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The year 2021 was a mixed bag of innovation, value vs. growth debates, equity recalibrations, high supply side inflation (stagflation), structurally challenged employment data, new virus variants and projected rate hikes. Going into the end of the year, the highly transmissible Omicron variant is roiling markets, overshadowing the Federal Reserve’s (“Fed”) policy guidance of rate hike to rein in inflation.

Since launching our ambitious series on commodities, we have spent a significant amount of time on energy. That's with good reason: according to the latest reading of the U.S. Consumer Price Index that has markets jittery and the Federal Reserve dreaming of interest rates, energy prices are up 33 percent, compared to 6.8 percent for all goods. But if energy prices have spiked suddenly, hiding in plain sight of the global inflation story are food prices, which have steadily increased since May 2020, when pandemic-related economic shutdowns started impacting agricultural supply chains.

Today, hydrogen is largely used for industrial purposes, either in oil refining or the production of ammonia fertilizers. (If you didn't read our missive on fertilizers, click here). But hydrogen has a lot more potential than that. Hydrogen can also be used as a fuel. It can be transported via pipelines or ships, just like liquified natural gas.

For the past few months the eurodollar futures market has steadily priced in the FOMC’s abandonment of “transitory” in its assessment of inflation. More often than not the Fed follows the market. The typical absence of public comments that precedes FOMC meetings was extended while Biden contemplated renewing Powell’s term.

To understand the importance of data, and how to express that importance in terms of investments, let's start with something that is simultaneously simpler and more complex: A map. This is just not any old map, however. The image below shows the plumbing of the modern economy – the underseas cables that create the digital environment that allow you, dear reader, to consume this content wherever in the world you are sitting.

To understand the importance of data, and how to express that importance in terms of investments, let's start with something that is simultaneously simpler and more complex: A map. This is just not any old map, however. The image below shows the plumbing of the modern economy – the underseas cables that create the digital environment that allow you, dear reader, to consume this content wherever in the world you are sitting.

In the semi-annual Financial Stability Report, the Fed issued a stock market warning as elevated valuations are causing markets to be “vulnerable to significant declines”.

Charting the stock market “melt-up” in prices, and the Fed’s naivety of the laws of physics may be of benefit to younger investors. After more than a decade of rising prices, accelerating markets seem entirely normal, detached from underlying fundamentals. As a result, new acronyms like “TINA” and “BTFD” get developed to rationalize surging prices.