Futures this morning telling us we're in for a strong start and after no sell off Friday on the employment numbers we continue to view the market as wanting to move higher.
Through all of this the dow transports have fared much better and in fact the transports are not too far away from setting an all time high...about 400 points or so away. Not impossible.
And of course we have our MLP chart which has come off its bottom and appears to be attempting to get back above 290 where the old base was from August. While the rally here started a little later than the dow, we have seen relative outperformance over the last 3 days and money returning to some of the harder hit PIPE victims. I would expect that trend to continue for the short term.
No morning headlines so far but this is an early post and no upgrades or downgrades have appeared yet. Crude oil is higher by 1 dollar this morning at 107 and change. Nat gas is up 15 cents. Dollar up..rates up. Based on yield spreads which have gotten to 400 basis points vs the 10 year we have tons of room to rally. And if we combine an increasingly favorable market enviornment for MLPS plus the next round of distribution increases coming plus spreads that could easily drop 100 basis points and we could be in for much higher prices.
Many of you are tackling your K-1's as we get out taxes done. And as always this time of year we get the MLP in and IRA question. Now i have MLPS in my IRA and i trade them in there. The issue is the UBTI or unrelated business income which if exceeds 1100 bucks triggers a tax event that will be paid with IRA money. Now my view on this is if you think MLPS are going to outperform longer term against anything else then its okay in my view to keep them in a IRA. As per the UBTI it is cumulative. In other words you can offset a positive UBTI in one MLP with a negative UBTI with another. And the yearly total if its a loss can be carried over to next year and beyond. And it is the responsibilty of the custodian of the account to do all the irs paper work. So all i do is collect the K-1s and mail it to Charles Schwab and they do the rest. Just some food for thought.
joseph cioffi's Source Page - Associated Content
3 comments:
I am new to MLPs and watching CEP Why was it selling for $50 last August and $20 now? Why is it down today when everything else is going up?
"Why was it selling for $50 last August and $20 now? "
Entire MLP sector has been hammered by credit crunch, increased risk aversion, hedge fund liquidations, recession fears, and issuance of new units, etc.
E&P MLPs have been particularly hit hard.
Bruce (long CEP among others)
With regard to holding MLP's in an IRA or other tax deferred account: I use closed-end funds in these accounts, avoiding all complexities. For example, TGY, FMO, SRV, and MTP (MLP&Strategic). The last two are mis-priced now and yield well above the average of the securiities they own.
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