BAILOUTS, BONDS, AND BUYERS
(OR LACK THERE OF)!

We certainly hope that you had a wonderful Thanksgiving as i did here. Now its back to Monday morning and a full trading day with all the players back. Over the weekend we had the bailout of Ireland but will it make any difference? Doubtful as these guys seem to think they can grow there way out of this mess. And that means the Euro mess will continue to drive markets. Attention shifts to Portugal & Spain among others. Its not a good sign that German bonds dropped on all this. And ask yourself this question. What happens as interest rates rise especially on the long end? That is certainly something the U.S. will have to consider as it finances its massive debt at higher rates. We may be at the very beginning of the swirl around the drain.
The 30 year yield chart looks to me like we have come out of a bottom and are now on an uptrend. I believe the thing to look for is when we start to see on a sustained basis; bond yields going up while equity prices drop. That will be a telling sign that trouble is brewing.




The dow and MLP charts appear to be in a holding pattern here and right now there appears to be nothing extraordinary going on here. US markets have strongly outperformed Europe as the fed's QE2 just floods the markets with tons of liquidity with no place to go. This is probably why these soverign debt collapses have not had a big impact on stock prices with the fed backing up the markets. MLPS have the crosswinds of good business conditions and the prospect of higher distributions on one side vs the threat of rising long term yields on the other. This push and pull is likely to continue for awhile until something causes the markets to break one way or the other.

MLPS are going to follow the tape at the open. No news drivers out there on the corporate side and no upgrades or downgrades so far. Stock futures are lower and below fair value after being higher overnight. Bond yields are a touch higher as are crude. Nat gas continues to move higher as colder weather looms in the gas consuming states. At some point this tailwind will run out of steam but nat gas seems to have broken out of a base.
Using UNL as a proxy (better than using UNG) 37 is doable on this upleg and that would be the logical place where a test will ensue. The dollar continues its flight to quality rally with the European woes. Watching headlines and will post any news items that break on MLPS before the open.