Oil Producers in a Difficult Spot?

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That’s the central thrust of a couple of news writers in Wednesday’s Wall Street Journal. Their lede:

Big Oil has a tough balancing act: help further President Trump’s “energy dominance” agenda and stick to its climate goals at the same time.

And

The escalating assault on climate initiatives puts large drillers such as Exxon Mobil, Chevron, and Occidental Petroleum in an awkward posture. They have pledged to curb their emissions—and unveiled plans to spend billions of dollars on low-carbon technologies such as carbon capture and storage, hydrogen and biofuels.

This whole idea of a “tough balancing act” is utter nonsense. The Trump administration simply is moving to take the shackles off American energy production.

Nor is there anything at all in the Trump administration’s assault rolling back of climate initiatives that make no economic or climate sense that prevents those and other businesses from continuing those pledges. On the contrary, in the present and improving environment, “Big Oil,” natural gas producers, coal miners, wind and solar energy producers—all of them—are better able to make their production decisions, including those concerning their emissions, based on sound business decision-making and not in response to government pressures to produce only certain types of energy.

A Random Question

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I have one, triggered by a settlement between the Federal DoJ and Kentucky regarding the latter’s granting of in-state college/university tuition rates to illegal aliens living in the State. The settlement has Kentucky rescinding that grant.

Thus:

The first clause of the first article of the 14th Amendment says this:

All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.

The second sentence of that clause says this in pertinent part:

No State shall…deny to any person within its jurisdiction the equal protection of the laws.

What does this suggest about a State’s colleges’ and universities’ use of resident—citizen of the State and of these United States—vs non-resident—but still citizen of these United States—tuition?

Ya Think?

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The Just the News headline says it:

UN-backed Gaza City famine determination may be flawed by reliance on incomplete data

This fleshing out:

While the world is bombarded with heart-wrenching images—many of them fake or staged—of starving children, a review of the data shows that the IPC appears to have relied on incomplete survey results for the month of July to make its claim [of famine].

It also turns out that the UN’s IPC (Integrated Food Security Phase Classification) used carefully selected “sample” data from Gaza with which to manufacture its claim.

The IPC relied on a sample of 7,519 subjects in the Gaza Governorate to calculate the malnutrition rates.

However:

Nutrition Cluster published the full health data from the Gaza Governorate in July, which showed a sample size of 15,749 subjects.

This dishonesty was exacerbated by the intrinsically dishonest press’ bruiting about those inaccurate, incomplete, and openly falsified “data” as though they were factual and told the whole story.

Israel and its IDF is fighting a three-front war, not just the terrorists in Gaza.

Correct Move

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A DoJ paralegal flipped off a National Guard soldier while the paralegal was enroute to her office work. Then she bragged about it to a DoJ security guard on her way into the building. When word got to Attorney General Pam Bondi, her response was prompt and direct. Bondi’s memo to the paralegal said, in part:

Based on your inappropriate conduct towards National Guard service members, your employment with the Department of Justice is hereby terminated, and you are removed from federal service effective immediately[.]

This has two correct moves in the same sentence. The first is the prompt termination of the misbehaving paralegal. The second is especially important: the paralegal is not going to be reassigned somewhere else in the Federal government; she’s barred from Federal employment altogether.

The woman might have gotten away with her reprehensible behavior, even though she would have deserved to be fired, had she not bragged about it. The lack of judgment she showed by bragging about her misbehavior, though, conclusively demonstrates she’s unfit for Federal employment regardless of any specific act of misbehavior.

Bondi’s memo can be read here.

What is their Value, Really?

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What is their Value, Really?

In a Sunday Wall Street Journal article on universities’ penchant for investing their endowments in private equity (as opposed to instruments bought and sold on public exchanges, these are bought and sold in private deals between the university and one or another private (i.e., not traded on an exchange) entity, or rarely a private deal to which a publicly traded entity might also agree.

A few exceptionally talented, or lucky, endowment managers seemingly did very well in this environment. Yale’s late David Swensen got an annualized return of 13% over the course of his management.

But how valuable are those investments, really? The WSJ‘s subheadline reads

Universities and other institutions have built up large private-equity holdings, but they are now lagging behind the S&P 500 and aren’t easy to shed

And this:

And much of what those funds earned for their investors in that time was on paper; endowments and other institutions were getting less and less cash that they could put to work in the booming stock market.

And this [emphasis added]:

…making it hard for managers to get the prices they want for the companies in their portfolios. Meanwhile, institutions have struggled to find investments that hedge against stocks and private equity without further eroding returns—and the problem has gotten worse with the stock market’s latest rally.

The value of any investment is what someone is willing to pay to get it. The initial value of those private equity investments in these endowments is what the endowment managers paid to get the private entity or a piece of it. Now they’re moving to sell some/most/all of these privately held pieces, but there are few to no buyers at those initial prices or anywhere near those prices.

This is Yale’s continued position:

Yale said in a statement that it remains committed to its private-markets strategy. “We trust that sophisticated investors, especially our partners who know us best, understand this,” the school said.

That sounds like the typical arrogance of Know Betters.

What is, in the end, the true value of those privately held pieces? It’s still whatever a buyer is willing to pay for them. And that calls into question two things: an accurate valuation of those entities and the wisdom of relying so heavily on non-publicly traded entities for endowment investments.

Former Yale endowment private-equity manager Tim Sullivan:

One of the reasons we hire these guys is because they know when’s the right time to sell an asset[.]

The problem here is that a potential buyer won’t necessarily agree that it’s the right time to buy that asset.

It’s tough to grow, or even just to maintain the value of, an endowment based on phantom valuations of its holdings.