For the first time in four decades, inflation is a key risk in the US and other developed economies.
Indeed, according to the University of Michigan survey, US consumers expect annualized inflation of close to 3% over the long haul, a full 1% above the Fed’s 2% target level.
Meanwhile, more than 50% of small businesses in the National Federation of Independent Business (NFIB) survey reported that job openings were hard to fill in the month of August 2021, the highest reading in the history of this survey dating back to 1973.
Rising labor costs prompted FedEx (NYSE: FDX) to slash guidance in September while expectations for Q3 2021 US economic growth have plummeted since August as many fret that rising prices are beginning to pinch the consumer.
And while they’re often dismissed as volatile, energy prices are at the epicenter of the world’s current bout with inflation just as they were in the Great Inflation episode of the 70’s and early 1980s. As we’ll cover in this issue, a burgeoning energy crisis in Europe is driving record power prices in the region and forcing a re-think of the timing of the EU’s green energy push.
Some might argue convincingly that extreme electricity cost inflation helps explain why German voters handed outgoing Chancellor Angela Merkel’s center-right bloc its worst election showing since 1949.
Our view remains that markets have only just begun to price in the risk that resilient global demand for fossil fuels – crude oil and natural gas – coupled with years of underinvestment in exploration and development will power a multi-year supercycle for prices.
1| Feature: A New Energy Supercycle. We take a closer look at recent spikes in US and global natural gas prices including our short and longer-term outlook for US gas prices. We also offer a brief update on our outlook for crude oil.
2| Portfolios. We’re updating buy under target prices for some or our favorites in this issue.
3| Endangered Dividends List. There were no dividend cuts in our coverage universes since the September 17 issue. The current EDL roster remains at 13 names, three of which rate sells and the rest holds at current prices.
Your complete guide to energy investing, from growth stocks to high-yielders.
In October 2012, renowned energy expert Elliott Gue launched the Energy & Income Advisor, a twice-monthly investment advisory that's dedicated to unearthing the most profitable opportunities in the sector, from growth stocks to high-yielding utilities, royalty trusts and master limited partnerships.
Elliott and Roger on Oct. 28, 2021
Balanced portfolios of energy stocks for aggressive and conservative investors.
Our take on more than 50 energy-related equities, from upstream to downstream and everything in between.
Our assessment of every energy-related master limited partnership.
Roger Conrad’s coverage of more than 70 dividend-paying energy names.