DISTRIBUTION NEWS CONTINUES TO BE SUPPORTIVE AS WE APPROACH 206!
Considering the distressed economy i would have thought that distribution news would be a little murky but apparently its been pretty good in my view. Somehow some mlps are managing to raise distribtions even if its only by 1/2 a cent or in some cases a full penny! Boardwalk Partners (BWP) boosts its payout and Markwest Energy (MWE) managed to keep their payout steady at 64 cents. There are still a few mlps out there we haven't heard from but if this is the worst of the economic conditions and these companies are doing okay then maybe the worst is truly behind us. Targa Resources(NGLS) keeps their payout unchanged while Spectra Energy Partners (SEP) nudges their payout higher. Magellan Midstream Partners keeps their distribution unchanged.
This morning stock futures have firmed up from overnight as earnigns continue to roll in and they are comin in better than forecast. So instead of hideous they are just awful. Crude is back over 50 bucks this morning as energy markets are firm as well. Tape action for mlps continues to remain constructive and also continues to flash signals of normalcy. They are trading they way they used to trade back in more normal times...slow upticks or downticks. Now if we can only get them back to what we used to view as normal prices for our shares!
This morning stock futures have firmed up from overnight as earnigns continue to roll in and they are comin in better than forecast. So instead of hideous they are just awful. Crude is back over 50 bucks this morning as energy markets are firm as well. Tape action for mlps continues to remain constructive and also continues to flash signals of normalcy. They are trading they way they used to trade back in more normal times...slow upticks or downticks. Now if we can only get them back to what we used to view as normal prices for our shares!
joseph cioffi's Source Page - Associated Content
6 comments:
Joe,
By saying the worst may be behind us, I assume you are referring specifically to MLPs and not the market at large. Based on my reading of the tea leaves, the economy is a long way from recovery and hyper-inflation is headed our way.
But I think MLPs are out of the woods because the agonizing deleveraging we saw last year led by Lehman is over. The weak holders all got out leaving only us diehard MLP fans still in the game. Now MLPs are starting - once again - to catch the attention of yield starved investors and is being fueled by the press, to wit the Barron’s article a couple weeks ago.
The beauty of MLPs is that barring weird circumstances (like deleveraging), they serve a non-discretionary function and therefore are pretty resilient in any economic scenario. Yes, they suffer under demand destruction, but only to a point and I think we hit that point a while back. I believe the future is much brighter, on a relative basis, for MLPs than for most other sectors going forward, although a well rounded portfolio might include some additional commodity oriented assets (agriculture, industrial and precious metals, pure energy plays, etc.).
Just my two cents worth...
Lee
IMHO, Joe it'll be a long time before we get back to the prices we had during the bubble days Some MLP's were yielding less than Treasuires. CEP, EVEP comes to mind. That was a red flag. I read somewhere that MLP's on average historically yield about 4% over treasuries.
Lee,
Since we're talking hyperinflation make that 2 dimes! And yes you stated brilliantly exactly my feeling.
Josef,
No question the bubble days aren't coming back anytime soon but reverting back to normal yield spreads which were anywhere from 200 bp to 400 bp would still mean quite a rally from here.
It has been observed by many that oil prices seem to track the general stock market now. If so, if the market retreats, oil prices may as well. That could particularly hurt E&Ps as they face loan redeterminations.
Also, an equities retreat could see high yield securities take it on the chin--which have a high correlation with MLPs.
For these reasons, I think the MLP sector may be extremely vulnerable if/when we get a significant market pullback.
This is not the time to be chasing MLPs IMO.
Bruce
WGC Western Gas maintains ditrib at .30
Bruce,
One thing the last sell off taught us is that mlps will go down with everything else when markets are in turmoil. I agree with on chasing but at least for now the tape is working in our favor.
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