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Is The Federal Reserve Wrong Again In Believing Inflation Is Transitory?

Mar. 02, 2023 5:20 AM ETEPD, ET, GGN, MMP, MPLX, TEI, TELL13 Comments
Tyson Halsey, CFA profile picture
Tyson Halsey, CFA


  • No Fed pivot to lower rates in 2023.
  • Stocks are in trouble if Treasury yields keep rising.
  • Buy high yields to hedge your portfolio.
  • Gold equities and Tellurian Inc. have asymmetric upside.

Screen with rising yields and interest rates.

Rising interest rates are taking the bunch bowl away from stocks!

Torsten Asmus/iStock via Getty Images

Between October 13 and February 2, the stock market enjoyed a healthy rebound on the optimistic market outlook that the Federal Reserve’s rapid 2022 tightening would bring lower inflation; a mild recession, and then the Federal Reserve would reverse directions and ease the

This article was written by

Tyson Halsey, CFA profile picture
Tyson Halsey, CFA, founded Income Growth Advisors, LLC, a South Carolina based Registered Investment Advisor. Through his career, Halsey has researched and invested in technology, energy, quantitative strategies, been a shareholder activist on behalf of shareholder rights, and invested in Master Limited Partnerships (MLPs) since 2000. . Halsey has appeared in major media including The Wall Street Journal, Barron's, Charleston Post and Courier, South Carolina Public Radio and CNBC. Halsey won the USA Today CNBC Investment Challenge in 1992 in the options division.Halsey formed Optima Process Systems, Inc. in 2018 and used economic cost modelling for ESG solutions. We analyzed heavy oil upgrading in South America, bunker fuel desulfurization for IMO 2020, and biofuel and biomass processing. Halsey has moderated panels on the energy transition "ESG 2.0" for the Ivy Family Office Network (IVYFON).

Analyst’s Disclosure: I/we have a beneficial long position in the shares of TELL, GGN, TEI, ET, EPD, MMP, MPLX either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (13)

jsantmyer profile picture
The FED is always wrong. We all know that..
Excellent data and commentary.
DKB2 profile picture
I found it to be a serial distribution cutter.
04 Mar. 2023
When I look at these funds I see lost principal: Templeton down over 20% . What good is yield when your investment is being demolished? Two year treasury’s at almost 5% and if the rise interest rates ends you get your money to try elsewhere.
jsantmyer profile picture
@DavG no you simply ride the interest rate decreases by buying longer term treasuries to lock in the higher rates.
08 Mar. 2023
@jsantmyer that’s certainly one way or use 2 year treasures then when the Fed starts easing buy stocks
E.D. Hart profile picture
I agree about gold and energy, but I dont see the asymetric upside to TELL. If anything I see asymetric downside at present. A better bet is DMLP, the oil and gas royalty company that pays out 11% or so, and has been adding reserves, and is debt free.

On the gold side, I would be buying cheap gold royalty companies like Empress Royalty; EMPYF. Long: both securities mentioned.
Christopher Fortin profile picture
@E.D. Hart While DMLP is a good choice for those seeking income from oil and gas royalties, it may not be the best bet for investors looking for an asymmetric upside. DMLP's potential is limited by the volatile nature of the oil and gas market, as well as its North America-focused operations.

In contrast, TELL has significant potential for upside through its liquefied natural gas (LNG) export terminal. As a key player in the rapidly growing global LNG market, TELL's terminal benefits from its strategic location near the Gulf of Mexico and long-term contracts with established players in the industry, providing a level of revenue stability.

Investors interested in gold may want to consider Empress Royalty. While it may be a cheap gold royalty company, it is important to carefully evaluate its financials, management, and growth prospects before investing. It's worth noting that investing in a single company carries inherent risks and may not be suitable for all investors.
edaskew profile picture
Sounds good. You mentioned a pretty good chunk of my portfolio, except I just don't know that inflation really will be that persistent, and I have FOMO when it comes to some of the longer duration fixed income. What if you had started buying up stuff like that in 2005 or 2006? Would that have been a bad move? I missed out on that party, and I don't want to make the same mistake twice. Maybe it will go down and stay there for a while, but with the sort of debt levels we have today, these interest rates ultimately have to take sledge hammer to the economy.
oilyolin1 profile picture
Tellurian has not secured funding their LNG plant. AS of today, IMO, investing in their stock is NOT worth the downside. Management has a history of being over paid. Indeed IMO, this is not good advice when interest rates are increasing. But if you believe in this stock, put your money where your opinion is. Buy low sell high.
Tyson Halsey, CFA profile picture
@oilyolin1 Tellurian is definitely a speculative situation. Charif Souki is a risk taker and innovator who founded and was co-CEO of Cheniere. He got their original gasification facility funded; reversed the business plan when abundant nat gas was discovered and Cheniere went from 1 to 160-180.
The key has always been catching at financing turning point. Did you read the GAIL Expression of Interest? Did you see that Saudi Aramco is shopping for LNG too? Did you know that Simoes left Sempra for TELL and he help get Saudi Aramco interest there?
Their model needs to get financed, but there is growing demand for LNG and Tell has approvals, Bechtel and is funding foundation to make their LNG one of a limited number available for 2026-2027 delivery.
Yes buy low.
oilyolin1 profile picture
@Tyson Halsey, CFA Yes , I do agree LNG is in demand as an export for the forseeable future. If they can get financing with a reasonable deal, and can secure enough long term contracts to reach fid, it will take years to build the LNG plant. There are larger LNG concerns that have already had to delay their fids because they haven't secured the long term contracts needed.
I am bullish on exporting LNG, and am looking at Sempra, Energy Transfer, and the soon to be operating Golden Pass LNG. Even Canada has potential for LNG plants, like the small one on the west coast. As far as I know, there hasn't been one on the east coast reaching fid yet that was proposed. Shell and Exxon along with Cheniere are ahead in LNG and may be a better investment at this time. But good luck investing.
Good article and thoughts around history (1970’s) repeating itself. You provide examples of funds/stocks to buy in each investment area except for gold. You may want to research and report on CEF to your readers?
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