AREN'T YOU GLAD THE FED CUT RATES?
NOT IN MLP LAND!
The day the fed cut rates (9/18) we closed at 303.95 on the MLP index and there was hope. Here we are on 10/3 at 292.86 down 11.09 or nearly 4% while the rest the market has rallied to new all time highs.
We have all struggled as to the whys for all of this. I think this may just boil down to the fact that our group being more defensive is seeing money coming out and heading for the truly sexier groups typical of a post rate cut market. Hell even the housing stocks were up yesterday; how sad is that! I would say that the excuse of the so-called tax changes is just plain bullshit. First off there is nothing new here that hasn't been out there for months. Secondly the tax changes are directed at priviate equity and not energy mlps. And thirdly the Schumer threat to include em all is a poison pill to prevent changing the tax status of priviate equity. Democrats continue to back away from this anyway. So lets put that to bed once and for all. I did notice yesterday large volume spikes in some mlps where shares were being thrown out the window on no news. Constellation Partners (CEP) was down nearly 5 points on 10 times normal volume for example. Could we have seen the final blowout yesterday?
Some earnings news this morning on Amerigas (APU) as it puts out good numbers and guidance for next year. No other news this morning and no upgrades or downgrades.
Overall market starts lower this morning so lets see if a more defensive tape brings in some buyers.
joseph cioffi's Source Page - Associated Content
7 comments:
Listen people, there is nothing wrong with the fudamentals in MLP land and growth prospects are very strong. 6.5% yields with 10% + growth in the yield is as attractive as can be from a risk/reward point of view. This recent volality on the downside is more than likly due to funds (hedge funds) that were significanlty leveraged in this and other spaces and have been forced to liquidate. I think the dust should settle very soon.
I agree, this looks very irrational, but of course it's still quite painful. Some of MLP's are now down over 30% from their highs. Not supposed to happen this way in MLP land. Could be a huge buying opportunity, esp. in the E&P MLP's. Why would the value of these plummet, while all my other non-MLP's oil stocks, keep rising? Makes no sense. This must be forced selling.
yes, its painful. E&P feeling pain relative to others? easy, that's because the hedge funds own E&P stocks. look at the top holdings of the e&p's in yahoo. all public info.
But the volume today looks alot lower. So institutions may have stopped selling. Maybe this is only scared retail now??
Maybe it's just me, but what's out there more sexy than MLPs right now? As I type this LINE is yielding 8.8% based on the pre-announced quarterly distribution! And that distribution is supposed to go up even more. The price of RGNC has retreated to almost the same level as mid-May -- before the big GE announcement. How can the market be dumb enough to let this happen?
good questions mike. And from this lies opportunity as we await in joyful hope for the coming of the bottom!
okay so you know its bad when you are pulling out phrases from the Sunday Mass in order to illistrate a point and wait for a market turn!
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