“Texas isn’t well prepared for unusual Arctic weather,” a hilariously understated bullet point from a Monday Bloomberg article flatly declared.

Grid operator Electric Reliability Council of Texas, which manages some 90% of the state’s electric load, said it “set a new winter peak demand record” on Sunday. Wholesale power prices jumped above $9,000 a megawatt-hour. For reference, that happened in August of 2019 as well, when temperatures in Dallas, for example, hit 103 degrees Fahrenheit.

On Monday, by contrast, it was 9 in Dallas. And it was -1 in Midland over the weekend, which matters because… you know, oil. According to sources (traders and execs), Permian production is down as much as a million barrels a day. WTI topped $60. It’s overbought.

“The cold spell will be a test of Texas’s freewheeling electricity model,” FT wrote, noting that “electricity retailers compete fiercely for customer business, unlike utility monopolies that operate in some other states [and] the prospect of soaring electricity bills led some retailers to suggest that customers take business elsewhere.” Rolling blackouts were in the offing.

Anyway, there are plenty of climate change jokes you could make, some of them funny, some of them not.

I’m a lot of things, but a meteorologist isn’t one of them (unless you consider everyone who muses about markets a kind of glorified weatherperson). I’m definitely no climatologist. So I’ll just keep the humor to myself. What I would say, though, is that if Donald Trump’s Twitter account were still around, it would probably feature all manner of ill-advised allusions to a freezing Texas “proving” that global warming is a “witch hoax,” as the former president once put it, while accidentally mixing his own Mueller metaphors.

A lot of what “counted” (so to speak) was closed Monday, with the US and China out for holidays. But global stocks were gunning for an eleventh consecutive daily gain. And the Nikkei hit 30,000 for the first time in roughly 500 years.

Obviously, Japanese stocks still have some ground to make up if they want to breach old records. The Nikkei is still some 30% from its all-time high.

This is one of the most famous exceptions to the rule.

“Stocks go up over time.” Except.

It’s usually warm in Texas. Except.


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5 thoughts on “Exceptions

  1. Stuff happens…Which is a reminder that when there is a narrative around certainty that because of central bank liquidity and fiscal insanity that in base case is uber-bullish risk assets, things can and often do change dramatically. There is always a backdrop of uncertainty which is dangerous to minimize. Just when you least expect it, things change.

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