MASTER LIMITED PARTNERSHIPS

Friday, September 12, 2008

Looks like the dead cat bounce is taking hold here as we're up 3 1/2 points on the MLP index which after what we've been through is nothing. But lets see where the day takes us. At least its a break from the continuous selling.

4 comments:

Anonymous said...: I don't think its a coincidence that we implode the same week that LEH does. I think there are several things at work here:

1. LEH is a seller of everything

2. LEH provides a ton of leverage to hedge funds via it prime brokerage unit. This leverage is no longer available at a reasonable funding rate because LEH is losing trading lines via repo with other Wall St firms. Thus hedge funds sell.

3. This selling begets more selling as margin calls force the issue.

4. Buyers step away because the rapidity of decline is so severe they think something bigger is going to happen, so we lose the market bid. Even guys like us who follow the MLP market logically know it doesn't make any sense, but we can't bring ourselves to buy more.; 9/12/2008 10:21 AM
Anonymous said...: Not sure if this was posted all ready, but this is scary.
>
> JOHN HEINZL
> Globe and Mail Update
> September 10, 2008 at 6:00 AM EDT
>
> To hear Donald Coxe tell it, the commodity selloff ripping through
> Canada's stock market is no accident. It is the result of a
> deliberate, brilliantly executed plan hatched at the highest levels
> of the U.S. Federal Reserve and Treasury.
>
> Mr. Coxe is no paranoid conspiracy theorist. As the chairman and
> chief strategist of Harris Investment Management in Chicago, he is
> one of the most respected investment authorities in North America.
He
> also happens to have lost about 10 per cent of his personal wealth
in
> the commodity rout, which came at the worst possible time for his
> Coxe Commodity Strategy Fund that started trading in June. [my
> comment: 10% dang he's lucky]
>
> "This has done more damage to my personal wealth than anything in
the
> last 20 years," he said in an interview yesterday. But he has too
> much respect for how the U.S. authorities engineered the collapse
in
> commodities – a move he said was necessary to shore up the global
> financial system – to be bitter.
>
> "My attitude is, goddamn it, they're good … it was brilliant."
>
> To understand why commodities are plunging now – the S&P/TSX
> plummeted another 488 points yesterday – you have to go back to mid-
> July, when the U.S. Federal Reserve and Treasury first announced
> steps to support mortgage giants Fannie Mae and Freddie Mac.
>
> The move, which ultimately led to the Treasury taking control of
> Fannie and Freddie this week, touched off a chain-reaction of
market
> events that culminated with the wrenching decline in commodities.
>
> According to Mr. Coxe, the Fed's ultimate goal was to trigger a
rally
> in financial stocks, which would, in theory, help banks hammered by
> the credit crisis raise fresh capital and repair their balance
> sheets. To accomplish this, the decision to support Fannie and
> Freddie was deliberately announced on a Sunday, which had the
effect
> of maximizing the reaction from thinly traded financial stocks on
> overseas markets.
>
> Because many hedge funds were using massive leverage to short
> financials and go long on commodities, when North American markets
> opened and banks initially rallied, the funds were forced to cover
> their short positions.
>
> At the same time, the U.S. dollar was rallying because the risk of
> holding Fannie and Freddie paper had diminished. The rising dollar,
> in turn, made commodities less attractive, giving funds that were
> already scrambling to cover their financial shorts another reason
to
> dump oil, grains and other commodities.
>
> The losses were swift and dramatic. On the Friday before the July
11
> announcement, crude oil closed at $145.18 a barrel. Over the
> following five days, it plunged 11 per cent. "Leverage was being
> unwound dramatically," Mr. Coxe said on a conference call last
> week. "We had a true panic."
>
> As oil and other commodities were tumbling, fears about the slowing
> global economy were mounting, giving resources another push
downhill.
> This was also in keeping with the Fed's wishes, because lower
> commodity prices would help quell fears about inflation.
>
> Mr. Coxe has no proof that the Fed and Treasury acted in concert to
> boost financials and sink commodities. He is basing his assertions
on
> conversations with hedge fund managers and on years of watching
> financial markets. "There's no doubt whatever in my mind" about
what
> happened, he says.
>
> The future is less certain, however. Now that Freddie and Fannie
have
> been nationalized, the credit crisis is still very much alive and
> financial stocks are looking as shaky as ever. As for commodities,
> once the current storm passes, Mr. Coxe is confident they will
> recover.
>; 9/12/2008 10:23 AM
Anonymous said...: That article is idiotic. What is he saying the US govt sold oil futures, sold natgas futures, sold copper, sold lead, sold nickel? How about it was just another bubble that happened to burst. His money quote: Mr. Coxe has no proof that the Fed and Treasury acted in concert to boost financials and sink commodities. He is basing his assertions on conversations with hedge fund managers and on years of watching financial markets.

So the guy lost money and he is looking to blame someone, that is my take on that piece of shit journalism.; 9/12/2008 10:32 AM
Anonymous said...: We better see more volume on the upside or we'll just rollover agin...; 9/12/2008 10:39 AM