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Brent crude oil rose above $100 a barrel for the first time since July, while the U.S. benchmark West Texas Intermediate (WTI) crossed $95, with varying impacts on energy ETFs. The price surge followed escalation in the Middle East conflict, including U.S.
Equity markets remain in a prolonged, robust bull run, demanding high selectivity for new opportunities. Infra and utility sectors are heavily dependent on AI, while energy and midstream appear overinflated due to war-related factors. High-duration assets are considered excessively risky in the current environment, favoring cash preservation instruments like high-quality CLOs and T-bills.
Some of my biggest winners in the past remain very attractive opportunities today. I detail why these names combine high yield, strong growth, and sound fundamentals. I also discuss the risks they face.
Albert wrote in this week about a problem that can sometimes plague your investments. His email started, “Sometimes I like something that is too complicated for me to handle the taxes.
Midstream energy infrastructure has demonstrated notable defensiveness during a period of heightened macro volatility. This resilience is supported by durable cash flow characteristics that distinguish the segment from the broader energy sector.
Retirees face a challenging trade-off: higher-yielding assets sacrifice growth or add risk, while core dividend ETFs like SCHD now yield only ~3%. Relying solely on high-yield ETFs (PFF, HYG, JEPQ) exposes portfolios to credit risk, limited income growth, or capped upside, complicating sustainable income generation. A core & satellite approach—anchoring with SCHD-like holdings and selectively adding midstream (AMLP) and BDCs (BIZD) can enhance yield while managing risk.
Market conditions are primed for extreme volatility, driven by record valuations, fiscal deficits, and geopolitical risks. I see downside volatility as the base case, with limited upside catalysts for the S&P 500 given current fundamentals. Midterm elections and persistent macro risks could serve as triggers for heightened market swings.
Midstream MLPs and corporations generally posted strong second-quarter earnings, benefiting from record volume throughput, strong margins, and robust demand for natural gas and natural gas liquids (NGL) exports. Companies also demonstrated the defensive nature of their fee-based cash flows.