. The folks being paid that premium, mostly electricity generators in this instance, face that most welcome of problems: What to do with a windfall.
The Big Four Recession Indicators
Official recession calls are the responsibility of the NBER Business Cycle Dating Committee, which is understandably vague about the specific indicators on which they base their decisions. This committee statement is about as close as they get to identifying their method.
Monthly Stock Sector Outlook
Our outlook on the 11 S&P 500 equity sectors.
How 2024’S Election Could Reshape Your Portfolio
President Joe Biden’s withdrawal and endorsement of Vice President Kamala Harris has sent shockwaves through the political establishment, and while former President Donald Trump remains the frontrunner, the wind has certainly shifted in Harris’s favor.
A Sticky Last Mile
Progress toward a goal usually isn’t linear. The first 50% isn’t too bad, the next 40% is harder, and the last 10% consumes most of the effort and resources. Business strategists call this the “last mile” problem… and it applies to inflation, too.
Subsidize Solar and Wind Power, Not EVs
Like it or not, the world is going to fall far short of meeting its current goals for reducing carbon emissions.
Don’t Fight the Tape. The Market Is on Small Caps.
The big story making the rounds this summer is the spike in the small-cap Russell 2000 since the release of the latest Consumer Price Index (CPI) report, which shocked the market by printing 0.0% month-over-month in June.
The Factors Behind US Investor Confidence
US stock markets have remained bullish in the face of deepening domestic and international risks, owing to three key factors. But with two of these coming under pressure, the durability of the current cycle will depend on the third: the US Federal Reserve.
Bitcoin, Ether Slide as Risk Aversion Spreads to Crypto Market
Ether, the second-largest token, paced a drop in digital assets following a slump in equities that spread unease in global markets.
$1 Trillion Rout Hits Nasdaq 100 Over AI Jitters in Worst Day Since 2022
Investors soured on the promise of artificial intelligence Wednesday, sparking a $1 trillion rout in the Nasdaq 100 Index as questions swirled over just how long it will take for the substantial investments in the technology to pay off.
After Biden: What Comes Next?
Following the historic decision by President Biden to drop out of the 2024 race, Raymond James CIO Larry Adam provides insight into his team's economic and market outlook.
Bitcoin Halving and Mining Update: Mid-2024 Perspective
The bitcoin halving event in April 2024 reduced the block reward for miners, which is expected to increase bitcoin’s price.
Why Are We Still Relying on Russia?
The appetite for nuclear energy is growing fast. Here in the US, most adults now favor expanding our nuclear power capabilities because it’s a great alternative to fossil fuels. Unlike wind or solar, nuclear provides energy around the clock. So, why haven’t we built more nuclear power plants?
Navigating the Markets: Insights From Our Q2 Economic and Market Review
The momentum we've seen in U.S. equity markets over the past year continued in the second quarter of 2024. With large technology stocks leading the wave, the S&P 500 index has risen 23% in the 12 months ended June 30.
How Hurricanes Can Impact the Energy Sector
VettaFi discusses the impact of hurricanes on energy companies — upstream, midstream, and downstream.
American Farmers’ Next Hot Commodity Is Canola for Biofuels
Canola oil — invented in Canada 50 years ago as a healthier, shelf-stable cooking fat — may soon venture beyond the world’s kitchen cupboards to a spot in the airways.
Why The Smart Money Is Heading To Texas
A seismic shift is taking place in corporate America as even more companies announce plans to relocate from blue states to more business-friendly jurisdictions like Texas.
The Rice Price Scare is Over — Let’s Learn the Lessons
Wheat and corn are the most actively traded grains in financial markets. But they can’t damage the global economy like rice. The staple for half the world is largely ignored by Wall Street, but it’s the one commodity that really matters for global food security.
Kinder Morgan Says AI, Data Centers Are Natural Gas Growth Opportunities
Kinder Morgan Inc. (KMI) provided insight into natural gas demand and growth opportunities during the firm’s second-quarter earnings call.
When It Comes to U.S. Electricity Demand, Chatbots Matter More Than Cars
Artificial intelligence is set to become a game changer for the electric power industry, notes Pavel Molchanov, Managing Director, Energy Analyst, Equity Research.
Goldman’s Top Stock Analyst Is Waiting for AI Bubble to Burst
Over three decades on Wall Street, Jim Covello has learned how painful it can be to bet against an inflating tech stock bubble. The market has a way of minting riches, month after month, even after it’s clear the latest breakthroughs aren’t playing out quite as expected.
4th Industrial Revolution Could Bolster This Critical Minerals ETF
A transition to alternative energy is helping to fuel a 4th industrial revolution. In turn, this will increase critical minerals demand.
Goldman Sachs On Generative AI: It’s Complicated
Artificial intelligence and generative AI remain the proverbial hype trains of thematic investing this year.
Wall Street Starts Calling Time on ESG Labels After Backlash
At Institutional Investor, keeper of Wall Street’s version of the Oscars for financial analysts, the winner in one category this year is — nobody.
Private Credit Outlook: The Heat Is On
Private market growth in recent years has been remarkable. We think there's more to come.
Schwab Market Perspective: Connecting the Pieces
Softening inflation supports the potential for a Federal Reserve interest rate cut in coming months, but there are complexities below the surface.
Petrodollar Panic: Separating Fact from Fiction
Notwithstanding whether there was a formal agreement, the petrodollar is not going anywhere. Even if Saudi Arabia accepts rubles, yuan, pesos, or gold for its oil, it will need to convert those currencies into dollars in almost all instances.
Attitude Adjustments
We are in the time of year when Americans pack transatlantic airliners for their European vacations. I had actually hoped to be one of them. That didn’t work out but we can still talk about events in Europe. And we probably should, because potentially major changes are happening.
France’s Uncertain Future And Biden’s Leadership Crisis Shake Investor Confidence
As many of you are no doubt aware by now, France’s left-wing New Popular Front alliance thwarted Marine Le Pen’s National Rally party in a stunning upset, leaving the country without a clear majority in parliament.
Nuclear Energy Gets a Much-Needed Boost
President Joe Biden, as you’ve no doubt heard, has had a rough few weeks. Yet on Tuesday, he signed a bill into law that could well prove transformative for America’s energy future. Here’s hoping — whatever happens in November’s election — that more progress lies ahead.
Cantillon Marries the Red Queen
Over the last four years, we have maintained that the U.S. middle-class consumer is on firmer ground than many believe. The first wave of inflation that seems to be receding is just that—the first wave of a set—and oil and gas companies are fundamentally well-positioned for the next decade.