2021: Themes, Trends And Time Running Out -- February 6, 2021

The Bakken, of course, is what this blog is all about. But to keep me from getting bored and to put the Bakken in perspective, the blog is peppered (highly peppered for that matter) with non-energy-related items.

During the Bush, Obama, and Trump administrations, I was focused on politics to a great extent. Now that I am well into the winter of my life, metaphorically speaking, I am less interested in politics (what comes around, goes around; nothing new under the sun; to the winner goes the spoils) and am turning to investing. 

Along that line, there are two blogs within the blog that I now update fairly regularly: the "Investors" page; and,  "Themes - 2021."

Bonds and interest rates have never really interested me, with regard to studying and/or investing (at my peril, of course). But that is changing. I'm still not interested in bonds, but interest rates are now back on my radar scope and, it appears, back on the radar scope of a lot of other folks.

This morning, I got a very interesting note from a reader who follows this stuff a lot more closely than I do. His highly edited note from earlier today:

30-year-Treasuries on election day, 2020, were  1.60%. Today, only three months later, the rate is 1.97%. 

Although 2% is still very low compared to the last forty years, this 30-year-T-bill has increased by 18%.   

The reader does not expect a replay of what we saw in the 1980s but even a move of 2.5% or 3% in the next year or so would be a huge move. The reader suggests that this makes "inverse bond ETFs" very, very attractive, if I'm reading him correctly.

But this is what really caught my attention. The reader went on to say:

We may see many stock company mergers / buyouts. 

So, I had just filed that little nugget under "obscure/interest_rates/bonds/ETFs” -- a file is tucked away in a 2 nm x 3 nm node deep in the recesses of my left cortex that is seldom visited. 

But then this, of all things, popped up over at Argus Media from February 3, 2021: these are their six themes for 2021:

• energy transition;
• Covid-19 and the "new normal"
• the rise of digital disruption
• diversity and inclusion
• mergers and acquisitions
• evolving credit risk

Look at #5:

Uncertainty caused by COVID-19 dented M&A activity in early 2020, but the pace of deals picked up again towards the end of the year. Among financial institutions, the weakest sector in 2020 was US banks. But earnings headwinds will push banks to do deals in 2021 to gain scale.

After its initial slowdown, the technology sector rebounded strongly last year, with acquirers spending more than $600 billion on big bets in key markets such as enterprise software and semiconductors. Given the blockbuster deals announced in the second half of 2020, the momentum seems likely to roll into next year.

Thirty-year treasury history, link here. Look at this historical graph, it's not too hard to imagine 4% for the 30-year treasury before the next presidential election. 

By the way, take a look at something else on that graph. Hint: the width of the grey bars.