After a long hiatus,investors are returning once again to the midstream sector.In a difficult year for markets,the Alerian Midstream Index(AMNA)in 2022 was up 32.9 as of Oct.31,compared to a 17.7 decline in the SP 500 over the same period.The gains follow years of underperformance by midstream.But turbulent macroeconomic conditions,including soaring inflation and a hawkish Federal Reserve,have investors looking for safe havens.In many respects,midstream fits the bill.Just look at the average 6.07 yield for companies in the AMNA index,more than triple the return demanded by investors in the typical SP 500 company(see Figure 2).Midstream is the focus of East Daley Analytics,and we see exciting opportunities on the horizon.The Russia-Ukraine war has boosted global demand for U.S.energy products while helping solidify political consensus around the primacy of energy security.Midstream also has a critical role to play in the energy transition; infrastructure will be needed to move products such as hydrogen and renewable fuels or to capture and transport CO2 emissions for burial underground.
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