Week Thoughts: Yield Still Plays

Midstream was a big winner this week, benefitting from several converging forces. First, earnings releases were generally positive, headlined by the Williams analyst day and the 10% EBITDA CAGR, then punctuated by the big Canadian pipeline companies that reported Friday. The second big force supporting midstream this week was the violent AI disruption trade that again ripped through the market, leading to rotation to hard asset related companies more immune to AI disruption. Finally, interest rates dropped 15 basis points in the flight to safety trade that helped income-oriented stocks like midstream stocks to outperform.

For some of us who are not used to things working out so well, it does feel like the 15%+ returns for midstream to start the year have come too easily and makes us nervous, but others seem to be discovering or rediscovering midstream.