Commodity & Infrastructure Insights

Every investor is aware that the market’s been volatile recently. The VIX is high but converting it into typical daily moves isn’t intuitive. Several readers like the chart below, which shows what % of the last 100 trading days have seen the market move by more than 1% in either direction. It’s currently 55, so more than half of the past 100 trading days have seen such a move.

People may disagree on whether this Fed is hawkish or not, but reactionary is not a controversial adjective. They first demonstrated this in waiting eighteen months after the Covid vaccine and fifteen months after the last $1.9TN slug of fiscal uber-stimulus to roll back their monetary accommodation. Quantitative Easing (QE) is more aptly followed by Qualitative Tightening (QT*), since they regard the inverse of bond buying as letting holdings mature as opposed to auctioning their MBS holdings.

People may disagree on whether this Fed is hawkish or not, but reactionary is not a controversial adjective. They first demonstrated this in waiting eighteen months after the Covid vaccine and fifteen months after the last $1.9TN slug of fiscal uber-stimulus to roll back their monetary accommodation. Quantitative Easing (QE) is more aptly followed by Qualitative Tightening (QT*), since they regard the inverse of bond buying as letting holdings mature as opposed to auctioning their MBS holdings.

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 2BCF/D of additional natural gas in the US domestic market. Dutch TTF gas futures similarly rallied on fears of reduced supply. But both markets later reversed their initial move.

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 2BCF/D of additional natural gas in the US domestic market. Dutch TTF gas futures similarly rallied on fears of reduced supply. But both markets later reversed their initial move.

High inflation has captured the headlines as of late particularly as CPI recently hit the highest levels since 1981. Some are even suggesting we will face hyperinflation. However, while inflation is certainly present, the question to be answered is whether it will remain that way, or if the worst may already be behind us?

While wheat prices have garnered significant attention since the Russian invasion of Ukraine, corn has arguably been the agricultural commodity most affected by the war. In 2021, Ukraine was the third-largest corn exporter in the world, accounting for 11.4 percent of global exports.

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.”