MLP GP MERGER!

I had a feeling all weekend long that we would wake up to a nice piece of merger news come Tuesday morning and sure enough we do. Enterprise Products Partners (EPD) is buying up Enterprise Products Holdings (EPE) at a rate of 1.5 EPD for each EPE share. So at Friday's closing price of 38 bucks we're talking 57 dollars. The stock is bid up 5 in the pre market which is a nice premium to the Friday close. And this continues the trend we've seen in the group which includes Buckeye Partners (BPL) Inergy Partners (NRGY) and Magellan (MMP) of buying up the gp and cutting costs because by doing so the LP eliminates the payouts it makes to the GP, those incentive payouts we're always better than to the common LP holder. So i guess we should perhaps pay attention to Nustar (NS) and Nustar Holdings (NSH), Alliance Resource (ARLP) and Alliance Holdings (AHGP) among others where the GP still trades separately as the market place may decide that here lies the next takeout candidates. We'll watch to see if they move this morning. Elsewhere Inergy Partners (NRGY) is buying a storage facility for 780 million and its immediately accretive to distributable cash flow.

Stock futures are softer ahead of the open this morning which i suppose is not a big surprise considering the nice rally we had last week. Plus the futures are a little distorted by the holiday as they traded higher in Europe yesterday so it may not be as bad as it looks. Rates are lower this morning, bonds higher in a round of profit taking. Euro markets are down and energy markets are lower. Crude is down over a buck this morning ahead of the open.

MLPS in general continue to hover near the top of the range as the dow has come off another bottom test at 9900. Watch the 10 and 30 year rate to see if money starts to trend out of yield stocks and heads toward greater risk. You have to wonder whether 2.40 and 3.50 on the 10 and 30 year bonds are as low as we can go in here. But then again we've asked that question before at higher yields and bonds would just rally to higher highs and lower yields. At some point they can't go much lower on the yield side...unless of course it really is a 1930s style deflation. In which case 6 percent on MLPS looks pretty good!