WHERE WOULD YOU RATHER BE?
Yesterday's last hour collapse ( and it was a collapse) in the Dow Industrials did pull down MLPS but we managed an up close; well off the highs when the index at one point was up 3 points yesterday. They were buying everything defensive yesterday and we need to see follow through today if the sell off continues or if the market stages some sort of stand in here.
It makes for tough times in here trading and trying to figure out where we are going. Overall i would perfer a hard early morning sell off and then a rally back later. Futures were stronger early but have now turned lower on the S&P.
MLPS could use some drivers but there are no headlines this morning and no upgrades or downgrades so we'll just let the trading day begin.
joseph cioffi's Source Page - Associated Content
7 comments:
Feels like the MLP's have lost the mojo. Weak yesterday, weak again today.
Just about had it! Strategy has been to wait until mid-January to see if buying would replace year-end tax loss selling. Aint happening and I'm about to unload the whole lot of MLP's. I suspect many feel the same way and end of January may look like all of December {sell,sell and more sell].You all familiar with the term 'return to the mean' phenomonen of long term high flyers as they fizzle out?
BPL Sold 10 year 6.05 bonds at par.
Rated BBB. So BPL at least is creditworthy.
JF50
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Jan 8 (Reuters) - Buckeye Partners LP (BPL.N: Quote, Profile, Research) on Tuesday
sold $300 million in 10-year notes, said market sources. Lehman Brothers Inc and Suntrust Capital Markets were the
joint book-running managers for the sale.
BORROWER: BUCKEYE PARTNERS LP
AMT $300 MLN COUPON 6.05 PCT MATURITY 1/15/2018
TYPE NOTES ISS PRICE 100 FIRST PAY 7/15/2008
MOODY'S Baa2 YIELD 6.05 PCT SETTLEMENT 1/11/2008
S&P TRIPLE-B SPREAD 220 BPS PAY FREQ SEMI-ANNUAL
FITCH TRIPLE-B MORE THAN TREAS MAKE-WHOLE CALL 35 BPS
I guess we are faced with more than "tax loss selling" because that should have ended 12/31. We just have a lack of interest in the sector and extreme levels of volatility which will keep investors cautious. On the upside we have dividend yield, as well as interest rate cuts on the way.
Its grim and this is the kind of the market which just wears people out, myself included.
Unless you have concerns about the fundamentals of the specific MLPs you own, now is NOT the time to sell. Only the weak hands will get discouraged and sell, which is what helps form bottoms. The best strategy is to just hang on, enjoy your dividends and know that at some point in the next 12 months or so you will be very glad that you did.
Bruce Sherman
Oakland, Oregon
The 10yr UST is at a 46 month low (3.80%). I believe that at some point soon, investors will begin to scramble for yield, maybe after the next fed rate cut. I also believe that at some point soon MLP's will rally based on yield alone. Fundamentals are sound in our sector.
DS
I couldn't imagine selling now...what would you buy? What's the hot sector to be in now? Or do you park your cash in a money market? These MLPs pay you higher rates than that while you wait for things to pick up. Those distributions will keep growing even if the unit prices don't. But look what happens to the yield if the market keeps selling. Do you really think sane investors will let the yield on KMP, MMP, and EPD get to 10%? I say let the market keep selling while I use my quarterly distributions to keep buying more.
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