MASTER LIMITED PARTNERSHIPS

Wednesday, October 08, 2008

Kinder Morgan was down 7 dollars at one point today. Its now up nearly 2 dollars. A nine dollar one day swing in an MLP....something you don't see in normal times over six months. But these are not normal times.

Fingers crossed as we head into the close.

4 comments:

Anonymous said...: I think the earnings season will bring positive clarity to the sector. Let the market panic, in a few weeks we'll have the facts. By then the forced sellers and swap unwinds will be finished, just in time for the mother of all MLP rallies.; 10/08/2008 3:43 PM
Anonymous said...: I dunno. I am skeptical that we will enjoy a V-shaped recovery. The reality is that our upside is a deep and long recession, and our downside is unthinkable.

With future demand growth in question and access to the equity and credit markets greatly impaired, I think the business model for MLPs will be greeted with market skepticism for the foreseeable future.

Bruce; 10/08/2008 4:01 PM
Anonymous said...: Well the AMZ almost was able to hold break even at the close.

The Dow had a 325 point reversal in the last 1/2 hour or so.

Today people were willing to day trade stocks on the buy side, but I guess there is great reluctance to hold shares over night.

Just listening to Paulson remind people that some banks will fail is enough to turn markets downward.

I'm with Bruce, except for Nat Gas pipelines where there should be demand growth especially if we have a cold winter.

I think that once markets are stabilized there will be several swings where markets discount both the worst and best possibilites.

Should credit markets return to a pre Sept. 8, 2008 level, then MLPs and stocks could have a good rally.

Earnings will stink ala Alcoa for many companies, but if credit markets unfreeze, then investors will be able to believe that a stiff recession might be the worst case senario.
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There might be some good news as to the credit market.

HS

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Ten-Year U.S. Swap Spreads Collapse After Coordinated Rate Cuts

By Liz Capo McCormick

Oct. 8 (Bloomberg) -- The spread between the rate on 10- year interest-rate swaps and Treasury yields collapsed to the least since before credit markets began to seize last year after coordinated central bank rate cuts.

The spread narrowed to as low as 44.94 basis points, the smallest since Feb. 6, 2007. The differences, or gaps, between swap rates of most maturities over corresponding Treasury yields are down today. The 10-year swap spread was 52.25 basis points at 3:06 p.m. A basis point is 0.01 percentage point.

``The movement in the 10-year swap spread is signaling a break in the upward trend in credit spreads,'' said Tony Crescenzi, chief bond market strategist at Miller Tabak & Co. in New York. The movement ``is probably hinting at a drop in the two-year swap spread, which if it occurs would strongly signal an easing of pressures in the inter-bank market.''
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"Two-year swap spreads are often used as a gauge of credit concern and near-term expectations for the London interbank offered rate, or Libor. The two-year swap spread is down almost 1 basis points to 133 basis points. It reached 167.25 basis points on Oct. 2, the widest since Bloomberg began compiling the data in 1988."

http://www.bloomberg.com/apps/news?pid=20601087&sid=aC9kppz7GziI&refer=home; 10/08/2008 4:52 PM
Anonymous said...: I'm curious about what the first poster is seeing that causes him/her to believe that the forced selling and swap unwinds will be over in a few weeks. I hope you're right and am staying the course as though I believe you are, but why do you think that's the case?

Lee; 10/08/2008 5:51 PM